29 Sep 2012

Land market liberalization urge

Tags: liberalization, property price, real estate market,

Land market liberalization urge

Land market liberalization urge

The Spanish Government has just created a new Real Estate Management Commission which aims two main goals: selling all toxic assets in the next 10-15 years and reaching a positive value for taxpayers.

Steps intending to activate the Real Estate market and cleaning the Spanish banks are already fixed: the Council of Minister has already approved the financial reform, expecting positive changes before the end of the year.

This management commission, known as the bad bank, should absorb toxic assets from recently nationalized troubled institutions (Bankia, Caixa Catalunya, Novacaixagalicia and Banco de Valencia) and shall be responsible to sell them at a reasonable price avoiding possible devaluations.

The housing sector reminds the importance of this issue: as these are nationalized entities, a potential devaluation may affect every single public institution.

The bad bank should have room to maneuver, with a specific budget and able take on debt. It should be supported by a private shareholder, with a little presence of the Restructuring Bank Fund (FROB), which should supply some expertise and help to the new Commission.

The main goal is to curb risks and boosting safer property investment in Spain.

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