Month: March 2016

Drago Buys Banco de Andalucía’s HQ For €25M

31 March 2016 – Expansión

Banco Popular has handed over the keys to Banco de Andalucía’s former headquarters to Drago Capital and a private Spanish investor. Yesterday, the parties signed the acquisition of the property, which had been up for sale for several years, for €25 million.

With a surface area of almost 8,300 m2, the building is located in the heart of the city, next to Avenida de la Constitución and Plaza Nueva.

Drago Capital will manage the renovation of the building itself to convert it into a hotel, which will open on the upper floors. It will also create a retail space with approximately 2,000 m2 of gross leasable space on the ground floor and mezzanine level.

According to sources at the company “the operation will contribute to the on-going regeneration of the area, one of the most iconic in the Andalucían capital”.

MacPherson Consultores will handle the marketing of the retail outlets, after “observing a great deal of interest for this location from major fashion brands and restaurants”, they added.

Original story: Expansión

Translation: Carmel Drake

JLL & IESE: Investors Are Willing To Take On More RE Risk

30 March 2016 – Expansión

The increase in liquidity, accompanied by the lack of profitability of alternative assets – such as the bond market – and the volatility of world stock markets all mean that the real estate sector is regarded as a very attractive option for investors. This trend, which was first glimpsed last year, will be maintained in 2016, but there will also be a step up in terms of the risk curve this year. That is one of the main conclusions emerging from a report prepared by the consultancy firm JLL and the business school IESE, on the basis of interviews with 101 investors in the sector, both domestic and international.

More yields / Most investors are looking for value added opportunities in light of the scarcity of prime assets.

The study indicates that the lack opportunities to add value in prime areas and the increase in funding means that investors are willing to take on more risk in their operations in the real estate market, although they continue to analyse the feasibility of these assets and check that they are financeable, given that capital continues to be selective.

In this way, investors have expanded their radars to other less exclusive areas and to buildings that need renovating. One example of how investors are willing to take on more risk with their operations is the purchase, in July 2015, of Telefónica’s former headquarters on Calle Ríos Rosas (Madrid) for €90 million by the institutional investors M&G. The building will be completely renovated and its tenant will be WPP, the multi-national media agency and marketing group.

Similarly, the report detects interest for alternative investments, such as student halls and health centres, as well as an increase in rental prices.

Asset values are on the rise

Following a record year in the commercial real estate market, with investment of €9,200 million, 89% of investors expressed a “high” or “very high” interest in the Spanish market, compared with 10% who expressed a “low” level of interest. In addition, 60% of the investors surveyed consider that the value (of assets) will continue to grow for another 18 months, at least.

The responses to the survey reveal that the typical investment in the commercial real estate market falls in the range of €30 million to €100 million, with a gearing level of between 50% and 60%. The average investment time horizon is less than five years, with an initial yield of between 5% and 7% and an IRR of between 8% and 14%. Offices in Madrid and Barcelona, logistics warehouses and shopping centres are the business segments in most demand. They are followed by retail premises on main streets and hotels, whilst the assets generating the least interest are residential properties and land.

Looking ahead to the future, investors remain alert to Spain’s political situation. The investors surveyed consider that the political uncertainty at home may slow down the upwards cycle seen over the last few years and they express concern regarding the possibility that some local governments, such as the one in Barcelona, are not granting them the permits they need.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

House Prices Rose By 0.7% In Málaga In Q1 2016

30 March 2016 – La Opinión de Málaga

During the first few months of 2016, the cost of new homes in Málaga has confirmed that prices are starting to rise there again, albeit slowly and cautiously. Having said that, prices in the region are still between 32% and 34.3% lower than the maximum values recorded at the peak of the housing bubble, according to the latest quarterly report from the Town Hall of Málaga’s Urban Environment Observatory (OMAU). Last year represented the turning point with the first YoY rise in house prices since the crisis began (specifically, prices rose by 4.3% in the capital and by 3.7% in the rest of the province) and now, during the first quarter of 2016, that trend is continuing, with new increases, albeit small, but nonetheless indicative that the recovery of activity in the real estate market is starting to take hold. According to OMAU, the average value of new homes for sale in the capital (including VAT) now amounts to €2,096/m2, after an increase of 0.4% during Q1 2016, whilst the average price in the province as a whole rose by 0.7% to €1,904/m2.

“In Málaga, several new developments, above all in Teatinos and along the West Coast (Litoral Oeste), have driven the market this quarter, together with others that were lying dormant, waiting for the reactivation of the market. That is now happening in a very timid and unstable way”, says OMAU which notes that, in any case, some values are still “not showing clear trends”, with quarterly fluctuations up and down.

The western area of the Costa del Sol is the area of the province that saw the highest price rises during Q1 2016 (1.98%), whilst the West Coast recorded increases of 0.9% and the inland area recorded rises of 0.6%. The highest prices in the province (ahead of those in Málaga capital, which is ranked in second place) are in Marbella, with an average price of €2,537/m2 and a rise of 3.8% during Q1 2016.

In terms of Málaga capital, OMAU’s report indicates that prices have increased above all in the West Coast (by 3.2%) and in the Centre (by 3.1%). In Puerto de la Torre, prices rose by 8.6%, although that was the direct result of the inclusion of a specific development, which significantly affected the average for that area. Interestingly, in Teatinos (one of the areas with the most activity, where work has been on-going at five or six developments in recent months), prices fell by 2.5% during the first quarter although, in any case, prices there are still higher than they were a year ago.

Very high unemployment. The Director of OMAU, Pedro Marín, confirms the reactivation of the real estate market, in the context of the tough years of the crisis, but he warns that it is a process that must be taken “very cautiously”. “There is still a lot of uncertainty in Spain, both in terms of the economy as well as politics, and the real estate sector is waiting (to see what will happen). But it is true that construction has resumed at several developments and there are lots of adverts around”, he says. However, according to OMAU, the major problem continues to be the persistence of high rates of unemployment (almost 27% in the case of Málaga).

“In reality, whilst unemployment is so high, individuals’ capacity to obtain reasonable incomes to allow them to access the real estate market and boost demand is little more than a pipe dream…”. (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake

Eurostone Buys EFE’s Former HQ To Convert Into Luxury Homes

30 March 2016 – El Confidencial

Eurostone, a real estate company headquartered in Luxembourg, has purchased the building located on the Madrilenian street Calle Espronceda, 32-34 from BBVA, which until 2013 housed the headquarters of the new agency EFE, which occupied the property for 35 years. The consideration paid for the operation has not been disclosed, but BBVA acquired it in March 2007 from SEPI (la Sociedad Estatal de Participaciones Industriales) for €51.25 million. The consultancy firm CBRE has advised the vendor, whilst Gabinete Inmobiliario and J. Pueche have advised the buyer.

The property, located just 300 m from Paseo de la Castellana, has a surface area covering more than 8,000 m2 spread across seven floors and more than 200 parking spaces. Eurostone already owns one property in Madrid following its purchase of a building on Génova 7 and three buildings in Barcelona, all in good locations.

The fund plans to convert the building on Espronceda into a luxury residential project in a neighbourhood, namely Chamberí, that has a shortage of new, high quality homes, and so it is hoping to become one of the iconic developments in the capital. The project, which will involve collaboration with the architect studio Lamela, will comprise homes and duplex apartments containing up to four bedrooms, terraces, gardens, a swimming pool, gym, etc. In addition, it will have more than 230 parking spaces and 1,700 m2 of retail space.

The building forms part of Project Zafiro, whose sale is being managed exclusively by CBRE. The portfolio of assets owned by BBVA comprises 15 buildings of different types, located in major Spanish cities, as well as in Lisbon, with a total surface area of more than 100,000 m2 and 1,300 parking spaces. This process has sparked interest from several funds, both domestic and international, and is close to being finalised. (…).

In addition, the building in question is located just 100 m from the former block of tenement flats (arranged around a patio, typical in Madrid, known as a “corrala”) that Pontegadea, the investment arm of Amancio Ortega, sold less than a year ago to the Catalan property developer Uniq, which specialises in the development of luxury homes, and which will be responsible for leading the development of the project.

According to sources at the time, Uniq will construct the homes, but another company, an investment fund whose identity has not been revealed, put up the capital to close the deal. The price of that operation amounted to around €20 million.

In addition, less than a kilometre away, on Calle Claudio Coello, number 108, another international fund, in this case the German fund Patrizia, recently entered the neighbourhood of Salamanca, with the acquisition of a residential building from Grupo Lar and Pimco for €22 million, where it plans to construct 14 luxury homes measuring 300 m2, with two or three parking spaces per flat.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Experts Predict Mergers Between RE Servicers

30 March 2016 – El Mundo

The real estate servicers that emerged from the financial institutions are driving housing developments, taking advantage of the recovery in the sector in areas with demand, and also the growth in rents. Experts predict that we will see mergers between these entities over the next few years in order to reduce costs.

Servihabitat, owned 51% by the TPG and 49% by CaixaBank, currently manages €51,000 million of assets for financial institutions, Sareb, investment funds, holding companies and large landowners, and whereby leads the ranking of servicers in the Spanish sector. Of the total, €21,000 million relate to financial assets and €30,000 million relate to real estate assets. The company also has 59 developments under assessment and under construction, containing more than 2,500 homes, as well as 38,000 contracts for rental assets.

The Executive Director of Servihabitat’s real estate business, Juan Carlos Álvarez, has explained that the firm has completed 18 developments containing 707 homes over the last three years. Moreover, it finishes an average of 15,000 homes per year from developers who have left projects unfinished, given that most of the financial assets that it manages relate to developers who have filed for bankruptcy; it deals with just a handful of mortgages to individuals.

Whilst at the beginning of the crisis, it was common practice to pursue court proceedings and “daciones en pago” to manage financial real estate assets, now the strategy involves making the real estate assets supplied as collateral more attractive to sell them at the best price possible, says the Director of Financial Assets, Agustín Melchor.

Solvia, the real estate arm of Banco Sabadell, has also gained a lot of weight in the multi-client servicers field, although its two main clients are the bank led by Josep Oliu and Sareb. It manages more than €28,000 million of assets, of which more than €5,300 million are financial assets, and it also manages land under development worth €4,200 million, and more than 10,000 rental properties (worth more than €2,500 million).

In the development sphere, it has constructed more than 3,400 homes since 2011 and currently has 34,426 properties up for sale, including homes (13,634), parking spaces, storerooms, retail outlets, offices, warehouses, plots of land and others, such as moorings and buildings under construction. It has 23 new property developments underway – 21 that it is constructing on behalf of clients and two that it is marketing itself – which contain more than 1,100 homes, primarily in the areas of Barcelona and Madrid, Levante and Andalucía.

Rental properties as a business

Although Servihabitat and Solvia do not own any assets themselves (they manage them on behalf of their clients), Anticipa Real Estate (owned by the fund Blackstone and created with 40,000 mortgages from CatalunyaCaixa) specialises in buying up mortgages and properties to focus on the business of rental homes. Thus, its strategy involves long-term management, rather than the liquidation of assets, and in 2015, it acquired developer loan portfolios from CaixaBank and Sareb for around €1,000 million and 5,000 homes in total; it also agreed to buy 4,500 homes from Banco Sabadell – 3,000 of which are currently rented out.

Of the portfolio of mortgages under management, 25% pay normally, whilst the remaining 75% pay with varying degrees of default. Anticipa plans to apply “dación en pago” arrangements to the majority of its problem loans. To date, it has signed 3,000 agreements in total. Following the “dación en pago”, most borrowers leave the home, but 5% remain, with a reduced rental price under a three year contract, explained the CEO of Anticipa, Eduard Mendiluce.

The future of the sector

Experts predict that there will be mergers between the servicers over the next few years, as the banks de-couple themselves from these companies and new investors look for economies of scale to reduce their costs, according to the Esade Alumni Real Estate Club. One of the first examples has been the Norwegian company Lindorff, specialist in non-performing loans and recoveries, which has acquired Aktua, the real estate services company of the former Banesto: “We expect to see more operations”, say sources at the Club.

Moreover, the distancing of the banks is going to force these companies to look for new clients and choose between offering end-to-end real estate services to third parties and becoming real estate companies. Sources at the Club expect that the major banks will sell their servicers and that over the long-term, there will end up being four operators in Spain after the concentration process: Servihabitat and Solvia, as integrated service companies and Neinor Homes (the fond owned by Lone Star) and Anticipa as real estate companies, the first focusing on development and the second on rental properties.

Original story: El Mundo

Translation: Carmel Drake

BdE: House Purchases Are Becoming Less Affordable Again

29 March 2016 – Cinco Días

As well as looking at average house prices in Spain, the experts always like to analyse how many people can pay those prices and with what degree of difficulty. Or to put it another way, how accessible housing is for households. In this way, they assess how much potential demand may be left out (the so-called insolvent cohort) and determine whether social housing policies, amongst other initiatives, need to be developed, such as the ones applied since the end of the 1980s.

When it comes to measuring the accessibility of house purchases, there are two, more or less official, ways of doing it, which are accepted by the consensus of analysts. The first involves calculating the percentage of household income that is used to repay the mortgage. At this point, it is worth remembering that for the banks’ risk departments, the monthly mortgage instalment should never represent more than one third of a family’s income. (…).

The critics of this formula point out that this monthly mortgage instalment figure does not include any money that a family would have had to pay by way of deposit, and nor does it reflect the notary or registry fees, or the taxes that are levied on house purchases.

Removal of the tax deduction

Currently, according to the statistics prepared by the Bank of Spain, families spend an average of 32.5% of their incomes on mortgage repayments, which falls in the range considered healthy by the banks. But just before the burst of the real estate bubble, when real estate prices were sky high and the Spanish economy was growing at a good rate in terms of activity and employment, that percentage exceeded 60% of income, excluding tax deductions, and 48% if we include those incentives. Now that difference no longer applies as the Government abolished the possibility of making deductions from IPRF (income tax) for the purchase of a primary residence in 2013.

The other formula..is based on the relationship between the average house price and average salaries, with the resultant ratio understood to represent the number of full years of salary that would be required to pay for the home in full. The experts believe that accessibility is measured more correctly in this way. Moreover…, they established that this ratio should amount to around four years.

In other words, if it is healthy for a household’s monthly mortgage payment to absorb no more than one third of its monthly income, then in full salary terms, the ideal thing would be for it to take no longer than four full years to pay off the house purchase.

The Bank of Spain has been measuring accessibility using this ratio since 1987 and the historical series perfectly reflects how the effort required to buy a home has increased when prices have risen disproportionately.

In this way, since the end of the 1980s until the year 2002, accessibility ranged between three years of an annual salary and four and a half years, which the analysts classified as acceptable; but since then, a much steeper trend has been observed, to reach the series peak with nine full years of salary to pay for a home in 2007. (…). The minimum seen in recent years was recorded at the beginning of last year, at 6.08 years, but the Bank of Spain recorded slight increases in the ratio during the second and third quarters of 2015 at 6.29 and 6.32 years.

The reason is none other than the change in the trend led by property prices, which after accumulating an average depreciation of more than 40% since the end of 2007 (when they reached their peak), have now been rising again for a year and a half. And although the dominator of the ratio (salary) is also increasing, it is doing so at a lower rate than house prices. (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Irea’s Warning: Carmena’s Policies Will Drive Up House Prices

29 March 2016 – El Economista

The shortage of land in Madrid and the blocks against several major urban development projects have brought a familiar face back to the Spanish capital, in the form of: speculation. This situation has not gone unnoticed by the opportunistic funds, who have unpacked their bags as they plan to stay in Spain for a while.

According to Mikel Echavarran, the CEO of the real estate consultancy Irea, “within a couple of years, we are going to have a serious problem in terms of the availability of good land in Madrid for the development of homes and, therefore, we can expect to see inflation”.

As well as the shortage of land, we are also seeing blocks imposed against most of the major urban planning developments in the capital. “These projects still require a push and the Town Hall is not up to the job”, says the CEO, who warns that with its new policies, the Town Hall led by Manuela Carmena (Ahora Madrid) “is going to cause exactly the opposite of what it seeks; house prices are going to increase”. Echavarran forecasts that developable land prices will rise “by at least 10% over the next two years, and in some cases by even more”.

Some players are already speculating

“Housing developments inside the M30 are almost anecdotal” and the funds are aware of this situation, which is why some are already speculating with land, although not in an obvious way. “They have purchased land to develop some of it and sell the rest”, explains Echavarren.

That was a common practice during the boom years. Developers used to buy up large plots of land, develop one phase and wait for that phase to push up the value of the remaining land. With the sale of that remaining land alone, they would recover all of their investment.

According to the CEO, another tactic being employed in the development sector is the purchase of office buildings for conversion into residential use. “Financing is available for end buyers with very good conditions and also to developers looking to convert properties into homes for buyers of a certain level”.

And it is not only changes of use that are being financed, developments themselves are also being funded. “If you purchase land, the bank will only give you financing when you have received sufficient pre-sales, normally around 30%”, explains the CEO of Irea. “Once you have made the 30% pre-sales, the bank gives you 100% of what you have left and may even lend you up to 50% of the cost of the land. As such, you are really well funded, for between 60% and 75% of the final sales price”, says Echavarren, who adds “if I were managing an opportunistic fund, I would recommend buying land in Madrid”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Listed RE Companies’ Values Soared By 30% In 2015

29 March 2016 – El Confidencial

(…). Colonial, Merlin, Hispania, Realia, Axiare and Lar, the six largest listed RE companies (in Spain), have been the drivers of the recovery that maligned the property sector until recently and, they are also, the major beneficiaries of the recent change of pace.

During the last year, these companies have been the value of their assets soar by between 25% and 30%, depending on whether one looks at their gross asset value (GAV) or net asset value (EPRA NAV). Although this spectacular rate of growth has been driven in large part by the commitments made by these companies to the recovery of the sector, in the form of lots of purchases, the data also reflects an improvement in the underlying valuations of many of their assets.

That positive trend has been felt most acutely in the segments in which these companies mainly operate, in other words, in the office, hotel and shopping centre segments, as well as the logistics business. By contrast, the residential and land segments have barely entered the portfolios of these companies.

As the table in the original article shows (see link below), the GAV or market value of the real estate investments made by these six companies increased by 25.7% last year, an improvement that in the case of Colonial was also seen in its stake in the French firm SFL, in the case of Merlin, in the purchase of Testa, and in the case of Hispania, in a leap driven by the consolidation of its hotel Socimi Bay, whilst in the case of Axiare and Lar (the latter publishes fair values), the figures simply reflect the high investment rate recorded last year.

But if we take the EPRA NAV as the reference indicator, which reflects the net value of the assets, in other words, which discounts the debt and excludes certain concepts that are not expected to materialise with certainty, we see that the improvement in valuations is even greater, reaching almost 30% on average (in the case of Realia, the NNAV value has been taken as that was the figure published).

Neverthless, this increase in asset values has not been reflected in the same proportion in the share prices of the companies. Although all of them recorded increases last year, and important milestones were reached, such as Merlin’s incorporation into the Ibex 35, the improvement in share prices fell a long way below the variations in the value of their assets.

Stock market

The company that performed best on the stock exchange last year was Realia, whose share price shot up by 49%, thanks to the takeover war between Carlos Slim and Hispania to take control of the company. Despite losing the battle, the Socimi led by Concha Osácar and Fernando Gumuzio was, alongside Axiare, the next best performer on the stock market, closing 2015 with an increase of 20%; whilst the company led by Luis López de Herrera Oria recorded an increase of 21.9%. Meanwhile, Colonial’s share price rose by 16.3%; Merlin Properties was up by 15.1% and Lar España’s rose by 3%.

Nevertheless, most of those gains have evaporated already this year, as the real estate companies have also suffered from the poor start to the year that has been seen on stock markets around the world. Almost all of them have recorded share price decreases during the first quarter, the only exceptions being the company led by Pere Viñolas, which has risen by 4.6%; and Realia, whose share price is being driven by a second takeover bid from Slim, and by the demands from Polygon to increase his offer of €0.80 per share. (…) According to the company’s own annual report, its NNAV per share amounts to €1.20.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

JLL: 3 Large Funds Want To Buy Student Halls In Spain

29 March 2016 – El Economista

Investment funds have been buying real estate in Spain for years and during that time they have acquired the best hotels, skyscrapers and shopping centres in the market. Now that those assets are no longer offering such high returns, investors are starting to look at alternative assets, including student halls of residences.

The US fund Oaktree, through the company Knightsbridge Student Housing, Round Hill Capital and The Student Hotel (TSH) are just some of the players that are currently looking for investment opportunities in this sector, according to Nick Wride, Director of Alternative Investments at JLL.

“For the best assets in operation, yields should be between 6% and 6.5% for the best locations”, says Wride, who recalls that these properties have to generate a higher spread than residential products, because they require more management”. The user is more demanding, there is more rotation and, in many cases, in addition to accommodation, these sites also provide catering services”.

Currently, Knightsbridge Student Housing is the most active firm in Spain. “They saw the opportunity before anyone else and they have led the way for other investors, who are now showing a great deal of interest in these types of assets in the country” explains Wride.

The firm owned by Oaktree currently owns one hall of residence in Madrid with 370 rooms, namely the Galdós hall, located in the Ciudad Universitaria.

At the end of last year, it acquired the Sucesores de Rivadeneira print works, which used to house the former printing press of the Gaceta de Madrid, located on the Cuesta de San Vicente, in the centre of the capital. The project, which will have 350 rooms, has not been started yet but is expected to become operational for the 2018/2019 academic year.

The manager is also preparing to open halls of residences in La Plaza de Cristo Rey (El Faro) and Calle de San Bernardo (Claraval), with 550 rooms, next year and is working on a 500-room project in the historical centre of Alcalá de Henares, which is due to be completed between 2017 and 2018.

The group also has a presence in Barcelona, where it was awarded two concessions by the Administration. Nevertheless, both projects have been suspected due to the hotel moratorium imposed by the mayoress, Ada Colau. (…).

Operation in Barcelona

The Student Hotel, the platform that was acquired by the US fund manager Perella at the end of 2014, is the other firm specialising in the sector that is looking for more projects in Spain. Last year, it participated in an important transaction in Barcelona, where it acquired a portfolio of two halls of residences in the Melon District (Poble-Sec and Marina). Both had belonged to BBVA and contain 597 rooms and 152 parking spaces, as well as around 3,465m2 of adjoining restaurant space in different areas of each building.

According to sources at the time, that operation amounted to almost €45 million. (…).

On the other hand, Nick Wride says that Round Hill Capital is also interested in investing in the country. “They have not made any purchases here yet or developed any projects for students in Spain, but they are looking actively”.

That firm starred in one of the most significant transactions at the European level last year when it sold The Nido Collection to the US firm Greystar Real Estate Partners for €847 million. (…).

Expectation and competition

(…). Nevertheless, halls of residence in Spain often do not comply with the criteria that these investors are looking for. “Funds have to justify movement of capital into a country with large projects, those containing at least 200 rooms. The typical halls found here tend to be smaller and many have double rooms. Now, the trend is increasingly moving towards individual rooms”, says Wride. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Valdebebas: Supreme Court Ruling Undermines Construction Plans

28 March 2016 – El Confidencial

Madrid’s High Court of Justice (TSJM) has dealt another fatal blow to the PAU real estate developments of Ciudad Aeroportuaria and Parque Valdebebas, the area in the north of the capital, where around 12,000 homes are expected to be built. According to a ruling on 4 March, the Administrative Litigation Division has partially accepted the appeal filed by the Association for Responsible Urban Development and has declared null and void the Special Land Sub-division Plan.

The decision by the First Section of the TSJM’s Administrative Litigation Division, chaired by Francisco Javier Canabal, overthrows the approval agreed by the Town Hall of Madrid on 30 October 2014, which modified the detailed plan APE 16.11 for the Ciudad Aeroportuaria and Parque Valdebebas. Although the Town Hall, now chaired by Manuela Carmena, the Community of Madrid, led by Cristina Cifuentes, and the Valdebebas Compensation Board called for the dismissal of the appeal presented in February 2015, the fact is that the ruling calls into question the urban development once again even though it had already been approved by the various administrations.

The plaintiffs allege that the Special Plan, dated 30 October 2014, modified the buildability of the area to include a large shopping centre in the development, with the allocation of space amounting to 145,794 m2 and an annex to it, measuring 36,488 m2 for other tertiary use. The Court emphasised that the Association “was right” when it said that this plan “modifies the structural organisation”, since land transformation operations inherently require an appropriate relationship between public space and collective amenities, and population density. (…).

The Town Hall and Community of Madrid must now decide whether to submit an appeal against this decision, a position that is difficult to adopt given that the new heads of Ahora Madrid and the PP in the aforementioned institutions have inherited a lawsuit fought by their predecessors, Ana Botella and Ignacio González. Moreover, they should take into account that in May the resolution is expected of a previous appeal against improprieties conducted by the Town Hall of Madrid, with the correction of the General Urban Plan (PGOU) approved in August 2013, an emergency action through which the Town Hall corrected the legality of Valdebebas, which had been suspended months earlier, following a ruling issued by the Supreme Court in September 2012.

Pryconsa, in question

But, the factor that calls everything into question, above all, are the plans of Pryconsa, which in December 2015, purchased 14 plots of land from the Valdebebas Compensation Board for €56.7 million. It acquired 92,000 m2 of buildable land, where it plans to build between 900 and 1,000 social housing properties (VPPL). Pryconsa paid just over approximately €600/m2 for the land, a price that is significantly below the €800/m2 that the Compensation Board obtained for one of the VPPL plots that it put up for auction after the summer and which was sold to the cooperative Esta Gestión 100, backed by the architect Enrique Toboada.

That operation ate up the last residential land assets owned by the Compensation Board and practically used up all of the land allocated to social housing in this urban development, given that now less than 5,000 m2 of land remains available. Moreover, following the transaction, only one third of the residential land is available in this area. The plots awarded are located next to one of the main squares in the new neighbourhood, close to the future shopping centre and JOYFE school, whose land also formed part of the assets sold by the Compensation Board, and where construction work is expected to begin soon.

Following the TSJM’s decision, all of these plans have been thrown back up in the air, a real setback for the developers that have bought land in this area of Madrid, located to the south of La Moraleja neighbourhood and to the north of the IFEMA exhibition grounds.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake