The President of the Madrid Property Developers Association (Asprima), Juan Antonio Gómez-Pintado, says that mortgage credit is the “Achilles Heel” of the Spanish property building sector recovery, in comments to the Spanish press.
Gómez-Pintado claims (pictured) that things are starting to move in the building sector, although still at an insipid pace. The big obstacle is the availability of mortgage credit because, as he pointed out, it’s an intrinsic part of property development.
Gómez-Pintado explained that lenders now use far stricter conditions than before, which he suggested is a good thing as it will lead to a healthier allocation of capital.
Developers now have to rely on their own funds for land purchase and initial development, as they always used to before the credit splurge of the boom meant anyone could get into development without any capital or experience.
In addition, certain pre-sale targets now typically have to be achieved, varying between 30 and 60 per cent, depending on the bank and the client, before developer scan get a mortgage. Furthermore, a certain amount of construction has to be completed (between 15 and 20 per cent).
Despite far stricture, some would argue healthier, lending criteria for developers, Gómez-Pintado believes that “2015 will almost certainly be the year of recovery” and that a steady speed will be reached in 2016.