Spanish Real Estate Prices Near Bottom, Santander CEO Saenz Says
Banco Santander SA (SAN)’s decision to “retract” as much as 1 billion euros ($1.3 billion) of provisions to cover property price declines may show Spain’s real estate market is close to its lowest point, Chief Executive Officer Alfredo Saenz said.
Santander, Spain’s biggest bank, set aside the funds for for this year to cover the risk that price declines would accelerate. The bank is “retracting” the provision because it now doesn’t expect it will be needed, he said today.
“If it hasn’t reached bottom already, the room that remains for the real estate market to fall is very small,” Saenz said at a news conference at the bank’s headquarters outside Madrid.
Santander’s upbeat outlook on Spanish house prices contrasts with other commentators who point to the weak state of the economy as evidence that further price declines are inevitable. Moody’s Investors Service said this month that house prices would continue to fall for at least five years.
Santander set aside extra provisions at the start of the year because it “subliminally” thought that Spain’s bad bank, known as Sareb, set up at the end of last year, might drive down prices, Saenz said.
“We don’t see that Sareb is having an effect on prices,” he said.
House prices have declined 36 percent from their April 2007 peak, according to the real estate website Fotocasa.es and the IESE business school in Madrid. Santander’s net holdings in real estate fell 47 percent from a year earlier as it sold 4,500 properties in the first quarter, the lender said today.
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