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DELAY IN<br />
DEVELOPMENT<br />
LAUNCHES<br />
HOUSING<br />
PRODUCTION: BACK<br />
TO THE PAST<br />
TIGHTER<br />
FINANCING<br />
CONDITIONS<br />
DEVELOPERS AND THE NEW<br />
SITUATION<br />
As already mentioned, developers will postpone the<br />
launch even of developments for which they already<br />
have permits and will be much more cautious about<br />
starting the marketing phase.<br />
We also expect the financing conditions for developers<br />
to be tightened, not only as regards the required levels<br />
of pre-sales but, more importantly, through greater<br />
flexibility for banks to allocate the loan amount among<br />
units sold and the rest of the units in the development.<br />
For some developments these tighter conditions may<br />
adversely affect business plans if the market performs<br />
below expectations.<br />
Note that this bank financing trend reflects Spanish<br />
banks’ expectations regarding future sales of new<br />
developments and the likelihood of difficulties in<br />
selling all the new-build units over the next few years.<br />
OTHER PLAYERS - COOPERATIVES<br />
AND JOINT OWNERSHIPS<br />
The scope for cooperatives and joint ownerships<br />
has expanded in the crisis, as the competition<br />
among developers for land has weakened. The<br />
possibility of taking an option on a plot of land and,<br />
over time, setting up a cooperative with sufficient<br />
members to meet the targets for bank financing has<br />
thus re-emerged.<br />
Joint ownership can also be an attractive option for<br />
housing development, though to a lesser extent and<br />
mainly for luxury housing, at below market prices.<br />
Copyright © 2020 Colliers International Spain. All rights reserved.<br />
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