Major analyst sees value in property in Spain

  • 13 years ago
  • Uncategorized

One of the world’s leading property  analysts believes that the property market in Spain will ‘bottom out’ within the next year, leading to excellent opportunities for investors looking to snap up Spanish property at a bargain price.

JP Morgan Chase & Co believes that property in Spain will reach the bottom of the cycle in the next twelve months before starting to recover.

Banks looking to offload distressed property in Spain

The property boom in Spain ended in 2008 as the global financial crisis took hold.  In the final quarter of 2010, Spanish banks were left with 315.8 billion euros (£276.6 billion) in loans related to real estate.  Many banks were forced to take on land and property as assets in return for cancelling debt and loans to developers who had gone bankrupt, according to the Bank of Spain. 

Banks also had millions of euros of property on their books that they had repossessed when buyers couldn’t pay their home loans.  This has led to widespread concern amongst investors as to the state of health of many leading financial institutions in the country.

Spain’s Finance Ministry recently announced new capital requirements that banks will have to meet by September and this is likely to result in lenders selling off property assets in order to boost their capital. 

These rules have resulted in many banks relaxing their lending criteria for distressed property with many now offering up to 100 per cent mortgages to encourage people to buy homes.  Selling distressed property also removes it from a bank’s balance sheet.

‘Banks are more willing to cut a deal than they were six months ago,’ said the investment bank who believe that prices in Spain will start to recover in due course.  In a note to investors, JP Morgan said: “There is still some way to go, given the large overhang of land, further write downs to come and further de-gearing by property companies and banks.”

Compare listings