Distressed sales equals bargains in Tenerife
Whilst investment banks have been busy snapping up distressed Spanish assets for millions since the credit crunch first darkened our doors, there is also an opportunity for those on smaller budgets to benefit from distressed properties, especially in Spain and Tenerife where there is also a wealth of them…
Last year, investment banks, including the now defunct Lehman Brothers, were desperate to get their hands on distressed Spanish assets.
The credit crunch meant that big discounts were on offer for investors who would take on troubled assets or companies and the banks took full advantage, buying up million of pounds of distressed senior bank debt. Lehman Brothers also bought stakes in a defaulted senior bank debt agreement and other non-performing loan sales.
Why Spain?
Spain quickly became the central focus for banks, who viewed the Spanish market as full of opportunity. Whilst the Spanish economy was faltering after ten years of boomtime, with house prices stalling after years of meteoric rises; food and oil prices rose, meaning many Spanish and Canarian locals were in trouble, businesses were shutting down and homes were being repossessed. This meant that distressed assets were ten-a-penny.
Individual buyers eye repossessed properties
Spain and Tenerife has long been the number one European destination for British buyers and hundreds of thousands of Britons happily already own property here. But, due to the decade long property boom having come to an end, the property market is now saturated with apartments that won’t sell and developers that are desperate to offload them.
Some off-plan property investors have a desperate need to sell before completion as either their circumstances have dramatically changed or they exchanged/completed on properties they could not financially keep, with the sole intention of flipping.
Thus, they have a choice. They can either sell the property for far less than market value, which is a distressed sale, or they can have the property repossessed by the developer or bank and forgo their original deposit.
Either way, they are in trouble and with trouble comes opportunity. Many estate agents claim distressed homes currently represent the ‘best value’ in the country for those looking to buy a home abroad.
Distressed properties can come with discounts of up to 40 per cent and there are many available in sub-prime hotspots, where developers have been faced with a glut of unsellable apartments.
Duquesa on the Costa del Sol and Torrevieja on the Costa Blanca are two such areas. Spanish savings bank Caixa Catalunya has estimated up to 500,000 newly built properties remain unsold. In Tenerife, Adje has some great bargains at present and Arona generally has opportunities if you are prepared to look.
If you want more information, why not check out agents such as Tenerife Prime Property or visit the Tenerife Property Guide for up to date news on all the available properties, whether domestic or commercial, for sale or rental investment. Many of the issues involved with buying “distressed property” and what to expect from such a sale will be explained, and relevant Spanish real estate terms and common sources of distressed property will be knowledgeably covered by a reputable agent or property portal such as these mentioned.
