“Land has gone from being the safest of bets to the riskiest” says The Economist magazine about Spain in an aticle titled “Hard Landing” in its latest edition.

“HOW bad Europe’s debt crisis gets depends largely on Spain, which would be much harder to rescue than smaller economies like Greece. How bad things get in Spain depends largely on the banks, which are already trying to find an additional €15 billion ($21.1 billion) to meet new capital requirements imposed by the government. And how bad things get for Spanish banks depends largely on the country’s unfolding property bust. Nestling at the heart of these worries is land.”

The article also points out that banks are exposed to more than €100 billion of land, whilst total Spanish land transactions were just €4 billion in 2010.

In conclusion The Economist says “Many banks are carrying the land on their books at higher prices and are reluctant to sell at a big loss. Even those lenders that have braced for big losses—Spain’s biggest bank, Santander, has provisioned 35-40% of its acquired land, for instance—may need to set aside more. Just how much more is a question with ramifications well beyond those empty tracts of Iberia.”

+ Read the full article at The Economist (might require subscription)