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MARKET OVERVIEW

 

The real estate meltdown that hit Spain especially hard left the country with thousands of unsold and foreclosed properties. Some of these assets are in the hands of the banks (according to the media, it is the banks that were to blame for the real estate bubble), others are owned by construction companies, and others remain in the hands of the debtors. There have been many attempts to promote and to reduce that pile of properties. But with the Spanish real estate market suffering the largest price drop in centuries, the vast majority of these properties are still waiting to be sold. After the agreement between the government and the banks, a great number of these assets are now in the hands of SAREB, the so called “banco malo”.

SAREB stands for “sociedad de gestion de activos procedentes de la reestructuracion bancaria”. SAREB was established by the government in order to save the banks from ruin. The main activity of SAREB is to manage and sell the properties from those bank entities that received protection (primarily BFA-Bankia, Catalunya Caixa, NCG Banco-Banco Gallego and Banco de Valencia). Banks, energy companies, and other investors own a 55% share of SAREB; the other 45% is owned by a governmental institution called FROB. As of today, SAREB has received 197,474 assets: some are loans, others mortgages, and some plain properties.

The signs of recovery are clear. The massive discounts and the 40% price drop is once again making it attractive to invest in Spain. Pura Strong, partner at Strong Abogados, said that the renewed interest in real estate in Spain is revealing a different type of investor than in 2006. The current clients are not looking for a holiday home on the coast, but tend to come from investment groups or holding companies who want to invest in whole buildings in large cities. They want to renovate these buildings and then rent or sell the individual units, according to Ms. Strong. The Spanish market is perceived as “supply” by investors from countries such as Russia and China. Group investors and real estate holdings companies are watching the Spanish real estate sales figures with interest.

How does SAREB fit in? In the opinion of experts, SAREB is not going to be of primary interest to these investors. In many cases, the properties sold by this institution are termed as “toxic” — they lack the quality or location to attract international investors. The big Spanish banks have made great efforts in online marketing and which already have their websites full of properties ready to be bought

The following is an approximate guide to the purchase process, although this may differ from time to time depending on the particular operation.