@Peter Good wrote:
flosmichael, if land is withdrawn from the market, then the value is irrelevent. If a bank sits on that land.
Eg. 100,000m2 land value in 2008 for sale at €15,000,000 with a mortgage of €9,000,000 is withdrawn in 2009 valued at €8,000,000. Then re-offered and sold in 2014 at €17,000,000 equates to a profit of €2,000,000 if the developer still owns it, or a profit of €8,000,000 if the bank sells it. Minus some costs of course.
What I am trying to say is, that is how the Spanish think, especially the banks holding the mortgage for that land.
In the UK, the banks would foreclose and sell the land at €5,000,000 creating a loss of €4,000,000 on their balance sheets.
Why should they be so hasty?? The Spanish banks think more for the future, they have already bought some silly bargain UK banks as we all know.
Peter, if they can afford to moth-ball the land and hold till the market booms, then I perfectly agree that they will never lose.
But then the question would be what happens to the developer’s losses? Who is keeping these losses in the books till (say) 2014? Banks?
If banks hold the losses till market recovers, why do some developer go bankrupt and others not? Why did Fadesa go into administration? Were they on the wrong side of the political spectrum?