Online auctions helping banks offload properties
Online auction of properties acquired by banks, mainly through debt-to-asset swaps to reduce their toxic loans, have started to take-off as many more are being sold off.
A private online platform, BidX1 held its second online auction of Cyprus property, selling 59 out of 66 properties going under the hammer for €10 mln.
A banking source confirmed that these properties belonged to the banks.
Some 25 residential properties, including flats and villas, were on the list, along with plots of land and a small number of commercial real estate.
The large majority of properties at Wednesday’s auction were sold at a much higher price than the reserved tag, boosting banks’ confidence that online foreclosures have started to gain momentum.
The largest sale in value was a housing complex sold for €750,000.
PropTech leader BidX1 called it a “successful auction”, generating €30 mln in total bids on its digital property marketplace.
Over 330 bidders, the majority of which were Cypriots, registered for the auction.
“All bids, as well as the final sale price for each asset, are displayed publicly on the BidX1 platform, underlining the transparency of the process,” said BidX1 Cyprus official Kritonas Onisiforou.
“We are extremely happy with the results of our second auction, and the level of engagement in the market. We aim to bring greater transparency and efficiency to the markets in which we operate, we’re delighted that Cyprus has embraced it,” he added.
In an auction held in October last year, BidX1 sold €9.5 mln of real estate assets in Cyprus’ first digital auction.
There were over 220 bidders registered for the sale, all based in Cyprus, with BidX1 recording almost 2,000 bids.
The company officially launched its digital marketplace in Cyprus in September. BidX1 also has properties across all asset classes for sale in Ireland, the UK, Spain and South Africa.
The mobility created on BidX1’s private platform creates an expectation for bankers that they will be able to boost their online auction process, through the platform set up by the Cyprus Banks Association.
As confirmed by banking sources, the properties sold by BidX1 were mostly properties banks had in their portfolios.
A property source told the Financial Mirror that banks are now hoping that they will be able to sell-off properties linked to toxic mortgages at a higher price than initially estimated.
The Online Auction System (www.eauction-cy.com) went live on November 18, 2019, after the Ministry of Finance issued a decree allowing banks to establish e-platforms.
The auction platform was set-up by banks to sell properties linked to toxic mortgages, essentially foreclosing them.
This online auction platform was set up by ACB E-Auctions, entirely owned by the Cyprus Bank Association.
“Banks appear to be satisfied with the results of their online platform’s results, during the three months the system went live, there have been vivid interest from both lenders and bidders,” said the source.
The source added that some 12,000 unique visitors have clicked on the platform’s website, while 250 users have registered with the system.
According to the latest data, there are some 112 properties up for grabs on the ACB platform.
Banks utilising online auctions as a tool intended to put pressure on strategic defaulters rather than aiming to foreclose properties of struggling families.
“Online auction is yet another tool to clamp down on strategic defaulters. Banks’ policy will be no different than it has been until recently.
We are not seeking to kick people out of their homes for the sake of it. Nor do we want to be overloaded with properties,” said a bank source.
Directives from the European Banking Union state that banks cannot hold on to a property they acquire through foreclosures or debt-to-asset agreements for more than three years.
Physical and legal entities from both Cyprus and abroad have the right to bid for a property through the online platforms.
According to data recently sent to parliament by the Central Bank, the success rate of properties foreclosed through auctions doubled in 2019 compared to 2018, reaching 10.8%.
In the first nine months of 2019, 213 foreclosures were completed, according to Central Bank data.
Banks sent out a total of 1,971 notices to defaulted borrowers, informing them that their property would be sold at auction.