Government Auctions 3.000 New Apartments in Madrid’s Center

7/10/2014 – El Mundo

It has been already several years since various public administrations decided to dispose of thousands of properties to obtain equity necessary to face the recession. Nowadays, the sales of plots and buildings enhance housing development in Madrid center.

In the years 2013-2015, the Government is planning to tender 15.135 units in total, among which noteworthy are countless residential plots and buildings located in the very heart of the capital.

Two of those properties deserve special attention. First is a plot situated at 50 Raimundo Fernandez Villaverde street owned by the Ministry of Defense, whereas the other the old depots of Madrid’s Metro located adjacently to the Cuatro Caminos station. Each of the pieces of land spreads over more than 50.000 square meters of residential building purpose and they ask for €90.2 million and €81.8 million respectively. Also, former headquarters (18.000 square meters) of the capital’s subway at 58 Cavanilles street is available from €28.8 million.

Desire Object

According to experts, sales of the assets are doomed to success due to tremendous interest watched among the investors. First transfers of the Town Planning Department’s old premises (found at 13 Guatemala street, 32.000 buildable square meters, pictured) and former depots of EMT (107 Bravo Murillo street, 8.585 square meters) have been instantly snapped up by cooperatives for €65 million and €4.5 million respectively. Thereon, cranes are already raising hundreds of new homes, all of them booked up.

‘Generally, when referring to public assets, one is thinking of prime properties due to their attractive location’, assures Pablo Mendez, Land, Rehabilitation and Housing Business Director at Aguirre Newman, a company that advises on Metro’s sales. In his opinion, the prices of plots are ‘good’ and the transactions will be sealed at much more.

Data on available properties overhelm if the groups of the already transferred and those bound to change hands added up. Among the local, regional and state real estate offer, 17 units have been selected as the most representative. In total, around 285.000 buildable square meters intended for 3.000 new apartments in the city center.

‘Madrid is experiencing the biggest urban transformation in the last decade’, Mendez points out and takes it for granted that more projects are to come up soon. Over 100 firms sent their enquiries about the 50 Reimundo Fernandez Villaverde plot (deadline for bids: October 22nd).

Competition for Right to Develop

Until now, co-ops used to snap up such assets. And in fact still they provide most of the projects but they also complain that the Public Administration values suggested price rather than the architectural quality of an offer.

Domo and Grupo Ibosa are presently the leading companies. First bought the Town Planning Department’s premises and now eyes the two aforementioned plots, while the other won the bidding for the Cuatro Caminos depots of Metro by submitting its Residencial Metropolitan design. Both firms seek partners.

Funds Ask to Leave the Way Clear

Grupo Ibosa’s CEO Juan Jose Perucho believes that the land casts a double opportunity: the sector reactivation and access to quality, affordable housing. And although the activity of the co-ops means less jeopardy, they cannot afford to bet on uncertainty.

Domo remarks that ‘all moves to market homes at economical prices must be right’, while Mendez explains, ‘the prices proposed by co-ops are lower by those of developers as the latter have to ponder the financial and sales risk’. Assumably, the developers will sell at €3.000 per square meter in the Cavanilles project and at €3.600-3.800 in the Cuatro Caminos one.

Not only the co-ops and financially independent domestic developers bid for the governmental property. Lately, also private equity funds start to play substantial role in new projects pursued by developers without capital and become a serious competition to the co-ops. Moreover, funds will give priority to luxury housing for sale and properties for rent encompassed in Socimis (Spanish Reits).

Cherries on the State Cake

Apart from the current lucrative assets on sale, in the future the Public Administration will put up on auction such jewels as the plot located at 52 Padre Damian, nearby the Santiago Bernabeu stadium, as well as the properties at 19 Paseo de la Castellana and at 35 Serrano streets.

Tenders of two other interesting parcels, namely the numbers 2 to 8 of Joaquin Costa and the 5 Cea Bermudez streets, have been cancelled due to burocratic obstacles but they are expected to return to the showcase window soon.

Old headquarters of RTVE at 75 Paseo de la Habana also seeks a buyer. Probably, it will be demolished, leaving a 1.500 square meter lot available for sale.

The rest of the important units inside the Governmental portfolio will undergo refurbishments.

Last but not least, the Ministry of Finance sold the building located at 13 Barquillo street for €11.3 million.


Original article: El Mundo (by Jorge Salido Cobo)

Translation: AURA REE