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Volume of NPAs in Spain could be 200 billion in 2022

Seminar on “The NPA and Real Estate Market. Trends and Developments”

  • Spain has the second largest stock of NPAs in Europe after Italy, excluding NPAs managed by funds
  • New build approvals could reach growth rates of up to 25%

Haya Real Estate, Tinsa and Oliver Wyman came together with key players in the property and finance market to examine the NPA (non-performing asset) market and property sector in Spain.

There are currently around 285 billion euros worth of NPAs in Spain, and it is estimated that in 2022 the figure will be 200 billion euros. If the volume managed by funds is excluded, the amount stands at 215 billion, giving Spain the second highest stock of NPAs in Europe after Italy. This type of assets no longer poses a problem for the banks and now represents an opportunity for the firms that manage them, known as servicers.

According to Vázquez Bouza, a Financial Services Partner at Oliver Wyman, “we are forecasting a positive scenario for the next few years, with a lot of activity and several transactions in the market. NPAs will finally stop being a problem for Spanish banks and will become a huge opportunity for the servicers who are active in the market.”

Participants discussed the management of Spanish property stock that has yet to be divested and the opportunities offered by the future. There was general agreement that Spain has developed a very efficient servicer ecosystem with a high degree of property expertise, making it a benchmark within Europe.

Juan Hoyos, Chairman of Haya Real Estate, commented that “since Haya Real Estate was founded we have already helped our clients to monetise 17 billion euros. We are committed to providing an excellent service to our clients, and to achieve this we work hard to stay ahead of changes in the market. Our objective has been and continues to be to position Haya Real Estate as the leading independent servicer in the management of non-performing assets, whether bad loans or property assets on the balance sheets of banks or funds, in order to take advantage of emerging opportunities or the potential consolidation of the Spanish servicing market”.

Enrique Gutiérrez, Director of Financial Institutions at Tinsa, stressed the importance of using reliable valuation methods to value underlying portfolio assets, in order to minimise the uncertainty associated with a property market in which performance varies widely. “The speed of sales processes for assets – whether property or loans – is making automated valuation systems essential”, said Gutiérrez. “This has required a major commitment to technology on our part, focusing on three main factors: improving the accuracy of calculation models; using data of the highest quality that has been verified in the field; and enriching valuations by utilising objective liquidity criteria that segment portfolios based on expected time to market.”

The seminar included a discussion of the size of expected transactions over the coming year, and an analysis of the current state of the property market and recent trends in NPAs.

The analysts taking part concurred that, despite forecasts of a slowdown in growth in Spain, the next year will see growth in private consumption, which is again becoming increasingly important to the Spanish economy. This will impact on the residential sector, which will follow the same course as the economic cycle: we will see an increase in new build approvals – where growth will remain pronounced and could reach levels of 20-25% – and also wide variations in price trends.

“Our forecast is that in 2019 average prices in Spain will rise by between 5% and 7%, coupled with an annual increase in transactions of between 5% and 10%”, explained Rafael Gil, Director of Market Research at Tinsa. According to data from the property valuation firm, 80% of housing stock is currently located in provinces that are registering an annual increase in value.

About Haya Real Estate

Haya is the leading company in the management of Non-Performing Loans and Real Estate Owned assets (NPLs and REOs, respectively) in Spain. The company manages assets as well as financial and real estate vehicles for a wide variety of clients, from financial institutions to international investors. In total, Haya is responsible for €31.8 billion of AuMs (Assets under Management).

Haya offers products and services covering the entire value chain of NPLs and REOs. Its NPL services focus on the management of corporate or individuals’ debt, with a high degree of specialization in the valuation, management and recovery of loans and the conversion of non-performing loans into real estate owned assets. Real estate services are delivered to a portfolio of ~189,000 assets under management, and they range from asset boarding, property management, maintenance and valuation to its commercialization. Haya's services are fully integrated into the lifecycle of each NPL / REO, and also involve portfolio advisory, underwriting capabilities, land management, completion of works in progress and securitization.

Haya’s main clients include financial institutions such as BBVA, Caixabank (former Bankia), Cajamar, Liberbank, Sareb and international investment funds such as Cerberus Capital Management. The company employs ~863 professionals, featuring an extensive sales network that covers the entire Spanish geography. Haya has invested ~€63 million euros in cutting-edge technology, data analysis and IT tools focused in process efficiency and performance delivery.

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