Operación Chamartín’s Secret Contract: Adif Sells 1.2 million m2 of Public Land at Half its Market Value

27 December 2018 – El Diario

For 25 years, the agreement has remained a secret. It is the document that supports one of the largest urban development projects in Madrid in one of the most sought-after areas of the capital, in the north of the city, to continue the Castellana, where the financial district and the most expensive homes and offices are located, which are being sold for more than €5,000/m2. The contract is going to be signed on Friday. On the one hand, Adif, the public company that forms part of the Ministry of Development and that manages the railway infrastructure, and on the other, Distrito Castellana Norte, a property developer that has changed its name repeatedly over the last quarter of a century.

In 1993, the Ministry of Development, chaired at the time by Josep Borrell, now the Foreign Minister, signed an agreement with the construction firm San José and BBVA to develop the railway land reserved for Chamartín station. That agreement, whose term has been extended several times, has been kept under lock and key until today. The property developer filed several lawsuits to prevent it from being published.

However, eldiario.es is now exclusively publishing the latest draft of the agreement, which reveals the economic conditions of the project, which is reportedly the largest urban development project in Europe: the sale of 1.278 million m2 for homes and offices. On Friday, the definitive agreement will be signed, confirm sources at Adif, which has been blessed by the municipal planning of Manuela Carmena’s government and which will see the disposal of public buildable land for a price of €769.5/m2 in that area to the north of Madrid, the expansion area of the financial district, one of the most expensive parts of the capital.

Sources in the real estate sector claim that the agreed value represents half the market price at which other plots in the same area have been sold recently. In January, the same vendor, Adif, put another plot up for sale, further north, in San Sebastián de los Reyes, outside of the capital, which was sold for €1,500/m2 to a real estate cooperative: €16.3 million for 1,500 m2.

The gigantic plot that Adif is going to sell to Distrito Castellana Norte (DCN), formed by the construction firm San José and BBVA, groups together 1.27 million m2 of land, according to the current contract. For that space, DCN is going to pay €984.2 million, which represents a price of less than €769.5/m2 excluding the financial interest corresponding to the payment over 20 years.

Hours after eldiario.es published the contents of the agreement, Adif issued a statement confirming that the cost that the private partners (…) will pay for the operation is above market prices. To reach this conclusion, the public company (…) is taking the price of the land and adding the interest that will be paid for 20 years (3% each year), the budget for the urbanisation of the plot and even the transfer of the land that the law obliges to the property developer: 100,000 m2 for public housing that Adif estimates at €67.4 million.

In September, the Government of Manuela Carmena approved the general plan to authorise the urban development of the so-called Operación Chamartín. In the accompanying financial report, the only official estimate that exists, the Town Hall of Madrid calculates a land value that is three times higher than the figure that Adif is going to receive. In that document, Manuela Carmena’s Government establishes that the sale of the whole reclassified area (which groups together twice as much land as mentioned above and which also involves other landowners) “would amount to €3.749 billion in total”. The price established in that financial report corresponds to 2.6 million m2 of that urban development. According to those accounts, the price per m2 equates to €1,407/m2, well below the €769/m2 that Adif is going to receive (…).

Original story: El Diario (by Fátima Caballero)

Translation: Carmel Drake

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