By Álvaro Mohorte, in Valencia | www.valenciaplaza.com | Spanish banks have had enough of bricks and mortar, and urgently need to sell properties. Up until now, prices of many of the properties coming from developers as well as individuals have been kept over the market’s in order to protect the entitities’ balances, but requirements of further provisions have forced a strategy change. The goal is to get rid of thousands of flats, apartments and houses through the banks’ estate agencies themselves, and also in cooperation with the big firms of the industry.
While sector sources say that these properties are not included in the so-called toxic assets (an expression they prefer to use just for building land that have been valued on irreal expectations), they also admit that not all the stock which is being offered can be considered as first-class. According to a source, 40% of properties would be first-class and 60% of a poorer quality.
This situation largely explains the 60%-70% haircut applied over inicial values. The other reason is the buyer’s attitude, that tend to force down prices. In spite of critics against different developers for dumping practices, that is, to sell under production costs, the real estate agencies insist that they do not violate any rule at all.
a dynamic revision of prices according to each kind of asset,” Bankia Habitat admits.
In this sense, the tourist apartments along Castelló de la Plana's coast are the ones that are suffering the highest cuts. In the case of Bankia, the entity offers apartments in the complex Marina d'Or at €90,000, while its inicial price was €188,000, which means a discount of 52%.
Oportunidades CAM also offers another property in the same resort, whose previous price was €190,000 at €88,100. That is 53% lower. They both are inicial prices, so that the buyer can get even a cheaper price if negotiating, according to sector sources.
No formal complaint has been made in Valencia, but in other regions the real estate agency sector is considering to act. For instante, in the municipality of Barreiros (region of Galicia), where Grupo Santander’s real estate agency Altamira has put up for sale 30 to 54-square metres apartments with swimming pool and children’s park, two kilometres away from the beach, at a range price between €19,000 and €31,900 with 100% financing. The difficulty that developer companies find now is how to fulfil loans repayment commitments with so low a price fixing.
They complaint that these price reductions would be supported by the provisions that financial entities have already made, and which may be discounted from the sale price. This price war is not well considered by the rest of real state agencies either, since the cuts will make a reference of minimum price, which buyers will tend to.