[attach id=257930 size="medium"]A worker puts up a sticker at the stand of Spain’s bad bank Sareb during a real state fair in Madrid last Thursday. Photo: Reuters[/attach]

Several major property investors say Spain’s bad bank Sareb is demanding overinflated prices for the best of its €51 billion of unwanted property and loans, delaying sales that could ease some of the pressure on public finances.

Like Ireland’s bad bank before it, the body created to relieve Spain’s lenders of the worst of the toxic assets generated by its property crash has made a slow start to its efforts to generate some returns.

Bankers in Spain warn that an ongoing audit of the real value of the assets it is holding may reveal many are worth next to nothing and force it to turn to the government for more capital to swallow the resulting losses on book value.

But property investors say that even as Spain slips deeper into recession, Sareb has shown little sign of flinching in talks this year, demanding prices that are close to those for prime assets in major markets like Paris and London.

“I’m not wasting any more time with Sareb,” said one investor at a global institution managing more than €5 billion of European property, speaking on condition of anonymity.

“There are good deals to be had in Spain, but not through Sareb.”

Founded last year, the agency was given two years before it has to generate profit from the assets it took onboard when Spain’s banks cleared out their books, backed up by 4.8 billion in funds from the state and major banks.

Spain’s economy minister said that Sareb aimed to sell €1.5 billion of assets this year but investors say the pricing and trickle of sales to date makes that look unlikely, citing an apparent paralysis based on a fear of selling too cheaply.

Several other industry sources said it was seeking yields – the annual return from renting out commercial real estate as a percentage of how much it cost to buy – of six per cent compared to rates of four or five per cent for the best office properties in major markets like London and Paris.

They said the prices it demands for those assets would have to reflect yields of at least eight to nine per cent to draw in potential buyers and reflect the risks of investing in Spain.

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