Banks under pressure to finish building Costa del Sol properties
The governments most recent financial reform is forcing banks to dig themselves out of a hole that they helped to make in the first place.
Mortgage default and repossessions mean that now financial institutions are the owners of around half of the 6,792 unsold new properties on the Costa del Sol (according to a recent repost by Aguirre Newman). Now following Spain’s most recent financial sector reform this stock of real estate assets and loans granted to developers are costing the banks more and more in the form of provisions. As a result they are doubling their efforts to sell, which in many cases implies first finishing off the construction work where indebted developers left off.
“Now the bank is penalised more for having unfinished properties than finished ones” explains a lawyer from a well known firm that works for credit institutions. He confirmed that finishing projects is part of the banks’ current strategy, but providing two conditions are met: the works must be at an advanced stage and have certain prospects for sale (especially if there are buyers who paid a deposit).
Projects such as Valle Romano in Estepona, Arenal Golf in Benalmádena and the Félix Sáenz building in Malaga are examples of the trend. The banks have finished the construction work and the properties are on sale.
The recent report on the Costa del Sol real estate market released by Aguirre Newman, explains that 98 percent of the unsold stock of properties is now finished. Meanwhile the total number of homes in this situation has fallen by 12.35 percent in the last year, evidence that the banks have become more proactive in promoting sales.
A spokesperson for one banking group explained the current situation: “There are three types of property: undeveloped land, which is not moving, unless it comes with a very attractive project; finished dwellings, which the banks are now using aggressive strategies to sell; and unfinished properties, which until a year ago were abandoned, but work is now being resumed”.
Author Nura Triguero, Sur in English June 8th to 14th 2012