Should the "bad bank" demolish or finish the properties?

 Having read the other day about  Spain's Bad Bank deciding to spend €500M on demolishing unfinished properties and properties that can't be sold,  I was wondering what everyone's take was on this, should they really demolish them or just leave them so they can be finished in the future. What do they really gain by demolishing them?

Here is a link to an article that was posted here the other day

www.eyeonspain.com/blogs/SpanishBusinessNews/8569/spains-bad-bank-to-allocate-500-million-euros-to-demolishing-properties.aspx

 God yes.  Some of it was junk going up - overpriced rubbish in the middle of nowhere.   People were bounced into putting deposits down on the promise of loads of facilites 'in house'.     There are ghost towns which resemble outmoded council estates from the 60s and it will be a blessing to everyone when they go - they will never be occupied.   Some will say that the local community would have benefited, but from what I have seen of ex pat living - most people would only have remained in house, and contributed very little to the actual Spanish community.

I will go to watch the demolition of Almanzora Country Club, and Tabernas Oasis and applaud!!!!

 Bank in Spain are a lot to blame for the situation with the unfinished building of homes, They are the ones that encouraged the so called builders by giving loans without sufficient checks.

I have an apartment bought an apartment in a complex which is completed. The builder has cheated many of the purchasers by taking fees for the completion of the building which he later removed some of the expensive equipment like the service water pumps to all floors & lift contract although the lift is installed and was working when we purchased + Many areas of unfinished work.

The Bank now ownes 18 apartments and after 6 years we still have the same situation, No Habitation certificate, No utility Meters, The Road has no completed surface. Much of this is because the local council are unable to provide us with the Habitation certificate. ?

The Builder & the Bank have tenants who rent, living in the completed apartments the Bank & Builder own. The 14 Private Owners who are French, UK & Spanish citizens, who live in fear of the antics of the Builders tenants who abuse the facilities like the Swiming Pool etc. 

Many of the private owners would like to become residents but fear the move to Spain will be the wrong move to make.

To finish the inside of apartments they own, the Bank would then be able to sell the apartments, the lack of Habitation certificate must be holding up the process. 

Who will pay the Private owners for the loss of the homes they purchased if the complex were to be demolished. The Private owners seem to be in a no win situation. 

I speak as a very frustrated real estate business owner who has to deal with the Spanish bureaucracy and bullshit every day!

These government officials, politicians and civil servants (which make up 60% of the workforce) need to realise, people come to Spain for the sun and not to be ripped off!

Why don't they spend a lot less money and issue the first occupation licenses on the 30,000 properties around Marbella which do not have them, despite people living in the properties for the past 12 years and paying tax to the corrupt government each and every year!

The utilities such as water and electric are not supposed to be contracted unless a first occupation license is issued, however the government took the transfer tax and continues to take taxes, however a lot of these people cannot sell because lawyers instruct buyers not to, funny as these are the same lawyers who took their fees when acting for the original purchasers!

It would be SOOOOOOOOOOOO easy to resolve the property issues as there are still plenty of people wishing to purchase in Spain it's just that they do not trust the Spanish or the Spanish systems and government!

They expect people to pay a 10% transfer tax simply to buy a property from January 2013 and what do you get for that?.... f**k all!

It is very simple, issue the first occupation licenses for all the developments where people are living and paying their taxes and reduce the transfer tax on purchases, then watch the people come flocking back to buy, it's not rocket science!

As for the unfinished developments, I agree with "Moncapitan", auction them off to the highest bidder with a stipulation they have to be completed within a certain timescale (so don't sell them to a Spanish developer), then issue them with a first occupation license so they can be sold legally, that will create jobs and generate tax revenue at the same time!

Why on earth spend €500m of tax payers money, sorry EU bailout money, on something which could easily earn you more than €500m!

Is it any wonder the country is in the shit!

Only an idiot socialist would actually spend money to destroy assets/wealth.  

You couldn't make this kind of stupidity up.

I agree with kengolfer and moncapitan.  It's a pity these messages can't go to the top.  The idea of auctioning off to the highest bidder is a particularly good idea, combined with kengolfer's ideas.  It does make you despair that they can engage in such a destructive 'solution.'

 Surely it would depend on the type of property and where it is?  Not 10 miles from here is an estate that had the roads completed, the signs painted and erected and half a dozen properties started.  The roads are now covered in weeds and trees, the buildings are crumbling, the fences are dilapidated and the whole area is an eyesore.  This is the type that should be bulldozed straight away.  Another one, similar, has already been destroyed and the new La Zenia Boulevard built on top.  Others look habitable but remain unsold as the builders went bust.  Those could be taken over if the local council ever got around to issuing habitation certificates but, as at least 3 communities have been lived in for over 10 years and still have no such certificates I wouldn't hold my breath until they get around to it.  

I can't see the point of finishing off part built properties as there are so many unsold in that area they would have to spend more to complete them (and the associated infrastructure) than they would ever get by selling them.  Nice, roomy apartments with 2 beds and sun terraces are already being sold for less than €40,000 in that area and they are the ones that are completed with all the licenses in place.  Then again, the council is so riddled with infighting and forming/breaking coalitions that they would probably be grateful if the banks took the property off their hands and did whatever they wanted with them.

kengolfer, I agree that is madness. I can only see logic in knocking down a building or unfinished property if the land is going to be used for something else that can generate more wealth, such as the shopping centre boboal mentions. That makes sense. Otherwise I think it is just a case of autioning them off , recovering cash or holding onto them until the demand for properties increases. There is a natural demand for around 200,000 properties a year, as far as I am aware, in Spain, so it will eventually come around sooner or later. I agree that many of the builds are of poor quality but the majority are unfinished and that can be remedied.Those that are built will eventually sell as has all the other rubbish that was built over the past 10 years if the price is right. I know they did asimilar act of demolition in Germany years ago, entire residential neighbourhoods, as much as I try to find the economical logic behind this I can't. Which ever way you look at it it's money and you're throughing it away only to pay for it again futher down the road, justifying that it will create jobs of stimulate builds again, it's madness I really can0t get my head around it. Why don't they spend €500M financing new businesses and export iniciatives to boost he economy long term. It's throwing money back into the buidling sector but this time to detroy, so in theory it's not throwing money back down the drain, but it's not being very productive is it? Sure there are 500 companies in spain that would get down on their knees for €1 million loan to help expand their busines into foreign markets. That's what Spain need to do, stop destroying and start building, but building a longterm business model. The proerty market will sort itself out over time. They should give those licences straight away, bring down the prices, cut tax on purchasing a property and seriousl attract foreigners back to Spain, no half measures.

Leaving the euro and depreciating a new currency may seem like an easy and fast way to correct current imbalances. You could say that Spain would regain competitiveness and attract foreign capital by offering assets at bargain prices. But returning to the peseta might not be as attractive as it seems: currency devaluations are no different to a default on external liabilities, transferring debtors’ problems to creditors; and currency devaluations increase the cost of imports and unless they can be replaced by internal production, may have a limited impact on export competitiveness. I think reforms, although tough are necessary as a country cannot spend what it doesnt have, simple economics, so I think internal adjustments and reforms to government spending in Spain are healthy and converting to the peseta may tempt politicians to avoid the real problem. As far as knocking down fairly new buildings is concerned, I am sure that that money could be spent elsewhere and achieve far better returns.