Spain’s Banks Renewing Homebuilder Loans as Sale Rate Rises

graph bloomberg 01.05.16  Some Spanish banks are advancing more loans to home builders and cutting their borrowing costs, eight years after they froze credit for construction as the nation’s property bubble burst.

CaixaBank SA, Spain’s third-largest bank, will this year lend 1.4 billion euros ($1.6 billion) for developer financing, more than twice the amount in 2015, the lender said. Banco de Sabadell SA gave 850 million euros in loans to build homes in Madrid and Barcelona last year as the value of some new-builds rose as much as 10 percent, said Joan Bertran, head of real estate investment at Spain’s fifth largest bank.

“We foresee that new supply won’t keep up with demand and that will translate into healthy house price growth for these new-builds,” Bertran said in an interview. “Now is the best moment to finance and we want to gain share in this market.”

Madrid and Barcelona will lead future gains, according to Philip Wedge-Bernal, a London-based residential research analyst at Jones Lang LaSalle Inc. House prices in the nation’s capital rose 7.5 percent in the first quarter from a year earlier and 9.7 percent in Barcelona, according to Tinsa, Spain’s biggest property appraiser.

Ignacio San Martin, chief economist for real estate at Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest bank, says the country’s real estate market is luring international investors as falling unemployment, higher disposable income and record-low borrowing costs boost demand for homes and propels prices higher.

CaixaBank forecasts that Spain can build between 100,000 and 280,000 new units per year in coming years compared with just 39,891 units last year and a peak of 597,632 in 2006.