Spain and its property sector are paying dearly for the mistakes made during the last boom. Lorenzo Castilla, the Sales Director of ANIDA, the property division of BBVA – one of Spain’s biggest banks – claims the sector now operates along more rational lines, but suggests we mustn’t forget the lessons learnt as a new cycle begins. The priority is to build to satisfy demand, and avoid over-supplying the market.
The property sector has changed beyond all recognition since boom turned to bust, Castilla recently explained in an interview organised by Inmonext, a real estate industry discussion forum run by the Spanish property portal Idealista.com (see above, interview in Spanish). In the boom years the priority was to build as much as possible. Today the priority is just to satisfy demand.
“The Spanish property market has gone through several phases,” says Castilla. “At first the priority was just to build, because everything that was built was sold. Later, activity started to focus on the quality of the product because it wasn’t enough to produce any old product, not everything was acceptable.”
Then came the liquidation phase, when the sector tried to “sell everything available that had not been sold in the past.”
Now we are back on a rational footing, he argues. “Nowadays, the sector is finally behaving sensibly. It appears to have learnt the lessons of the past, when coherence was conspicuously absent, and now we’re paying the price for this”.
For the moment, the sector is focused on building to satisfy needs. “If you build what’s needed, the product works. So this time it’s not about covering Spain with cranes again, but starting viable projects,” he stresses.
There are already new developments underway with sound fundamentals, he points out. “There are many examples in new areas with high demand, which makes sense,” says Castilla. BBVA Real Estate itself is studying 25 new developments with a total of 2,000 homes, to add to its 12 project (630 new homes) currently underway.
BBVA Real Estate itself admits that it’s looking at 25 projects to build around 2,000 homes. These plans are in addition to those it carried out during the crisis year (11 projects with 650 properties) and those it’s currently building (12 projects with 630 homes).
“What we need is to regenerate the productive core of the property sector with players who are rational, coherent and who present sensible projects,” says Castilla. “To do this, we need to research and study the market, and get to know and understand the client to be able to produce something that really answers their needs”.