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Operación Chamartín: The Plot Thickens

30 September 2015 – El Confidencial

The small print of the agreements signed between the Government and the developers of Operación Chamartín, BBVA and San José, includes an important payment in kind that has gone undetected until now. A payment that will convert the Ministry of Development into one of the largest landowners of this development.

And so, not only will the company formerly known as Duch, now Distrito Castellana Norte, have to pay €1,240 million in cash to acquire the land (covering an area of almost 2 million m2) currently owned by Adif, it will also have to make a payment in kind, involving the transfer of urbanised land with buildability of 100,000 m2 for residential use.

This payment forms part of the principles of the agreement signed on 22 January between Duch and the public entities Adif, Renfe Operadora and Adif-Alta Velocidad, the owners of the land where the majority of Operación Chamartín is expected to be constructed and, therefore the main beneficiaries of this urban planning project.

Specifically, when this development, whose official sign off has so far been delayed for more than two decades, was reactivated at the beginning of the year, the economic agreement was structured around three pillars: the payment of a cash fee amounting to €984 million, the payment of interest linked to this expenditure over the next two decades (which takes the total amount of the cash payment to the aforementioned figure of €1,240 million), and the payment in kind in the form of plots of land.

But the public administrations’ role as landowner goes much further than that, given that the land that the Ministry of Development will take control of will be added to the plots (covering an area of almost 600,000 m2) that will correspond to the Town Hall of Madrid.

The Local Government, led by Manuela Carmena (who has the ultimate power to unblock this development) is set to become the second largest landowner, as a result of the sum of: the space (165,000 m2) it currently owns in the area; the area (150,000 m2) that houses the EMT’s garages in Fuencarral; and the land (300,000 m2) that corresponds to it from the transfer of 10% of the land from the developers, as required by legislation.

Sell or develop

At the current market price of €1,000 /m2, the value of the plots of land owned by the Town Hall could amount to around €600 million, whilst the land owned by Adif could be worth around €100 million.

In both cases, the public administrations have the ability to benefit from their roles as landowners to develop social housing on the Operación Chamartín site itself or to make profits to return to society.

And one of the main attacks launched against the developers of this site has been they are simply seeking to “strike it rich”, criticism that has been fuelled by the fact that the development is located in the north of the capital, an area traditionally regarded as very wealthy, and because the original plans include just 10% of social housing.

The reason why it looks like the people responsible for Distrito Castellana Norte are planning to construct so few VPO homes is partly because these calculations do not include the uses that the public administrations will make of all of their plots of land. Therefore, it is up to Carmena and Adif to increase the volume of social housing in this development.

Between the two of them, they own more than 20% of the total surface area (3.1 million m2) that makes up the Operación Chamartín site.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake