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6 July 2015 – Expansión
To be more profitable and create more value. That was why Sareb wanted to evolve from being just a warehouse for real estate assets for sale, to become a factory as well. In accordance with the new strategy that it has set out, the bad bank is constructing 42 real estate developments spread across Madrid, Cataluña, Andalucía, Valencia, Galicia and Cantabria.
These work in progress construction projects form part of the total of 600 developments that Sareb received from the rescued former savings banks. The bad bank decided to finish some of them because they were in advanced stages of completion. They hoped to obtain a greater commercial yield as a result, because the value of an asset increases in a way that is more than proportional to the investment required to finish it, and furthermore, it is easier to close the the sale of finished properties.
From the pool of developments that are currently underway and the 30 that were completed last year, the bad bank will bring around 1,200 newly constructed homes to the market during 2015, according to the provisional data presented by the company chaired by Jaime Echegoyen (pictured above).
In addition to this new supply of homes from Sareb, other new homes will come onto the market this year, in developments that were foreclosed by banks in exchange for the payment of debt, following the burst of the real estate bubble. Santander and BBVA are constructing 600 developments (300 each) and will bring thousands of homes onto the market between this year and next.
In this context, Sareb has set itself the objective of maintaining its rate of sales close to 15,000 properties in 2015 and whereby retaining its position as one of the top five players in the market. To achieve this, it will have to put its foot down on the accelerator during the second half of the year, since it only sold 5,000 properties during H1 2015.
As well as resuming the construction works that had been suspended, the bad bank is preparing plots of land for two reasons. On the one hand, it has begun the urban transformation of some land for its subsequent sale and, on the other hand, it is assessing the possibility of building new residential developments on certain plots over the medium term. The commitment to create value by finishing construction works and urbanising land required an investment of €35.6 million in 2014.
Recovery of the real estate market
In his first appearance in Congress, Echegoyen did not reveal any data about the status of developments in progress or about his plans for the land held by the entity, but he did make clear that Sareb is prepared to take full advantage of the recovery in the real estate market. (…) Furthermore, he is convinced that Sareb’s business model works and he said that not only does the bad bank not need any more public money, but also it will be able to return capital to its shareholders, mostly banks – except BBVA – and the Frob.
“Moreover, the recovery is not only affecting the housing market, it is also spreading to other segments, such as land and tertiary assets, which is positive for us, given the wide range of real estate assets in our portfolio”, he said. Sareb closed 23 land sales during H1 2015, which represented a 43% increase on last year.
Original story: Expansión (by Alicia Crespo)
Translation: Carmel Drake