46 | EMEA
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But many have recently been put off by horror stories of planning permission being retrospectively revoked and other complications, and the number of British buyers has slumped.
According to government fi gures, at least 100,000 homes built around the coast during the last decade face unresolved planning problems. “The British are our highest priority and are those about whom we are most concerned,” Corredor said. “It is true that there has been... an image problem. Now we want to reassure the British, and all foreigners, that we are doing everything possible to put the details clearly on the table.”
The change in the law will be part of a package of legal reforms steered through the Spanish parliament this month. The idea is that for any property being sold, the local council will be obliged to provide a document stating clearly its boundaries, the category of land on which it stands, its access to services including water and electricity, and details of its planning approval. If someone buys a house with all the correct paperwork, Corredor says, they can be assured of its legality. “If there is not any mention of legal proceedings on the document, the person who buys the property through the correct channels will then know there is judicial support.” The one drawback is that nothing will apply retrospectively. Houses that are currently in dispute will stay in dispute and resident action groups like AUAN remain highly sceptical about pronouncements from Madrid. Local offi cials rarely seems to follow national dictates they say. But not everyone is toeing her line.
A full-scale Spanish economic crash is now inevitable says Greg Butcher, founder of the Fairhomes Group and one of Spain’s leading international property experts. “It’s just a matter of time.”
He believes that “this recession
has not worked its way through yet, there is a lot more pain to come. Spain has got to go. There is going to be a crash.” Butcher is convinced that Spain will go the way of Greece and Ireland and that “right now, we are in the lull before the storm.” “You only have to look at the numbers … Spain has more than 1 million empty homes plus more than
300,000 homes stopped whilst under construction. There are at least 1.1m bank repossessions and I reckon that at least 13% of the country’s residential stock is now empty.”
“Once you are past 5% you are in the crash zone. And the developers also have enough in their land banks to last a decade,” Butcher continues.
“Just like in Ireland where NAMA
(The National Asset Management Agency) is selling any assets it can to get cash,” he says, “the Cajas in Spain will have to sell at more realistic prices and in bulk. One- off individual sales will be no use to them by then. And that is where overseas property companies can move it and acquire large-scale deals for good prices.” Group buying will become the order of the day he says. Spain’s banks will be forced to regroup and reassess their balance sheets. Prices will crash from their artifi cially high levels at present and soaring unemployment will see people struggling to pay off car loans, credit card bills and mortgages. Butcher argues that the current
impasse is a result of the cajas (Spain’s regional savings and loan banks) pricing their repossessed housing stock at “anywhere between 25% and 45% above the real market value.” They are giving buyers 100% mortgages to buy at these levels on a 50-year term. “The cajas are effectively subsidising the sales of these properties so that they can keep their asset values at a higher level on their balance sheets than they should be in reality.” Even though the cajas survived
a round of EU-sponsored banking stress tests last year (as many of the failed banks in Ireland did) Butcher thinks that it was only on the basis of artificially inflated property valuations.
In the decade up to the crash in
2008, land prices rose about 500% and developers built hundreds of thousands of units — about 800,000 in 2007 alone. At its peak, the construction sector
accounted for 12% of Spain’s GDP, double the level in the UK or France. OPP recently reported that
Fernando Acuña, co-founder of the
Pisosembargados.com website that sells housing on behalf of many of Spain’s banks, said as many as 100,000 repossessed units were now for sale in Spain ... a number that “could double or triple.” And that is scary.
But probably the biggest challenge
for the banks is that they are likely to end up owners of vast amounts of
CatalunyaCaixa.
Total assets: 76,649 Total loan book: 55,440 Exposure to real estate loans: 12,774 Of which bad and risky loans: 3,457 Percentage of Spanish banking system: 2.6% Cost value of repossessed assets: 3,730 Book value of repossessed assets: 2,025 Provision for losses: 45.7%
CaixaBank, the La Caixa-led merger.
Total assets: 285,724 Total loan book: 189,546 Exposure to real estate loans: 33,231 Of which bad and risky loans: 5,737 Percentage of Spanish banking system: 8.1% Cost value of repossessed assets: 4,416 Book value of repossessed assets: 3,323 Provision for losses: 24.7%
www.opp.org.uk |MARCH 2011
undeveloped land. José Luis Suárez, an expert on real estate at the IESE business school, recently said that 65% of bank lending to developers is tied up in land, enough to build 758,000 more housing units. “That gives you an idea of how
long it could take for the market to digest all this,” he said. It really is going to be a waiting game.
Banco Base.
Total assets: Not given Total loan book: 90,000 Exposure to real estate loans: 23,286 Of which bad and risky loans: 9,786 Percentage of Spanish banking system: 4.3% Cost value of repossessed assets: 4,208 Book value of repossessed assets: 3,026 Provision for losses: 28%
NovaCaixaGalicia.
Total assets: 76,604 Total loan book: 53,638 Exposure to real estate loans: 11,150 Of which bad and risky loans: 4,438 Percentage of Spanish banking system: 2.9% Cost value of repossessed assets: 3,525 Book value of repossessed assets: 2,616 Provision for losses: 25.8%
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