30 May 2017 – El Español
Sareb (…) has started its fifth year of life in a rather surprising way, by doubling its overall sales between January and April, and by tripling its land sales.
The upwards trend has been on the cards for a couple of years, with the emergence of property developers, such as Neinor, Aedas, Aelca and Kronos. These new stars of the real estate market, which are mainly financed by large investment funds and managed by Spanish professionals, have had to buy up land to support their business plans.
Improvement following the migration of assets to the servicers.
In addition to this overall improvement in the real estate environment, sources at the bad bank also defend the role played by the servicers engaged by Sareb (Altamira, Haya, Servihabitat and Solvia) in this exponential increase in sales. “Last year, not all of the assets had been migrated to their respective platforms, but this year, now that the migration has been completed, the results have improved significantly”, say the sources.
(…) The 3,260 properties sold by Sareb between January and April represent an increase of 87% compared to the same period a year ago. In the case of land, the number of plots sold has tripled, in such a way that the bad bank has managed to divest almost 900 plots of land during the first four months of the year, which is the same number that it sold during the whole of 2016.
Nevertheless, the increases in sales do not correspond to a similar increase in revenues, another trend that has also been seen over the last two years.
Twice as many sales, at half the price
In 2015, Sareb sold 421 plots of land for €335 million, i.e. an average plot price of €800,000. Last year, that average decreased to €400,000. It is true that the number of plots sold increased by 220%, to 927, but the corresponding revenues only grew by 9%, to €366 million.
Sources at the bad bank chaired by Jaime Echegoyen justify this gap by explaining that “increasingly smaller plots of land are being sold now. Moreover, the geographic spectrum has been expanded (…)”.
Call for caution
If the trend recorded until April continues, Sareb should be able to shed around 1,500 plots during 2017, which, at the average price of last year, would allow it to generate revenues of around €600 million. Nevertheless, sources at the bad bank prefer to be prudent. (…).
Unsustainable increase in land prices
The increases in house and land prices, which are being seen in certain areas of Madrid, Barcelona and the Mediterranean Coast, were one of the most talked about phenomena amongst professionals in the real estate sector last week, when they met at SIMA, the Real Estate Conference in Madrid.
In this context, the President of Spanish Property Developers, Juan Antonio Gómez-Pintado, called for caution. He is not talking openly about the existence of a new bubble and maintains that the increases are still technically a rebound after almost a decade of near paralysis in this market, but he did admit that “the increases that are being seen are not sustainable”. He believes that there isn’t sufficient housing demand to sustain the amount of land that has been acquired over the last year.
Original story: El Español (by Juan Carlos Martínez)
Translation: Carmel Drake