Spanish banks struggle to sell land

Land was snapped up by buyers during the property boom, but since the financial crisis there is little demand for the assets, leaving banks with plots that are worth significantly less.

Indeed, the average price of urban land plummeted 11.5 per cent year-on-year in the first three months of 2013 - taking them down to 43 per cent below the 2007 peak. At the same, sales have also slipped severely, falling 22.2 per cent annually in the first quarter of this year. Just shy of 3,000 deals involving urban land were signed in the three-month period. In 2004 and 2005, quarterly transactions often reached up to 20,000.

Old farm land and fields on the outskirts of cities are the most common types of land that remain unsold. Now, lenders may even have to construct properties on the plots to make them easier to sell - a move that would require more spending from already cash-strapped banks.

"There are assets which will practically have to be turned back into the farm land they once were, to grow onions," Alvaro Martin-Ropero from valuation firm Tinsa told Reuters.

"Just because they had a 'for sale' sign put up on them does not mean they can be turned into an urban development," he added.