Posts in Category Real estate market
29 June, 2010 No Comments
All the media are reporting that the bank has refused to refinance the debt and has not accepted the plan submitted by SACRESA, which in its attempt to become one of the largest Spain real estate entered into an excessive debt (with the purchase of Metrovacesa), which has led it in an economic collapse situation.
To undertand how this could happen in 3 years, to be on the top of the top ten ranking real estate companies to fall into insolvency, it is necessary a bit of company history and the evolution of its growth.
Like other real estate developers, Sanahuja’s family company began building homes in Barcelona due to the high emigration suffered by this city and its industrial belt during the 60s. From building blocks of flats in popular neighbourhoods went to make bigger real estate developments. In recent years, they have been present in large transformation projects of Barcelona, like Illa Diagonal, Basketball City Badalona, the shopping center Les Arenes and the underway project Porta Barcelona, next to residential area of Barcelona. After that, their expansion covered the rest of Sapin to go ahead in the foreign market.
Sanahuja entered the capital of Metrovacesa, a company owned by Joaquin Rivero and, to gain control of the company displacing Rivero, winning the presidency and control 80% stake in the compoany. It had to assume a debt of close to € 6.000 million. This project went wrong when the bank not allowed the fusion of Metrovacesa and Sacresa; this union would hace made more affordable the debt incurred by Sacresa, all further aggravated by market crisis and the current slowdown in sales.
After having take Metrovacesa’s control, with 80% of capital (which he lost a year later), began buying important product based on debt, and do went to buy the headquerters of HSBC bank, one of most expensive buildings in Europe by € 1.600 million, competinfçg with a major Saudi group.
Perhaps one of their mistakes was not looking at the value of what they bought, and so again Metrovacesa resell HSBC bank tower a year later by € 1.000 million. But there have been billions of euros that became an unsustainable debt that has led to this situation.
Sources: La Vanguardia, Expansión and Cinco DÃas newspapers.
27 June, 2010 No Comments
The reverse mortgage becomes a formula created for retirees supplement thier pensions, so that older homeowners may obtain some extra money by charging an annuity, in exchange for their home, without sacrificing ownership or use thereof.
The requirements of the law are:
- That the applicant and the beneficiaries are 65 or older or are suffering from severe dependence.
- That the property on which the mortgage is either the main residence.
- That the debtor of the loan amount available through any regular or unique.
- That the debt will only be payable by the creditor when dies last borrower.
- That the property was rated ans insured against damages.
With a reverse mortgage, homeowners can continue living in their home, without having to leave it, until their death. This assures that they will remain owner of the property.
When the owner of mortgage dies, his heirs may get the house, returning to the bank the payments it has made the mortgage more interest. It corresponds to the heirs liquidate the situation with the credit institution. In this case, the institution can not demand any compensation for the cancellation of the mortgage. Once they have paid and the heirs have released its load housing mortgage, can inherit it in the same way as any other good.
If the heirs do not want or can not cancel the mortgage, the institution may foreclose and collect the debts due more interest. But the agency may only collect the goods they have in the inheritance, without being able to collect anything from the personal capital of the heirs.
In this type of mortgage, the homeowner receives a periodical payments or a single payment for a maximum amount, which determines the percentage of the valuation at the time of the mortgage creation, and to reach that figure, they stop have income, but the debt continues to generate interest.
4 June, 2010 No Comments
Walking in frotn of the old building BANESTO in Plaça Catalunya of Barcelona, 10-11, corner of Passeig de Gracia, you wonder what fate awaits it and who will be the next owner …
Maybe back in the hands of banks or funds that were in Spain and it seems to slowly come back, or perhaps some FO … Of course, the building’s location is unbeatable.
It is another building in Barcelona that seems to always been there, and it becomes uncommon to see the state of neglect in which it is now, pending a settlement of the bankruptcy that is immersed in the present owners, Monteverde Group Ballester and real estate from Valencia.
Still have hung posters where it began to advertise the future promotion. Projected starting any building project in the short term this is not feasible, therefore, what happens is most likely decline over time which gives a bad image to the thousands of tourists who visit Barcelona in general daily.
This unique building was acquired in 2006, worth approximately € 100 million for the Monteverde Real Estate. This Valencian real estate gruop, together with the group Ballester, formed the partnership society Andybal for the rehabilitation of buildings in privileged enclaves, with the acquisition of buildings in Madrid and Barcelona, for the promotion of exclusive homes. In this case it was a construction project of 52 exclusive apartments with parking, but the resulting paralysis of the real estate market led the project, like many others, would slow down at first, then stopped altogether.
Currently the building is already in the market for a potential buyer.
Another building also for sale is a former hospital dated from s.XV, in Barcelona city center, which is at an advanced stage of rehabilitation, respecting the old structure which has a central cloister surrounded by arches. The project was to make a small hotel, even luxurious, but the owner’s heirs decided to sell it.
However, due to the evolution of the current economic situation, the few aid given by banks on credit or mortgage, plus the uncertainty in the price of current market value of the property, make purchase transactions be difficult to be reached.
2 June, 2010 No Comments
We have been seeing for several months, studying, analyzing past, present and future problems of housing market.
Rarely could be made an optimistic forecast about it. But maybe today I would at least contribute something more positive after having reflected on past crisis.
… And considering some of the ideas of Warren Buffett, the Oracle of Omaha, which broadcasts to their customers / shareholders, where:
- It makes the anticipation that the U.S. housing market in 2011 will be out of the crisis, although prices are not still the ones of 2005.
- Advises that people always has to have a good cash position to take advantage of investment opportunities when they arise.
- Indicates that it is much better to invest in business models, which are easy to understand.Â
ABOUT HOUSING, if we make a historical note that after previous downturns, people in general turned to buying a house or brick, whether to make a safe investment, have wealth in their old age, leave a legacy or make a donation their children.
For any reason whatsoever, prices are now falling. The problem is not to know if we bought an appartment or brick which is purchased from a market price today and is well bought, or bought only half right, since it is difficult to set prices in today’s market, in recession, because today taxation prices for sure in a month or two are no longer valid, and in most cases should be aware of the offer that makes you a potential purchaser to come to negotiate.
The good idea is to have purchased at the time the market price was low, so that in time, as happened after the other crises, we may see that real estate property will be worth double or triple.
I’m just speaking from the point of view of the experiences had during the time and that is expected to be repeated within + / – long time, as the housing market is cyclical, plus being one of the engines of our economy.
But always thinking in case that a real estate purchase has been made with an accouracy study, for example, in a city like Barcelona, buying in any of the areas that usually have been easy to sell, foreseeing that in future there will still be enough demand (in streets such as Passeig de Gracia, Diagonal, etc.).
ABOUTÂ CONSTRUCTION OF HOUSES, reflecting the thinking that makes Garcia-Montalvo, economics professor at 23.05 Vanguardia, whether it is right to build in a place where there are many houses to sell, the immediate response that comes to the head is not.
But he believes it, and the example is Las Vegas, where despite having a large portfolio of empty houses, and prices suffered a decline of 60%, construction has doubled. And the trick? since the fall of the price of land and construction costs of the new homes are very competitive against surplus product already on the market.
This is a warning to Spanish developers who have not reduced prices below the mortgage value.
… Let no one take it as a council to follow, since it is only my view … a feeling + the history of past crises + the pulse of the street + how to invest today for wealthy + opportunities market price + Euribor down + …
After having take Metrovacesa’s control, with 80% of capital (which he lost a year later), began buying important product based on debt, and do went to buy the headquerters of HSBC bank, one of most expensive buildings in Europe by € 1.600 million, competinfçg with a major Saudi group.
