44 | EMEA WORDS | Geoff Hadwick Waiting game goes on
There is plenty of advice out there on the web and in the industry’s exhibition halls telling clients “if you’re looking for property in a distressed market like Florida or Spain, now is the time to look … there is an abundance of properties on the market.” It is estimated that there are approximately 1 million properties for sale in the Spanish alone market … and prices are continuing to fall. But where will it all end?
for agents or developers. But, every disaster and every threat can just as easily be see as an opportunity ... if you put your mind to it. It is a cliché, but there is always someone doing well when times are bad. Affordability, bulk deals, and innovative mortgage products can all be unexpected benefi ts of a market that is as tough as old boots. Necessity, after all, is the mother of invention. And the need is certainly there. There
O
is a lot of property to shift. According to Spain’s National Institute of Statistics home prices there fell 2.2% year-on- year in the third quarter of 2010 … in a country with an estimated 1 million empty holiday homes.
Experts predict that home prices in Spain may continue to drop for at
n the surface, distressed property markets do not appear to be good news
least another two years, which has led several overseas investors to keep a careful eye on the country. They are getting ready to pounce when the right investment opportunity comes along. Neighbouring Portugal is having a tough time too. The numbers are not as big, but they still make grim reading. But all is not lost. Stephen Anderson, managing director of Infi nito Real agrees that while “right now, it’s clearly a buyer’s market, that doesn’t mean that property can’t sell, and sell quickly, if the vendor follows certain criteria.” According to Anderson “most buyers want a deal, so be prepared to sell for a good price. Forget about the original purchase price and focus on today’s market as what can be considered a good price now is not the same as a good price when the property was purchased. A good local estate agent will be able to assist and advise here.
“During this time of economic downturn, many buyers are looking for higher valuations on their properties so it can help to have two or three valuations carried out by various banks to ascertain what they value the property at. Be aware though that this does not mean that this will be the same when it comes to applying for a mortgage but will give a good indication of how realistic your sales price is. For a quick sale, it goes without saying that the asking price should be below the valuation.” “Another, often overlooked point,”
says Anderson, “is to give the property ‘curb appeal’. All too often the garden is overgrown and paint is seen fl aking from the walls. Once inside, the rooms are cluttered and, although this doesn’t directly affect the value of the property, it can make a huge difference when prospective purchasers are viewing, especially if they have to choose between similar properties, and can even hinder an initial viewing at all. A tired and unkempt property does not look good on the marketing material. Ultimately, as has historically always been the case, price is the key, the only difference now is that the price needs to be even better than before.” For investors looking to make a
profi t during the crisis, Infi nito has a set of guidelines for its investor clients: “To take advantage of the highest discounts, you need to work with
Red box guide
Reuters recently reported on The Bank of Spain’s much-vaunted campaign to assess how much property exposure is wrapped up in the country’s 17 remaining regional savings banks or ‘cajas.’
The main results are listed in the dark red boxes on these pages. “Figures are in millions of euros and refer to the banks’ positions at the end of 2010,” says Reuters, adding “the exposure to real estate loans refers to developers and real estate business, not to mortgage lending.” Risky loans are defi ned as “currently sound loans at risk of default.”
So, for instance, the fi rst bank listed below, the Banco Financiero y de Ahorros, has total assets of €328,099,000,000, equivalent to 11.1% of Spain’s entire banking system. And €41,280,000,000 of its total loan book of €214,799,000,000 (just under 20%) has been classifi ed as the total value of its exposure to property in general.
Banco Financiero y de Ahorros (Caja Madrid-led Merger.)
Total assets: 328,099 Total loan book: 214,799 Exposure to real estate loans: 41,280 Of which bad and risky loans: 15,112 Percentage of Spanish banking system: 11.1% Cost value of repossessed assets: 11,048 Book value of repossessed assets: 7,402 Provision for losses: 33 %
Overbuilding | has been the biggest problem for the distressed market in Dubai
DISTRESSED
www.opp.org.uk |MARCH 2011
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