Madrid/Palma.—Spain's “bad bank” will struggle to find buyers for swathes of empty land, unfinished housing projects and doubtful loans left over from a property crash, hindering Madrid's attempts to overcome the wider economic crisis.

Real estate consultants predict that almost two-thirds of assets that the government's newly-created bad bank is due to take over from commercial banks will fail to attract investors, at least in the short term and possibly ever.

Spain is setting up the bad bank, known by the acronym SAREB, under a plan to cleanse the banking system of toxic property assets. SAREB aims eventually to buy up to 90 billion euros of the assets at deep discounts and then sell them to investors over 15 years.

Buyers are likely to snap up the likes of prime holiday homes and completed properties, commercial and residential, which already have tenants. But that leaves a majority of assets that will be much harder to shift.

Between 60 and 65 percent of the foreclosed property and bad loans to be hived off by the banks will relate to undeveloped land and half-built projects, according to forecasts compiled for Reuters by real estate consultants Jones Lang LaSalle and CBRE.

CBRE gave the higher figure for this category which investors will probably shun, put off by high risks and costs such as having to rip down abandoned shells of buildings that no one would ever want to occupy.

Together with Ireland, Spain has suffered Europe's biggest property crash, leaving the banks with 184 billion euros of bad real estate debt and incomplete developments around the country.

This has brought much of Spain's property market to a halt. “In the last five years there has been virtually no value for land,” said Rafael Powley, a Madrid-based director of strategic consulting at JLL. “There are no buyers and if you want to sell it right now, there is no price for it.” CBRE and JLL are the world's biggest property advisers and helped consultant Oliver Wyman prepare a report this year that examined how exposed Spain's banks were to souring property loans after the bubble burst.

The crash has put Spain centre-stage in the euro zone debt crisis, now in its third year, as investors believe a high budget deficit, soaring state debts, and a deepening economic contraction will force Madrid to seek more external help.

Spain has already secured up to 100 billion euros of European aid to rescue the banks worst hit by the property collapse. Madrid may now have to take a full sovereign bailout, with the state assuming the bad real estate assets unless it can find private sector investors to buy stakes in SAREB itself. On Monday the Bank of Spain said property loans would be moved into the bad bank at an average discount of 45.6 percent in the hope of attracting investors. The figure would be 63.1 percent for foreclosed assets and 79.5 percent for empty land.

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