The Electoral Shift May Undermine Operación Chamartín

27 May 2015 – El Mundo

The Ministry of Development fears that the electoral shift may undermine the plans for the project known as Distrito Castellana Norte, which is worth more than €6,000 million.

From June, the new municipal political map in Spain will face decisions regarding the future of dozens of urban development projects in the country’s large capital cities, worth thousands of millions of euros, many of which are still awaiting licence approvals from their respective town halls.

The largest one is Operación Chamartín, in Madrid, the largest urban development plan in the capital. The project has been in the pipeline for 20 years – four less than the Partido Popular held office for at the town hall – and was accelerated in recent months by the incumbent mayoress, Ana Botella, in an effort to obtain the final approvals.

The inability to comply with all of the procedures required for the operation, located in the North of the capital, covering 3.7 km in length and three million square metres in surface area, with plans to build 17,000 homes, as well as offices, retail areas and green spaces, forced Botella to leave the final approval (of the project) in the hands of her successors at the Town Hall. Specifically, to the resolution of around 1,800 claims and above all, to the approval of a partial plan for the extension of the Paseo de la Castellana.

Until 24 May, it was expected that a new municipal team led by the Partido Popular would continue the project, which promises to transfer the centre of the city from Puerta del Sol to the North. But the setback suffered by the Partido Popular in the capital last Sunday leaves the project in the air. The most likely option, that of a left-wing coalition between Ahora Madrid and the PSOE, is raising concerns amongst the stakeholders. The focus of the likely team, led by Manuela Carmena, would centre on social housing rather than on million-euro urban developments.

The project known as Distrito Castellana Norte is estimated to be worth more than €6,000 million; BBVA and the construction company Grupo San José are the main partners in terms of financing and development. The operation also includes municipal and regional land, but the majority is owned by the Ministry of Development, and in particular, its two largest companies: Renfe and Adif.

The urban development plan that Ana Botella was unable to finalise involves covering over the train tracks at Chamartín station. The value that the sale of this land to BBVA and San José would have for the companies owned by the Ministry of Development amounts to €1,200 million, most of which would be paid to Adif, whose debt amounts to €18,000 million this year, making it the State’s most indebted public company, behind only the FROB (Fund for the Orderly Restructuring of the Banking Sector). Given the financing needs of the conventional railway infrastructure companies and the lack of funds available for such investments, the minister Ana Pastor has publicly backed the plan. In fact, Adif was already counting on the payment of €200 million this year based on the approval of the pendingpartial Plan.

Now the deadlines are being called into question, at least the fast-track option is, which carries the support of the incumbent town hall. But the amendment, rejection or definitive approval of the largest chapter in the capital’s urban planning cannot be left on the sidelines for long.

After its launch in 1995, with the granting of land to the current BBVA, the project has survived (changes in) municipal teams, real estate bubbles and judicial processes, which have delayed its approval and halved the value that the property developers were guaranteed to generate.

In the end, last year, the grant was awarded, but BBVA and the Grupo San José extended their offer up to a maximum deadline of 2016. If there is no partial plan by the new Town Hall and the new extension expires, the Ministry of Development will see its largest urban development project die, although it is likely to be a legacy that another Government will pick up in due course.

Original story: El Mundo (by César Urrutia)

Translation: Carmel Drake

The PP Stops ‘Operación Chamartín’ Dead In Its Tracks

14 May 2015 – El Confidencial

Ana Botella has met with opposition from several members of her own party regarding the progress of the largest urban development in Spain, which was due to involve an investment of almost €6,000 million.

“I would like to settle the future of Operación Chamartín…it would be a real shame if the project does not go ahead”. Those were the statements made by Ana Botella in an interview with El País on Sunday, in which the now almost former Mayoress (of Madrid) summed up her legislature. With this assertion, she responded to a question about what was left for her to do and what she would like to finish before leaving. However, despite recent attempts by BBVA, the main shareholder, to push ahead with the largest real estate development in Madrid, the project that has been renamed Castellana Norte does not seem to be able to get off the ground.

According to sources at the capital’s Town Hall and shareholders of Dutch (the property development company), an extraordinary council meeting will not be held on Thursday to approve what was going to be the largest urban development in Spain. That is because 14 May is the last logical day from a political point of view for the authorisation of the new partial urban plan that would have to include the extension of the Paseo de la Castellana, promoted by BBVA and Construcciones San José.

Botella, has tried to the end to convince other members of the PP to approve a project that has been blocked since 1993 and which, was going involve an investment of €5,974 million. Of that amount, €3,300 million was going to flow to the coffers of the three Public Administrations involved in the project – the Town Hall of Madrid, the Community of Madrid and the Ministry of Development – and so the interest of all of these parties was evident.

Those figures were announced at the launch of the operation, an act that was blessed with the presence of the Chairman of BBVA, Francisco González, the Minister for Development, Ana Pastor, the Mayoress, Ana Botella and the President of the Community (of Madrid), Ignacio González. From that photo, two of the politicians are no longer in their roles and the owner of the infrastructure is waiting to see what happens in the general election. “There is no other project like this anywhere in the world”, said the Chief Executive of BBVA, the primary shareholder with 75% of the developer’s share capital, who added that “I don’t know if it will be profitable for the bank, but it will be for Madrid”.

The Director of Real Estate at BBVA, Antonio Béjar, has been putting pressure on Botella until the last minute to obtain authorisation for the project despite the opposition from various members of the PP and the reluctance shown by the Minister for Development. (…).

From the ranks of the municipal Government, they say that the 2,000 complaints made by various groups less than two weeks before the municipal and autonomous community elections make the approval of Operación Chamartín impossible. The authorisation would have been used by the opposition parties to link the PP to the financial system and the so-called “casta”, especially if we take into account that some voices link the arrival of Francisco González as the President of BBVA with that of José María Azar to the Government.

Sources at Dutch are confident that Castellana Norte will receive support from the new local government that emerges from the municipal elections on 24 May. Above all, because they consider that it will represent a significant economic boost for the capital, something which, in theory, no one should oppose. That has been recognised half-heartedly by the various opposition parties, such as the PSOE and Ciudadanos. But at the same time, they recognise that the (likely) diversity of the next local government will make any agreement more difficult, especially if we also take into account that there will be general elections in November and that the project also needs to be approved by the Ministry for Development.

The Castellana Norte District project involves extending the capital’s main thoroughfare by 3.7 kilometres and creating a new area where 17,000 new homes would be build, thanks to the burial (move underground) of the train tracks at Chamartín Station. The macro-project includes a green area measuring 24 hectares, two business areas with the construction of several skyscrapers of up to 320 metres tall and a new stop on the local train network.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

BBVA And The Government Reactivate The Castellana Extension

2 February 2015 – Expansión

BBVA and San José will invest €4,800 million in the Castellana Extension / Covering an area of more than 3 million sqm in the North of Madrid, it will be the largest real estate development project in Spain. An IPO has not been ruled out.

Investment of almost €6,000 million, an area of more than 3.11 million sqm, 20 years of planning and another 20 years of development – those are some of the dizzying figures encompassed by the Castellana Norte urban development project in Madrid, also known as Operation Chamartín or the Castellana Extension.

“It is a very unique, innovative project that will result in the strengthening of the local, regional and national economy. It is the only project of its kind anywhere in the world”, said Francisco Gonzalez, the Chairman of BBVA, on Friday as he presented the plans for the regeneration of the north of Madrid, which has been paralysed for years and which will be the largest real estate development project undertaken in Spain in the last two decades.

The financial institution is the owner of 75.5% of the company Castellana Norte Madrid, the developer behind the plan. The remaining shares are held by the San José Group, whose own shares soared by 8.5% in trading on Friday.

Homes and offices

The project includes the extension of the capital’s main thoroughfare, the Paseo de la Castellana, by 3.7 km and the movement underground of the railway tracks at Chamartín station. 17,000 homes will be built on this land, of which 10% will be subsidised in some way; a financial district covering almost one million square metres will also be constructed.

The company Castellana Norte will drive the regeneration of this area, alongside Chamartín station and its adjoining railway tracks. Thus, of the total investment (€5,974 million), the company will spend €1,300 million on infrastructure and another €3,500 million on the construction of buildings. A long way off of the €11,000 million projected in the initial plans devised for the area in 2008. “The previous project was based on estimated revenues and therefore associated investment when housing was worth 40% more (than it is now)” explained Antonio Béjar, the Chairman of Castellana Norte. “The current plan addresses the shortcomings of the past and will involve a significant degree of self-financing”, he added. Sources of funding may include the entry of a new partner into the company, the use of bank financing and even the IPO of the company.

Construction of this neighbourhood, designed in four areas, will take place over 20 years and will result in the creation of 120,000 new jobs. “The project will generate economic gains of more than €3,363 million for the public administrations”, confirmed the Town Hall of Madrid on Friday.

The developers hope that the various government bodies involved in the process (the Ministry of Development, the Community of Madrid and the Town Hall of Madrid) will formally approve the project during the next few months so that work can begin on the development “at the end of this year or at the beginning of next year”.

Sustainable travel will play an important role in the new urban development, which will include three new metro stations, two train stations and 12.8km of cycle lanes. 80% of the 3.114 million square metres of land (just under the permitted buildable area) will be used for public infrastructure projects, including space for green areas equivalent to 56 football pitches.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake