Real-estate challenges in 2012

The Spanish real-estate market faces challenges in 2012 with further financial reforms expected to increase pressure on the banks real-estate portfolios.

This is according to Trends 2012, a survey carried out by CB Richard Ellis (CBRE), which talked to over 200 executives across the sector, all of whom agree that Spanish banks’ surplus stock must be moved before the country could begin to emerge from the crisis.

Of those interviewed a staggering 91% agree that Spain’s banks are not dealing with their real-estate portfolios adequately, and a further 60% think those portfolios will grow during 2012.

Sales figures in 2012 are likely to be similar to last year but smaller deals will be more popular as the corporate and public sector seek to cut costs. Currently, properties in the 100,000 to 120,000 euros price range, with finance available, are seeing the most movement.

“The main task for Spain’s public sector in 2012 is to reduce costs, and in order to do so they need to optimise and manage their real estate assets,” explained Eduardo Fernández-Cuesta, president of CBRE Spain.

“The key to the sector’s recovery is the necessary rationalising of banks’ real estate portfolios. The measures taken by the central government, obliging the banks to amortise assets, point the way forward, but there is still much to be done. The restructuring of the financial system will return confidence and credibility to the real estate sector.”

Experts predict house prices will continue to fall in 2012. However, prices in Madrid and Barcelona are now falling slightly slower than in 2011. Property prices on the Costa del Sol continue to plummet and experts think this will not change until the banks’ surplus stock is reduced.