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2 March 2016
The Salazar family continues its process of selling off hotels, one that began in 2014 with their eviction from the Hotel Ada.
Madrid’s hotel market is at a fever pitch. This Tuesday, the sale of the Villa Magna hotel, on the Paseo de la Castellana, to the Turkish Dogus Group was announced. Just 300 meters from the Madrid’s central avenue, another well-known property has come on the market. The Gran Hotel Velázquez is up “For Sale,” asking for more than 60 million euros.
Owned by the Corporación Hispano Hotelera (which is in turn owned by the Salazar family), the investors who have made offers for the property have been rebuffed by the family, which is nevertheless beset by debts. “They are asking for approximately 62 million euros”, sources in the real estate sector explained to 02B. Meanwhile, those same sources believe that a fair price for the asset would not exceed €35 to 40 million.
An old-fashioned property
Although the location and the building are very attractive, it would be necessary to adapt the building, bringing it up to modern standards. Some call it “old-fashioned.” Others added that the property could be called, “vintage, if not just old.” The 435,000 euros per room requested by the Salazar brothers would require significant additional investments to remodel the establishment.
At first, the owners of the Gran Hotel Velázquez confirmed that the property has been on sale “for a while.” However, other sources at the firm then stated that they had no information on the possible sale and that any statements to the contrary were “rumours.”
The hole of the Salazars
The Salazar brothers have been divesting themselves of their hotels since 2014. In May of that year, they left the Ada Hotel – currently owned by Único Hotels – evicted for failure to pay rent to Real Gran Peña. A year later, in March, the Hotel Maria Elena went to Hotusa while Asturias went to Platinum Estates in May.
The former owners of SOS Cuétara, the current Deoleo, are awaiting a court appearance regarding fraud allegedly committed in 2008. A €213-million loan ended up on the balance sheet of another the group’s company. For that, a judge confiscated their passports and imposed a fine of 93 million euros. Also, the magistrate seized its assets to guarantee a €360-million security.
A hotel bubble
The Gran Hotel Velázquez is just one example, but prices have skyrocketed in Madrid. “A bubble is forming,” warns Bruno Hallé, a consultant at Magma HC. “Threats of a possible moratorium generate uncertainty and consequently the value of real estate increases.” Also, growth is not commensurate with the pace of occupancy and prices in the capital.
Meanwhile, an investor says: “They’ve put this price on to see if someone bites.”
Original Story: Cerodosbe – Carles Huguet
Translation: Richard Turner