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Property bus revs Spain's stalled market
27 June 2009 @ 16:23

MADRID, June 26 (Reuters) - Spanish banks and builders desperate to get rid of unsold buildings are jumping on board a new scheme to offload it -- a bus tour showcasing property so cheap that sellers don't want to be identified.

Under the strict cover of anonymity so as not to appear desperate, banks selling defaulters' assets and builders on the verge of going bust have teamed up with canny entrepreneurs to shuttle investors around blocks of flats, empty shops and offices being offered at half price or less.

The idea, which organisers say is the first of its type in Europe, has already been running for 1-1/2 months around the resort town Marbella and has sold 20 percent of the properties on its books -- not bad for a market that has been virtually paralysed for the past year.

"It's such a simple idea and just snowballed," said Africa Leon, whose promotions company Circulo Financiero Internacional organises the tour.

The first stop on Thursday's inaugural Madrid bus is a block of 20 flats near the city centre, selling for between 160,000 and 200,000 euros -- half the original price tag.

The building was repossessed from the developers by one of Spanish savings bank, known as 'cajas', which have been badly hit by Spain's property market collapse.

The tour went on to two vast apartments in the up-market Salamanca district of Madrid, a 2,000 square metre shopping centre going for 9 million euros and another block of flats.

Victoria Ansola, a property consultant who normally seeks out Costa del Sol apartment blocks on behalf of German and U.S. funds, was a fan of the bus.

"It's comfortable, they take you around, you can get five appointments in an afternoon, and then you can return and negotiate," she said.

 

POWER TO THE PEOPLE

Anyone can get on the bus and lawyer Emilia Zaballos, who specialises in organising young people into buyer groups with greater clout, said the idea could change the old rules of a game that has favoured professional investors up to now. "It's totally innovative. This is not just for investors. Anyone can access these kind of bargains. Who normally gets access to these things? Up until now those with the information and the money."

From 1997 to 2007, Spanish house prices tripled on a wave of domestic and foreign speculative buying. Official statistics showed a 5.4 percent decline in the fourth quarter of 2008 but market players say these figures underplay the retreat in prices which has, in any case, greatly accelerated in 2009.

Property companies' biggest problem is slow sales.

Zaballos said seven builders and real estate firms had filed for administration at her small practice in 10 days alone -- straddled with debts and without income as banks refuse to offer mortgages to buyers they had already signed up. (Reporting by Ben Harding; Editing by Karen Foster and Andrew Macdonald)

Source: Reuters



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