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Sareb Tries Its Hand As A Property Developer

7 December 2015 – El Mundo

Sareb, also known as the bad bank, is boosting the recovery in the residential development segment. Using its own land and several delegated firms, the company is going to inject 783 new homes onto the market through 13 developments spread across Spain. Construction on these projects is expected to start in December and to be completed at the end of 2017.

This supply from Sareb represents an important boost at a time when construction activity is very low compared with growing demand, which has started to drive prices up. The statistics speak for themselves: between January and September, just 36,031 permits were granted for the construction of new homes. And although that figure represents an improvement of 30.6% compared with 2014 and exceeds the number of permits granted in 2013 as a whole, it is still very low according to the experts, who are advocating an objective of somewhere between the historical minimum of 2013 (34,288) and the peak of 2006 (865,561).

With this property development initiative, Sareb is opening a new line of business. Until now, it had limited itself to selling land, and since 2014, to the termination of partially-completed new build projects that it had inherited. To this end, it has approved the completion of around 70 projects containing 1,200 homes, and has spent almost €50 million. According to its President, Jaime Echegoyen, “with this (property developer) initiative, we are strengthening our commitment to the reactivation of the real estate market and are boosting the local economy”.

The bad bank is undertaking this major commitment in collaboration with several servicers, in their capacity as technical and commercial managers. “Sareb’s business model means that it makes sense for us to work together with third parties to undertake our activity. In the case of development, we want to have the best professionals in a collaboration model in which the technical management is the responsibility of, in this case, Solvia (nine full management projects and one sales project under the technical management of Algescom), Servihabitat (two) and Altamira (one), but that we will extend this to work with other collaborators in the future”, explains Andrés Benito, Sareb’s Director of Real Estate Development. (…).

The company says that it will focus its developments in “strategic locations”, making it clear, once again, that the real estate recovery is not homogeneous. The cities selected by the bad bank for its developments are: Madrid (two developments), Valencia (two), Málaga (three) and one in each of Sevilla, Pozuelo de Alarcón, Badalona, Alcalá de Heranores, Vigo and Alicante. Sareb expects to invest around €110 million in the 13 developments. (…).

Francisco Pérez, Director of Promotions and Developments at Solvia set out the servicer’s functions under its agreement with Sareb, championing its role as a dedicated servicer: “This project is another example of all of the services that we offer: product proposals, project coordination, the request and processing of all kinds of permits and licences, preparation and development of marketing and sales plans, sales management (including first occupancy licences), handover of keys and post-sales service management. (…).

Looking ahead to the future, the bad bank does not rule out continuing to grow its property development activity, but it will do so cautiously, according to Benito. “Sareb will gradually identify profitable investment projects in accordance with our criteria of prudence and value creation”.

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake