SAREB to speed up Construction of abandoned Costa del Sol Properties to meet Demand

Increased demand for holiday homes at the Costa del Sol, particularly in resorts like Marbella, has prompted Spain’s “Bad Bank” SAREB to speed up building works and complete construction projects, where hundreds, possibly thousands, of half-finished holiday homes were abandoned by bankrupt developers. According to Antonio Vargas, the head of Malaga’s Colegio de Arquitectos, the Malaga province alone has ca. 40,000 unfinished homes.

While the idea to finish such projects is appreciated by industry experts and potential holiday home buyers alike, Mr Vargas pointed out that completing a mere 116 of such abandoned homes is a mere “token gesture” and SAREB needs to make far greater efforts.
 
The first of many more to come?

There has been some considerable debate among industry experts of how many such homes are actually still cluttering up the Malaga province. While Antonio Vargas believes there are 40,000 of them, Pedro Marin Cots, the director of Omau (“Observatorio de Medio Ambiente Urbano”), believes there are just 3,000 unfinished homes in Malaga province and that SAREB will complete them in due course, because demand will force them to do so.

So far SAREB has confirmed they will complete a total of 2,857 unfinished homes in 36 provinces across Spain at the cost of EUR 107 million. This move aims to reduce the debts Spanish banks accumulated during the crisis and is part of the deal Spain struck with the European Union when EU finance ministers granted bail-out funds to Spain’s nine nationalized or restructured banks.
 
The increased demand by international buyers looking for affordable holiday homes along the Costa del Sol has prompted SAREB to take a much closer look at stalled building works. SARED was formed in 2012 to deal with the enormous number of repossessed homes that Spanish banks had taken in exchange for unpaid loans, when the Spanish property market collapsed at the end of 2007 after two decades of unequalled growth.
 
The 116 homes at the Costa del Sol are spread across two projects; around 100 of them are allegedly sitting idly in a residential estate in Casares in the Malaga province. Already 80% built and in the final stages of construction – some of them need just a lick of interior paint, a phone or electricity connection – these homes are expected to enter the market early next year. Work will start on them this July and works are scheduled to complete by the end of 2014.
 
Resale versus New

What perhaps surprised many industry experts most were the changes of buying behaviour, when the crisis struck.
 
While before 2007 the Spanish property market had been driven by sales of new homes, this shifted with the deepening of the crisis. Resale homes were typically over-priced but when desperate vendors finally understood the new market conditions, they adjusted their asking prices accordingly and as a result, second hand homes began to outperform newly built homes in many parts of the Malaga region.

Buying a second hand property often came with advantages such as mature landscaped gardens and service providers like pool cleaners and gardeners already in place. Many permanent home owners threw in the furniture as part of the house sale package, as they sought to realise whatever assets they had left before leaving Spain for good.
 
In brand new urbanisations holiday home owners often felt abandoned, without shops, service providers or other amenities, as developers who were still afloat financially sought to minimise on expenses and finish off their construction projects as fast and as cheaply as possible.

The greatest obvious advantage of buying resale is still the asking price, for one can buy a holiday home for half the price of a new one in many parts of the Costa del Sol, even in Marbella. And this may well force SAREB to sell their 116 new homes at a very competitive price just to part with them quickly.