26 January 2016 – El Confidencial
The Imperial Plaza shopping centre on the outskirts of Zaragoza has been put up for sale, in what may be Spain’s most disastrous real estate operation to date. The asking price has been set at €35 million, significantly lower than the €230 million that it cost to construct the property, which will mean a loss of €195 million. The failure of Imperial Plaza proves that, despite the economic recovery, the property hangover is still affecting the majority of the Spanish market. It is also proof that senseless urban planning can ruin any investment project.
The developer of this shopping centre is the company Procom Desarrollo Comercial de Zaragoza, which is now controlled by the Dutch bank SNS. According to the “Heraldo de Aragón”, Deloitte has been appointed to handle the sale of the asset. The exit plan involves converting the property into a giant “outlet” centre, but that will require additional investment (€23 million), which would mean even lower proceeds from the final sale.
To put the scale of this tragedy into context, it is worth remembering that Procom and Eroski bought the land from the Town Hall of Zaragoza in 2004 for €67 million. Now, 14 years later, the completed centre is being put on the market for half of that figure. In other words, a total disaster.
Imperial Plaza is a failure that comes at the end of a long string of other failures. First, there was the failure of Arco Sur, a new residential neighbourhood in Zaragoza, half of which was going to be VPO (social) housing. 21,000 homes were going to be constructed in total, but only 2,000 were actually built, according to real estate sources. And without Arco Sur, there was no need for a super shopping centre for its residents, such as the one proposed for Imperial Plaza.
The project was also wrecked by urban planning – Imperial Plaza was awarded more than 132,000 m2 of leasable surface area in 2005, when the Town Hall of Zaragoza freed up retail land, a year after it had sold the plots for Imperial Plaza. But that liberalisation of land also benefitted other projects and so Puerto Venecia was constructed. The authorisation of Europe’s largest shopping centre in Spain’s fifth largest city (by population) did not seem to ring any alarm bells with anyone, and especially not with the socialist mayor Juan Alberto Belloch, who governed the city for 12 years. But someone was going to have to pay the price: specifically, the owners of Imperial Plaza. Plaza was big, yes, but Puerto Venecia was built to measure 206,000 m2. (…).
As soon as Puerto Venecia opened, the companies that had opened stores in Imperial Plaza with such great enthusiasm started to close their doors. Zara was one of the first to leave, but it was not the only one. The departure of Primark to Puerto Venecia was devastating. Sport Zone, Amichi, Women’s Secret, Massimo Dutti, Merkamueble, Nautalia, Sunglass Hut, Kaymo and Movistar all left too. The last firm to flee was FNAC, which, of course, left Imperial Plaza to move to Puerto Venecia. A shopping centre has never fizzled out so quickly. (…).
The crisis at Imperial Plaza will have collateral damage beyond its sale at a loss. The Town Hall of Zaragoza is currently stalling Pikolin, one of the largest industrial companies in the autonomous region, regarding its project to create a large “outlet” centre in its former mattress factory, according to real estate sources. If Imperial Plaza wants to reinvent itself as a major discount centre, it will face serious problems, especially if it is up against an identical project in a city that has just 664,000 inhabitants.
Original story: El Confidencial (by Marcos Lamelas)
Translation: Carmel Drake