25 October 2016 – El Mundo
The skeletons of half finished construction sites are one of the symbols of the crisis in the real estate sector, which fell to its knees in 2008. (…). Countless developments fell victim to the crash in activity, zero demand and the closure of the financing tap.
That gave rise to a vast catalogue of half finished developments (…), which can still be found across the Community of Valencia, one of the largest real estate cemeteries in Spain. This group of toxic assets was transferred into the hands of the banks and Sareb, and they are now putting their feet down on the gas to get rid of the properties, which are still weighing down heavily on their balance sheets. The entities have been hovering over these real estate supplies for too long now; they need to get rid of them.
Nevertheless, the operation is more complicated than it might seem at first glance: it means convincing local property developers to work together with the financial institutions to reactivate the failed projects, complete the unfinished homes, sell them and recover all or some of the money tied up in the stock. According to market sources, the major stumbling block in attracting businesses to take this step once and for all, is the conditions of the agreements being offered. Although the demands relating to financing, the marketing of homes and the selection of customers and prices, amongst other aspects, have been eased compared to previous years, they are still too harsh and risky for property developers. Some of the most active entities in this sense are Solvia, Sareb and Santander, which together have been managing around 100 suspended developments in three provinces since the outbreak of the crisis and which now want to relaunch them again in collaboration with business people in the sector.
Sabadell’s real estate subsidiary has around 50 unfinished developments located in Castellón, Valencia and Alicante. Its sales team is combing the market looking for possible investors who may be interested in resuming construction at these sites. From Elche, Alicante, Elda, Los Montesinos, Albatera, Orihuela, Santa Pola, Mutxamel, Sax, to Finestrat, etc, the province is littered with buildings and urbanisations, owned by Solvia, whose construction stopped dead with the collapse in property development activity. The same thing happened in Valencia.
The marketing strategy for these types of assets is not exactly easy, given that the investment involves effectively bringing projects back from the dead. Sources at Solvia state that “those interested in these types of assets are local property developers and construction companies with average profiles who are looking for these types of assets to complete the building work”.
The target market comprises professionals who are experts in their immediate environment and who have sufficient capacity to complete the construction work and then put the properties up for sale. Solvia, in addition to managing sales to property developers, also provides marketing services once the development has been completed. And all of that with the hook of financing from Sabadell. Sareb, Santander and Solvia manage suspended developments between them that may supply up to 1,300 homes in the region. Not all of the offers will be successful. The developments that cannot be sold will probably be demolished. The projects that have more chance of success are those located in tourist areas along the coast and whose target is overseas buyers. (…).
Original story: El Mundo (by F. D. G.)
Translation: Carmel Drake