Town Hall Seeks To Resume ‘Canalejas’ Construction Work

20 July 2015 – El Confidencial

Almost four months have passed since Madrid Town Hall’s Department of Town Planning decided to suspend some of the construction work at the monumental Canalejas Project, as a precautionary measure. The council, which was led at the time by Ana Botella, took the decision because it considered that some of the demolition work being carried out by the Villar Mir Group was affecting certain areas that are protected due to their historical value and was exceeding the work permitted by the municipal licence.

Following the electoral change, the new team responsible for Town Planning at Madrid’s Town Hall, led by Manuela Carmena, seems willing to resolve this situation as soon as possible. According to sources close to the project, the council is working to create a technical committee that will allow the works to recommence, however the Town Hall has denied that this is the case, at least for the time being. (…).

At the end of 2012, the Villar Mir Group purchased seven buildings located on Plaza de Canalejas (number 1), Carrera de San Jerónimo (number 7) and Calle Alcalá (numbers 6, 8, 10, 12 and 14) from Banco Santander. The group paid more than €200 million for the buildings and with an additional investment of around €300 million, is going to create a unique complex that will house around thirty luxury homes, a shopping centre measuring 16,000 m2 spread across three floors and a five-star hotel to be operated by the Four Seasons chain with 215 rooms and measuring 26,000 m2.

To achieve this, all of the buildings need to be joined up and to make that possible, Madrid’s Town Hall (PP) changed the protection in place on some of the buildings a few months ago. Specifically, it reduced the ‘Building of Cultural Interest’ protection to the front bay (crujía) and roof of the building at Canalejas, 1 and the front bay (crujía) and patio at Alcalá, 14; it also reduced the protection on all of the buildings to confine it to the façades.

Suspension of the building work

And it was the work performed on the front bay (crujía) between Calle Alcalá, 14 and Plaza de Canalejas, 1 that led to the stoppage of the works, as the Town Hall considered that protected pillars, slabs and stairs had been demolished…Nevertheless, sources linked to the project say that all of the work has been performed in accordance with the scope of the licences granted. The rest of the works – which affected 90% of the complex – have continued in the meantime, in accordance with the licences obtained.

In order to resume the suspended work, the planning experts consulted say that the licence for the next phase of the work needs to be granted, i.e. the licence for the new construction work. And for that to happen, the construction company must legalise their actions. The creation of a technical committee could accelerate the process, whereby leaving the final decision in the hands of professionals and not Madrid’s Town Hall.

It is worth remembering that Canalejas, along with other projects such as Operación Chamartín, Campamento and the shopping centre that is planned for Madrid Río, are coming under the spotlight of the new mayoress, Manuela Carmena, who is now less critical of these projects than she was in her electoral program. Carmena recently met with Antonio Béjar, the head of the Distrito Castellana Norte project, and promised that she would evaluate the most important urban planning project in the capital.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Sareb Unlikely To Meet Its Property Sales Goal In 2015

14 July 2015 – Expansión

The President of Sareb acknowledged today that the bad bank will probably need the entire 15-year period originally granted to it, to sell all of its assets.

Speaking at a briefing organised by Europa Press and Servihabitat this morning, Jaime Echegoyen recognised that it will be hard for Sareb to meet the goal it had set for 2015 of selling 15,000 properties to individuals. During the first half of the year, the bad bank only sold 5,400 homes, i.e. 33% fewer than during the same period in 2014.

Sareb’s President insisted that the entity is selling its assets slowly (on purpose) to protect the capital of its investors. 51% of the bad bank’s capital is owned by private investors – all of the major banks except for BBVA, insurance companies and other entities – and the remaining 49% is held by the State.

Echegoyen has said that Sareb will probably need the entire 15-year period originally granted to the entity to sell all of its assets. “I would go as far as to say that we will end up needing all of the time originally granted to us. We are planning to use up the entire period, but if we manage to sell all of the assets sooner, then we will”, he said.

Carmena and Colau

The head of the bad bank also said that he wants to hear the proposals that the mayoresses of Madrid and Barcelona, Manuela Carmena and Ada Colau, respectively, are going to make. Echegoyen confirmed that he is meeting Carmena tomorrow and Colau next Friday and that his position ahead of those meetings is to be “flexible and listen carefully”.

Echegoyen also repeated the message he delivered to Congress’s Economic Committee last week, saying that Sareb has made 2,000 (social housing) homes available in several autonomous communities, and he reaffirmed that he hopes to sign more agreements in more regions soon.

Original story: Expansión

Translation: Carmel Drake

Carmena Commits To Studying Operación Chamartín

25 June 2015 – Expansión

The mayoress of Madrid, Manuela Carmena, has confirmed to the Chairman of the Distrito Castellana Norte (DCN), Antonio Béjar, that she is committed to studying the draft plans for the extension of the Paseo de la Castellana, according to sources close to the company.

Carmena met with the project’s leaders on Wednesday, for around an hour, in an atmosphere characterised by the “utmost cordiality”.

During the meeting, Béjar described the planned development to the mayoress of Ahora Madrid. He explained that the project aims to promote the DCN through its Partial Plan and that it will be one of the most important city projects in Europe.

At the end of the meeting, Béjar seemed optimistic and said that he hopes that the Partial Plan will be approved at an upcoming plenary session, once the Town Hall’s new government has analysed it in detail.

The project will extend the Paseo de la Castellana north by 3.7 km and involve the redesign of an area covering 311 hectares. It will also include the construction of 17,700 homes, 56 hectares of green space – half the size of the Retiro park – and several skyscrapers.

Original story: Expansión

Translation: Carmel Drake

IESE: Demand For New Homes In Madrid Will Reach 20,000 In 2019

2 June 2015 – El Mundo

At a conference organised by the College of Civil Engineers before the local elections, Manuela Carmena, who will become the mayoress of the capital provided Esperanza Aguirre does not stand in her way, ruled out Operación Chamartín as a significant objective: “I do not think that we need 17,500 homes, we will talk about that again in 2017 or 2018, but not now”.

Her comments are interesting because just a few days later, professor José Luis Suárez, of IESE, has claimed that, during 2015 and 2016, demand for new housing in the metropolitan area of Madrid will reach 14,000 units and in 2017 alone, it will reach 13,000. Suárez is one of the foremost experts in the Spanish real estate market and during the annual symposium of the Center for International Finance (CIF), he presented the preliminary results of a study about the evolution of demand for new homes in Spain until 2028.

Suárez and his team of researchers are building a model to allow them to predict the demand for new homes in nine large Spanish urban areas. The model is driven by several factors, including the reduction in the number of people per household; financing; the rate of obsolescence of homes in use; the demand for replacement; the acquisition of second homes; employment; investment in housing; the preference for new housing; renovations; the declining population; the over-stock of housing; and rentals.

Although Spain’s “demographic winter” may lead us to expect a decrease in the number of homes, as well as in their average size, the calculations performed by Suárez for the Madrid area show that demand for new homes will reach 20,000 units in 2019. This quantity would mean demand returning to the levels last seen in 2009-2010, years when the trend lines between the purchase of new homes and the supply of new homes intersected. At the height of the bubble, in 2006, more than 40,000 new homes were sold in Madrid and during that same year, more than 60,000 units were constructed.

In fact, the excess stock of housing in Madrid is practically non-existent now. There is still excess supply in Spain, but not in places where demand is high.

Urban planning is one of the areas that the local politicians enjoy the most and where Carmena is undertaking a detailed program. She is committed to renovating and supporting operations in deprived neighbourhoods, such as the so called Operación Campamento, which is sponsored by Chinese capital. Although critics accuse the plans of being neoliberal since they serve individual interests, the fact is that urban planning is anti-liberal by definition and is fertile territory for commercialism.

(…)

Original story: El Mundo (by John Müller)

Translation: Carmel Drake

Political Uncertainty and Populism Threaten RE Recovery

1 June 2015 – El Economista

The electoral success of Manuela Carmena (Ahora Madrid) in Madrid and Ada Colau (Barcelona En Comú) in Barcelona has started to take its first victims in the real estate sector. Barely a week has passed since the elections and “some investors have already suspended deals to purchase property in Spain”, warn certain sources close to the negotiations.

The uncertainty regarding the possible political agreements has hit the property sector hard, “just when it was starting to recover”. In Madrid and Barcelona alone, large urban projects amounting to €14,000 million have already been called into question.

Major construction companies, financial institutions and large international funds are involved in these developments, including the Chinese magnate Wang Jianlin, who came to Spain with plans to invest around €4,000 million and who now see his real estate plans for the country being endangered.

“Right now, the sector is beginning a process of paralysis in certain segments. All of the investors are waiting for the possible political agreements to be settled so that they can carry out transactions”, explain sources in the sector.

“The is a great deal of uncertainty and considerable ungovernability in many cases, as well as expected increases in taxes and public spending, coupled with the suspension of forecast investments, which may result in the withdrawal of foreign capital”, they warn.

This situation may result in “an important step backwards for the emerging recovery”, given that it comes at a time when the real estate sector was really beginning to take off; record levels of investment were recorded last year. Before the elections, experts predicted that the level of transactions was going to continue (this year), but following recent events, “it is now very difficult to make forecasts”. These warnings coincide with others made this week by several important businessmen, such as the Chairman of OHL, Juan Miguel Villar Mir, who said that (political) groups such as Podemos put Spain’s economic recovery in danger. In a similar way, the markets have penalised the election results and the Ibex 35 recorded a loss of 2.91% last week.

(…)

The urban plans proposed by Carmena and Colau leave most of the major projects, both those already underway as well as those still to be awarded, up in the air. In Madrid, they endanger million-euro developments such as Operación Chamartín, the Madrid Río shopping centre, Operación Mahou-Calderón, the Canalejas complex, Operación Edificio España, la Ciudad de Justicia and even Operación Campamento.

Whilst in Barcelona, projects such as La Maquinista and Heron City shopping centres, the refurbishment of the Nou Camp and urban developments in the surrounding area, the ski slope in the free trade zone of Barcelona SnowWorld and the conversion into hotels of iconic buildings such as Torre Agbar, the Deutsche Bank building on Passeig de Gracia or Project Núñez i Navarro are also at risk.

(…)

Original story: El Economista (by Alba Brualla and Javier Mesones)

Translation: Carmel Drake

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