12 October 2018 – Eje Prime
Madrid Nuevo Norte represents good news for the Spanish real estate sector. The Town Hall led by Manuela Carmena expects the project, which received the green light at the end of September, to generate €13.2 billion of business for the real estate sector.
The urban development project, to the north of Chamartín train station, is going to house 10,485 new homes, as well as 1.5 million m2 of offices and another 103,119 m2 of commercial space. The acquisition of the plots will involve a total cost of €3.74 billion and the construction costs will exceed €2.78 billion.
The Town Hall of Madrid has confirmed that the tertiary assets will contribute the bulk of the income for the property developers that participate in the construction of Madrid Nuevo Norte. Together, the sales price of those properties will amount to €10.2 billion. In the case of the development of new homes, the business will amount to €2.98 billion, according to reports from Cinco Días.
The results of an economic study for the project show a range of returns of between 11.2% and 16.4%, although the Town Hall warns that the margin will depend heavily on factors such as the evolution of the real estate market and the acquisition price of the land. In terms of the latter, an orientative cost of €2,899.47/m2 is forecast for private housing located in the financial centre.
Following several adjustments, the total buildability of Madrid Nuevo Norte has decreased by 21%, down from 3.37 million m2 according to the initial plan to €2.66 million m2 under the current plan. In addition, the district has been divided into four areas: Chamartín station, the business centre, Fuencarral-San Roque-Tres Olivos and Fuencarral-Las Tablas. Each area will have its own construction timetable and urbanisation costs.
The project will have to be financed almost in its entirety by the landowners, who will disburse €1.2 billion on average. The Town Hall of Madrid is going to spend €307.89 million with the aim of covering the urbanisation costs, which will be added to €24.78 million from the Community of Madrid and €220.49 million from Adif, the concessionaire of the rights.
Original story: Eje Prime
Translation: Carmel Drake