Spanish bank take-under reveals real estate mess

Spanish bank investors have just had a painful reminder of the real estate mess that burdens the country’s banking system. Just a few months after Banca Civica listed on the stock market, Caixabank is buying the smaller lender – and its dud property loans – in an all-share deal priced at an 11 percent discount to market value. Caixabank will reap savings from cutting costs, including its own network. Without state support, though, the deal is still a risk.

Banca Civica was in a bind after the government recently tightened requirements for impaired property loans. It needed to do a deal. For Caixabank, already one of Spain’s biggest banks, the rationale is less straightforward. The combined entity will become Spain’s largest lender by assets, with leading positions in the wealthy regions of Catalonia and Navarra, and populous Andalusia.

On paper, the deal makes financial sense, giving Caixabank a good excuse to restructure its own bloated branch network. It says the combination will generate 540 million euros in annual synergies, mostly from cost savings, which have a net present value of 1.8 billion euros – nearly twice the 977 million euro price the deal puts on Banca Civica’s equity. Caixabank reckons its earnings per share will increase by more than 20 percent in 2014, excluding restructuring costs.

The deal won’t stretch Caixabank’s balance sheet too far, either. It is buying Banca Civica for a third of its 2.9 billion euro book value, and will write down the lender’s real estate assets by 3.4 billion euros. After taking into account various adjustments, including the conversion of preference shares, the hit to Caixabank’s capital will be 167 basis points. That shouldn’t impede it from reaching the 9 percent core capital ratio that European regulators require it to hit by the summer.

UPDATE: Fitch: Spanish Real-Estate Exposure Rules Stiff But Necessary

Fitch Ratings on Wednesday called Spain's new real-estate asset rules a big but necessary step toward extracting the country from a banking crisis that has continued to weigh down the broader economy.

Under Spain's stiffer rules on real estate, banks will need to comply with harsher regulatory capital requirements and meet the European Banking Authority's 9% core capital requirement.

The entire banking sector's total exposure to the real-estate sector at the end of June reached EUR323 million, of which EUR175 million was potentially problematic, according to Bank of Spain data. Soured real estate assets have plagued Spanish banks and held back the nation's economic recovery.

The country's latest move will force banks to build up coverage levels relatively quickly amid an economic slump that has hurt their overall operating performance.

Such rules are aimed at reducing risk from the banks' real-estate exposures through income statement provisions and capital buffers. The move is still needed to stimulate credit and promote economic growth, the ratings service said.

Fitch said Spain's larger financial institutions should be able to meet the new requirements without any adverse impact on their ratings, given the one-off nature of the change this year.

Smaller banks, particularly those relying on capital injections from the state, will find it harder to comply with the rules in just one year, given their low revenue generation and tighter capital.

Stronger institutions that merge with weaker institutions will also face downward rating pressure due to the potential weakening of their risk profile, additional provisioning and capital needs and execution risks, Fitch added.

Fitch said it expects larger players to report lower earnings due to the change, while some smaller domestic banks could report losses in 2012 unless they register capital gains.

Spanish banks offer 100% loans to clear distressed

Whilst over in the UK the tightening of lending conditions has made securing a home with less than 25% deposit an impossiblity for most would-be buyers, over in Spain banks are making it easier than ever for investors to get in on the market without the difficult commitment of an initial lump sum - as long as you're willing to buy distressed.

Signs Suggest Spain's Real Estate Market Near Stabilization

he latest real estate figures on prices and transactions are giving some hope that the Spanish property market is improving but foreign buyers are still not returning to the country in any great numbers. Prices are still falling, but less with every passing month, according to the monthly house price index published by Tinsa, one of Spain’s leading appraisal companies.

Average Spanish property prices fell by 4.4% over the 12 months to the end of May. ‘If the Tinsa figures are to be believed, the rate of decline in Spanish property prices has been slowing since June 2009, when it peaked at -10.1%. If the trend towards smaller declines keeps up, average property prices will be stable, or even growing slightly before the end of the year,’ explained Marc Stucklin of Spanish Property Insight.

Currency exchange rates help Spanish property vendors returning to UK

Spain's real estate market may still be some way from recovery but some vendors are able to sell at much less than they bought and still turn a profit, it has been revealed.

At first glance it's tricky to work out how buying a villa in Spain in 2000 for €122,000 and selling in 2010 for €85,000 can be seen as anything but an unmitigated disaster. In actuality, the client's getting a bargain and the vendor's making a profit. That's because the vendor's British and currency exchanges work in their favour.

Spain's Costa Cálida, in particular the Camposol Golf Resort promoted by real estate agent Mercers, is currently replete with vendors returning to the UK who have the strength of the euro to their advantage. This is making the local property market more price sensitive than ever with asking prices tumbling yet still not to the detriment of the vendor making a good profit.

Spain Numbers Don't Add Up

If there is one thing European property experts agree on, it’s that housing data out of Spain is fairly worthless.

For example, the most recent report from the National Institute of Statistics (INE) shows the market bottoming out, down only 7 percent in the last year. Catalonia and Madrid saw drops of more than 11 percent, but the rate of declines is slowing, the data shows.

“But it is always worth pointing out that the official index is so detached from reality it is close to meaningless,” Spanish Property Insight’s Mark Stucklin reports. He cites numbers suggesting Murcia prices dropped only 1 percent in the last year. “That is farfetched, to put it mildly,” Stucklin said. .

Gerens Hill International Establishes New Real Estate Asset Management Company in spain

MARLTON, N.J. and MADRID, Spain, Dec. 21, 2009 (GLOBE NEWSWIRE) -- Hill International (NYSE:HIL), the global leader in managing construction risk, announced today that a subsidiary company, Gerens Hill International S.A., has established a new majority-owned subsidiary company, Gerens Hill Gestion de Activos, S.A., that will be providing real estate asset management services.

Gerens Hill Gestion de Activos has entered into a three-year management agreement with another newly-formed company, Aliancia Zero, S.A., a real estate investment company entirely owned by nine Spanish financial institutions that has been organized with initial real estate assets of approximately $400 million.

"Gerens Hill has strong relationships with many of the largest financial institutions in Spain," said David L. Richter, Hill's President and Chief Operating Officer. "Gerens Hill initiated the development of Aliancia to help provide solutions to these institutions for the current property market," Richter added.

Some Areas Of Spainish Real Estate Improving Despite Five-Year Surplus

An estimated five year surplus in Spanish real estate is hindering recovery in some regions, while prices are beginning to rebound in other parts of the country. Prime properties in areas of high demand continue to attract buyers, typically mid- to long-range cash purchases intended for the owner's use, exemplifying the stability long synonymous with Spanish real estate. See the following article from Property Wire for more on this.

Spain property market
Property prices are starting to rise in some parts of Spain, according to a new report from one of the country’s largest savings banks.

The much awaited real estate recovery is underway in locations where there is no glut of property such as Cantabria, the Basque region, Asturias and La Rioja, says the report from Caixa Catalunya.

‘House and land prices have touched bottom in some cases. The adjustment is almost over, if not already,’ said Eduard Mendiluce, head of Caixa Catalunya’s property division Procam.

Spain Sees Endless Season For Political Scandal

Corruption has a long tradition in Spain. But lately, the country has experienced an explosion of scandals.

Hundreds of mayors and other officials across the country are being investigated for bribery and influence peddling, and police have seized assets worth billions of dollars. The government and the opposition agree that things have to change.

Boadilla del Monte, a small hill town about a half-hour west of Madrid, has achieved notoriety in Spain because of its former mayor, Arturo Gonzalez Panero. He was forced to resign earlier this year after being implicated in an influence-peddling network that extended to Madrid, Valencia and the Costa del Sol. A court in Madrid has frozen millions of dollars of his assets.

Spain takes over EU rotating presidency under new European Treaty

MADRID/BRUSSELS (EJP)---Spain took over the European Union rotating six-month presidency from Sweden on Friday, just a month after the Lisbon Treaty, which reformed the EU institutions, took effect.

Under this treaty, EU summits will be chaired by Herman Van Rompuy, the former Belgian Prime Minister who was named last month full-time President of the European Council along with the new EU foreign policy chief, Britain's Catherine Ashton.

But Spain, whose Prime Minister Jose Luis Zapatero promised to work to end Europe’s economic crisis, will steer other top meetings on the economy, environment and energy, and host summits with non-EU countries, like Israel.

Zapatero said Spain's main goal as EU president is "to fight for economic recovery, for recovery from the crisis, and make Europe an economy that is more and more productive, more and more innovative and more and more sustainable."

Spainish Real Estate Market Looks To Build On Positive Sales Activity

The number of real estate transactions grew for the first time in 13 months in Spain last quarter, but with volume still off 60% from the market's peak, claiming recovery would be premature. An excess of supply, tight credit and hard economic times have hurt the holiday home sector, which has also been hit by the loss of British business due to the weakened Sterling. See the following article from Property Wire for more on this.

Property sales in Spain have plummeted from over a million in 2006 to 400,000 at the end of the third quarter of this year, according to the latest published figures.

Spain’s real estate register shows that there were just 110,709 transactions in the third quarter of 2009, down 15% compared to same period last year, with coastal properties suffering the most.

Spanish Banks Expected To Increase Discounts On Housing Inventory

ith Spain's real estate market expected to take years to recover from the global economic crisis, Spain's banks — which now are the largest holders of property — are expected to offer discounts as high as 50% on repossessed properties in 2010. With more than 1.5 million properties on the market, and double digit unemployment rates, analysts predict that property prices in Spain will continue to fall through at least 2012. For more on this, see the following article from Property Wire.

spain real estate
Benidorm, Spain
Banks in Spain, now the country’s biggest property owners having re-possessed so many homes, will have to offer discounts of up to 50% in 2010 if they are to shift their stock of real estate, according to a new report.

Austerity takes a slice out of Spain's ham sales

Corporate and household austerity has hit sales of Spanish ham, among the country's most emblematic delicacies, and shown that pigs, too, can form an asset bubble.

According to industry representatives, Christmas sales this year of the traditional leg of acorn-fed Iberian pig, or jamón de bellota , could be down 20 per cent, or up to 40 per cent for the year.

Other, cheaper preparations have also been hit by cutbacks in corporate Christmas hampers and household consumption, driving down wholesale and retail prices by up to half.

With more than 25m pigs, Spain vies with Germany for the European Union's largest porcine population, and is among its most important consumers and exporters of pork meat products. Of the total population, about 20 per cent are "Iberian" pigs, an indigenous breed renowned for the quality of its meat.

Key-ready properties 'best bet in Spain'

New residences that have recently been completed are the best kind of real estate in Spain, it has been stated. Known as key-ready homes, Martin Dell of Kyero commented: "The difference is that these properties are available direct from the developer - who need sales to prevent the banks from taking possession." These are better bets than repossessed lots being bought from banks, as developers are able to process matters faster and "negotiate from a more realistic property valuation", he added. Mr Dell noted that buyers looking for long term rental proeprties in Spain are able to push for bargains to the extent that only lets with no reserve price received offers at a recent auction organised by A Place in the Sun magazine.

Read more about New residences that have recently been completed are the best kind of real estate in Spain by www.propertyshowrooms.com

New residences that have recently been completed are the best kind of real estate in Spain, it has been stated. Known as key-ready homes, Martin Dell of Kyero commented: "The difference is that these properties are available direct from the developer - who need sales to prevent the banks from taking possession." These are better bets than repossessed lots being bought from banks, as developers are able to process matters faster and "negotiate from a more realistic property valuation", he added. Mr Dell noted that buyers looking for long term rental proeprties in Spain are able to push for bargains to the extent that only lets with no reserve price received offers at a recent auction organised by A Place in the Sun magazine.

Read more about New residences that have recently been completed are the best kind of real estate in Spain by www.propertyshowrooms.com

New residences that have recently been completed are the best kind of real estate in Spain, it has been stated. Known as key-ready homes, Martin Dell of Kyero commented: "The difference is that these properties are available direct from the developer - who need sales to prevent the banks from takingpossession." These are better bets than repossessed lots being bought from banks, as developers are able to process matters faster and "negotiate from a more realistic property valuation", he added.

Read more about New residences that have recently been completed are the best kind of real estate in Spain by www.propertyshowrooms.comNew residences that have recently been completed are the best kind of real estate in Spain, it has been stated.

Known as key-ready homes, Martin Dell of Kyero commented: "The difference is that these properties are available direct from the developer - who need sales to prevent the banks from takingpossession."

These are better bets than repossessed lots being bought from banks, as developers are able to process matters faster and "negotiate from a more realistic property valuation", he added.

Mr Dell noted that buyers looking for long term rental proeprties in Spain are able to push for bargains to the extent that only lets with no reserve price received offers at a recent auction organised by A Place in the Sun magazine.

Read more about New residences that have recently been completed are the best kind of real estate in Spain by www.propertyshowrooms.comKnown as key-ready homes, Martin Dell of Kyero commented: "The difference is that these properties are available direct from the developer - who need sales to prevent the banks from takingpossession."

These are better bets than repossessed lots being bought from banks, as developers are able to process matters faster and "negotiate from a more realistic property valuation", he added.

Read more about New residences that have recently been completed are the best kind of real estate in Spain by www.propertyshowrooms.com

Property Prices in Spain More Pain

0% and have only dropped 10%. The biggest house price falls to come are likely to be in the holiday hotspots where many overseas buyers have bought and will be lead by the Banks.

Banks are now Spain’s biggest property owners having repossessed property as loans went bad. Bank owned property is often lower priced with huge discounts available however BNP Paribas Real Estate, the real estate arm of French bank BNP Paribas, argues that banks in Spain will start having to offer discounts of 50% in 2010 to shift some of their stock of property.BNP Paribas Real Estate says present discounts not big enough to make sales.

The price drops could well be lead by the Banks who are now the biggest owners of Spanish real estate. BBVA, Spain’s second largest bank says that Spanish property prices were 30% over-valued, but have only fallen 10% so far.

Pundits suggest that the biggest Spanish property price falls will come where they are the most unsold homes. That could mean that areas around Madrid and Spanish hotspots such as Malaga (Costa del Sol), Castellon (Costa Azahar), and Tarragona (Costa Dorada) could see cut price Spanish properties in 2010

Spanish banks need to offer huge price discounts in 2010 to sell off massive stock of properties

Banks in Spain, now the country’s biggest property owners having re-possessed so many homes, will have to offer discounts of up to 50% in 2010 if they are to shift their stock of real estate, according to a new report.

Current discounts are simply not big enough to interest buyers, says the report from BNP Paribas Real Estate, the real estate arm of French bank BNP Paribas.

The prediction comes as analysts point out that it could take years for the Spanish property market to recover. According to Acuna & Asociados, highly regarded Madrid real estate analysts, it could take six or seven years just to clear the huge numbers of empty homes that won’t sell.

The firm’s annual report indicates there are 1.67 million properties for sale in Spain including 500,000 new builds, 500,000 resales and the rest are buildings that have yet to be completed.

Indeed, the latest report from BBVA, Spain’s second largest bank, also indicates that a recovery will be slow and drawn out over several years.

Spain’s Zapatero Says Economic Recovery “Imminent”

MADRID – “The growth train is very close,” Spanish Prime Minister Jose Luis Rodriguez Zapatero said on Thursday, announcing measures to improve economic competitiveness and labor markets in a country where some 4 million people are unemployed.

“If we do what we should and rigorously apply all the reforms in progress, this train will increase its velocity until it acquires that necessary to restore job creation,” the Socialist premier said in Madrid before leaving for Brussels to attend a European Union summit.

He pledged to push changes aimed at ensuring the long-term stability of Spain’s pensions system, as well as labor market reforms that “strengthen companies without weakening the workers.”

Conditions Worsening In Spain's Real Estate Market

Costa Blanca, Spain

Spain’s house price bubble burst a long time ago. The Bank of Spain’s figures say the peak was in early 2008 (based on official valuations). Realtors say the peak was in mid-2007 (based on offers-for-sale). Whichever is true, two years later, in Q3 2009, Spanish house prices continue to fall.

Official figures show the average price of houses in Spain at €1,903 per sq. m. in Q3 2009; down 0.94% from the previous quarter, 8% from the same period last year, and 9.45% lower than the March 2008 peak (Bank of Spain data). In inflation-adjusted terms, house prices were 0.52% down on the quarter, 7% on the year, and 10.58% from peak.

Spain 'to see return of investors'

Spain should see property investors returning in large numbers after experts said the market there has reached its bottom.

Writing for Spanish real estate portal Kyero.com, Martin Dell said the "word on the street" is that the period of falling prices is over.

He also noted the comments by Knight Frank last week that the market has stabilised - although price rises will have to wait until 2011.

Spain emerges as commercial property hot spot in europe

The commercial property market in Spain is attracting an increasing share of the European real estate investment market, it is claimed in a new report.

The commercial property market in Spain is attracting an increasing share of the European real estate investment market, it is claimed in a new report.

Spain shares many of the qualities that are currently attracting investors to the UK commercial real estate market, according to new research released by property consultants CB Richard Ellis.