Jaime Echegoyen, The President of the Sareb – Spain’s so called Bad Bank – says there are emerging signs of stability in the Spanish property market, but only in certain segments.
As President of the Sareb “Bad Bank” – the institution in Spain with the most property and related assets to sell – Jaime Echegoyen has a bird’s eye view of the Spanish property market. Speaking at a recent conference organised by Europa Press and Servihabitat – a real estate servicer – Echegoyen said that 2014 was a watershed year, marking a “before and after” for the Spanish real estate sector.
“We are beginning to see cranes again,” he observed, whilst stressing that building activity is nowhere near the level reached before the crisis, a level that he was at pains to point out “will never be reached again.”
Admitting that “Clear signs of stability are starting to appear, with recovery in some parts of Spain and types of assets,” Echegoyen also stressed that there is no cause to “jump with joy.”
“It all depends where you look,” he went on to say. Recovery is well underway in prime Barcelona and Madrid, but “there are many other places where that [recovery] is not happening.”
Echegoyen warned against nostalgia for the boom years, when the real estate sector accounted for 15% of GDP, which he argues will never be repeated. “Forget those ‘glorious years’ because, amongst other things, they put us where we are now.” In many ways the boom years were a disaster for Spain.
On the other hand, he also pointed out that the market today is still a long way from a normal level for a country the size of Spain. “When you look at the averages, we are a long way from reasonable prices and transaction levels,” he said.
Asked if he thought there was a risk of another property bubble in Spain, Echegoyen said that bankers have “learnt from their mistakes,” suggesting they will never again inflate a property bubble with reckless lending.
Also present at the talk was Julián Cabanillas, head of Servihabitat (La Caixa) – a bank real estate servicer – who agreed the real estate market is “starting to stabilise by zones.” He reported that demand for second homes, in particular, is growing, cranes are starting to appear again on construction sites, and over the last year and a half land sales are taking place “at an ever increasing pace.”