Sareb Holds Talks With Cooperatives To Accelerate Land Sales

25 January 2017 – El Independiente

Sareb is exploring ways of selling off millions of square metres of land that are currently sitting on its balance sheet. Whilst sales of properties by Sareb, the largest property developer in Spain, accounted for 97% of its portfolio in 2016, operations involving land accounted for just 3%.

One of the bad bank’s options for changing this trend in 2017 is to meet with cooperatives, one of the groups that most specialises in managing land, according to several institutional sources consulted.

Sareb, whose dissolution is scheduled for 2027, generated €1,500 million from the sale of real estate assets last year, primarily residential properties, but the sale of land by the so-called bad bank was purely symbolic, forming part of larger operations in many cases. For this reason, Sareb and several sector associations have begun a round of contact, confirm both parties. The first meeting was held last Friday.

“Officially, we are not doing anything with Sareb”, responded a spokesperson for Concovi, the cooperatives’ trade association, surprised that details of the meeting had been revealed. “We have not defined a model of cooperation”. The cooperatives point out that they account for approximately 10% of the housing sector and that they provide much more security than traditional housing developments. Sareb is calling for another meeting with the Community of Madrid’s Federation of Housing Cooperatives and Renovations

Sareb, created at the end of 2012, at the request of the Ministry of Finance to group together damaged assets from the banks – whereby avoiding their collapse – with the aim of subsequently selling them at aggressive discounts, owned 13 million m2 of land before its birth. Although this newspaper has not obtained updated data about the stock of land currently owned by this company, it is clear that it still has a lot to get rid of over the next ten years. One example is this website, where Sareb is selling off a huge volume of land.

The cooperatives are starting to get their strength back, one step at a time. Until now, they have had a very limited presence in the property developer sphere, primarily due to a lack of knowledge about their operations and due to the poor image that they are still struggling to shake following the scandals of the 1990s, such as the one involving the PSV cooperative.

Nevertheless, this method of collection development is set to record its first year of growth since 2012, in terms of the number of finished projects. Whilst in 2012, 700 buildings were certified, the following year that figure plummeted to 283. The number of certifications then fell further still to 217 in 2014 and 214 in 2015.

But, with the economic recovery and upturn in employment in 2014, new cooperative projects were launched and it is those that are now starting to bear fruit. 205 buildings were constructed through this method during the ten months to October 2016, a rate that, if maintained until December, would have given rise to around 250 finished buildings in 2016.

In parallel, the budget allocated to the construction of these properties rose by 62%in 2015 to €348 million. The cumulative figure as at October last year (€350 million) had already exceeded that amount. This means that 2016 looks set to be the year in which the cooperatives move the most money since 2011.

Original story: El Independiente (by David García-Maroto)

Translation: Carmel Drake