An almost 2,000 square meter retail space in Suceava that BCR foreclosed on is the most expensive asset up for sale on a website of a major bank trying to recoup some of the non-performing loans. However, most of the high-priced properties are not buildings but very large plots of land inside cities.
The five most expensive pieces of property BCR is selling amount to EUR31 million, while BRD’s top five are worth EUR7.1 million and Banca Transilvania’s EUR5.8 million. Raiffeisen Bank is selling five plots of land worth EUR4.3 million. BCR is the only one of the four banks that does not have any land among its five most expensive properties auctioned.
Banks have accumulated tens of thousands of properties from customers that defaulted on their loans. The banks are sitting on a quite impressive portfolio of foreclosed assets and are reluctant to sell it all, because there are not enough buyers on the market so they would only put additional pressure on prices.
“There are buyers on the real estate market, but not enough of them. Banks are the biggest property owners at the moment with tens of thousands of foreclosed properties,” said Ilinca Paun, managing director of real estate consultancy Colliers.
“Banks are clearly becoming more open to selling but are not putting everything on the market at the same time. I think we’ll be seeing more and more repossessed assets up for sale.”
While BCR does not have any plot of land among its five most expensive foreclosed properties, BRD and Raiffeisen are only selling land and Banca Transilvania has three plots inside cities out of its five-most expensive properties up for sale. BRD, for instance, is selling an almost 34,000 square meter plot of arable land in Galati County at an asking price of EUR2.3 million. The land is in a semi-residential area, which explains the relatively high price.
Ilinca Paun says that when it comes to selling land, banks need to adjust to the type of buyer.
“Banks need to understand there are three types of buyers: end user, developer, and speculator.”
The residential market can take several thousand apartments every year, she added.
Most of the ads posted by banks are for houses, apartments and land, but banks also foreclosed on hotels, plants or gas stations, which are harder to sell, though. For instance, BCR is selling two production facilities of 54,000 square meters and 13,000 square meters in Blaj, Alba County (central Romania) and Bistrita Nasaud. The bank is asking EUR5.9 million and EUR3.4 million for them.
BCR also hopes to get EUR3.4 million for a four-star hotel with more than 100 rooms in Bucharest. Its most expensive asset put up for sale so far is the “Zimbrul” shopping center in Suceava (NE Romania). The center covers 1,850 square meters and was valued at EUR13.4 million.
The bank also foreclosed on a number of residential compounds, which have not been completed.
Most assets are being auctioned at 25% off their initial appraisal, since they are already at their second or third auction. Experts in this business say a foreclosed asset typically sells after three to five auctions.
Lenders most often would not sell the asset below the receivable price even though they can foreclose on other assets of the debtor not included in the loan contract.
Banks lost patience with the bad payers and have stepped up foreclosure pace in the last two years, putting thousands of foreclosed homes up for sale. The number of foreclosed homes increased after the non-performing loan ratio exceeded one fifth of the total loan portfolio, putting pressure on banks’ operating incomes.
(English version by Loredana Fratila-Cristescu)