Tag: Urban planning

Supreme Court Places Thousands Of Homes In Legal Limbo

1 July 2016 – Expansión

The town plans for Gijón, Vigo and Marbella are the latest to join the long list of projects that the High Court has declared null and void, placing thousands of homes into legal uncertainty.

The real estate bubble is still causing problems years after it burst. In the last five years, the Supreme Court has ratified the annulment of several general town plans (PGOU) all over Spain, decisions that have continued in the last year with the High Court bringing down the plans in three other places, specifically, in Vigo, Marbella and Gijón.

These rulings make thousands of homes illegal, given that they were constructed in accordance with PGOU guidelines that are now considered null and void. What will happen to them now? Although the risk of demolition exists, it is minimal and the next step for the municipal companies is to draft and approve new PGOUs that include a process to normalise these buildings, which currently find themselves in a kind of legal limbo.

However, that is not the only negative consequence of this escalation in litigation, as reflected in the round table organised by two partners at Ontier, Jaime Díaz de Bustamante and Jorge Álvarez, together with Susana Rodríguez, Managing Director at the consultancy firm Aguirre Newman, and Antonio Pleguezuelo, Director of Town Planning at the same firm.

“The cascade of PGOU annulments is generating a considerable lack of legal certainty”, said Díaz de Bustamante, who insisted that this situation “deters international investors, who cannot afford to allocate their capital to an urban development plan that is subject to unstable regulation”.

But, what are the reasons behind all of these rulings from the Supreme Court, which are nullifying PGOUs all over the country? According to the experts consulted, one of the main reasons is the lack of communication and coordination between the different administrations involved in the preparation of the urban plans.

In this sense, Jorge Álvarez and Antonio Pleguezuelo requested greater coordination between autonomous communities and the central Government when it comes to defining the rules that are going to be applied, as that would result in greater certainty, in their view.

Delays in the process

Nevertheless, more concern and unease in the sector is leading to delays in the approval of urban plans, which, in some cases, is even resulting in changes in government.

For this reason, the experts at Ontier and Aguirre Newman insist on the importance of reducing the regulations relating to PGOUs. “The bureaucracy surrounding these plans need to be reduced so that they can be approved more quickly and adapted to the social reality”, explained Díaz de Bustamante.

Not surprisingly, most of the PGOUs that have been declared void by the Supreme Court in recent years had defects relating to the processing of the different reports required or to the sectoral processes, almost all of which are provided for by state law.

Original story: Expansión (by Laura Saiz)

Translation: Carmel Drake

Edificio España: Renovation Prohibited So Wanda May Sell

13 January 2016 – Expansión

The Chinese company Dalian Wanda is considering putting the iconic Edificio España building on the market. It acquired the property from Santander for €265 million in 2014, but is not being allowed to completely renovate it and convert it into a luxury hotel, with a retail space and homes.

The group founded and led by Wang Jianlin wanted to pull down the tower, located in Plaza de España (Madrid) and reconstruct its façade with a design that is identical to the current one, however the new Town Hall of Madrid, led by Manuela Carmena, has rejected those plans, on the basis that the façade must be protected as it forms part of the city’s artistic heritage.

After months of fruitless negotiations between the Asian company and the Town Hall to begin the construction work, Wanda has now decided to sell the building, according to several sources consulted by this newspaper.

As a preliminary step, Wanda Madrid Development has decided to close the office that it opened in the Spanish capital to carry out the remodelling of the iconic building, which has stood empty for many years.

Following the commotion caused by the plans set out by Jianlin, the wealthiest businessman in Asia, the Town Hall of Madrid said yesterday that it was not aware of any plans for the building to be sold.

Meanwhile, the PP’s spokesperson at the Town Hall, Esperanza Aguirre, asked the municipal Government to “think twice” and allow Wanda to demolish and reconstruct Edificio España from scratch, because losing the investment (opportunity) and the jobs that would result from the Asian group’s plans would have “very serious consequences”. The spokesperson for Cuidadanos, Begoña Villacís warned that, if the decision is confirmed “Madrid could become an investment desert” since it is “a city with lots of development projects on the table and investment opportunities that we must not miss out on”.

Background

Despite the disagreements, Dalian Wanda, which also paid €45 million for a 20% stake in Atlético de Madrid last year, reaffirmed “its commitment” to “the citizens of Madrid” in October last year, as well as to the restoration of an “icon of the urban landscape”. The group confirmed that it was willing to hold “open and transparent dialogue, provided safety and the law are put first above everything else”.

At the end of November, the councillor for Urban Planning at the Town Hall, José Manuel Calvo, confirmed that the plans were moving ahead to enable the renovation work to start “as soon as possible”, although the administrative procedures must first be completed.

Madrid’s local historic heritage committee issued a binding ruling, which resolved that the façade must not be demolished or dismantled, but Wanda insisted that maintaining such a tall façade during the renovation work would be unsafe, which is why the company proposed that it be dismantled and then reconstructed.

Original story: Expansión (by R.R./A.F.)

Translation: Carmel Drake

Kronos To Close 2015 With €100M Inv’t & 1,200 Homes

6 November 2015 – El País

The real estate investment, management and development company Kronos Investment Group expects to close the year with a portfolio of 1,200 homes and investment of €100 million, which will generate projected sales of between €400 million and €500 million. And it expects to double these figures, at least, by 2016.

The company, which marks its first anniversary in Spain this week, is here to stay. (…). In 2016, it intends to create its own investment fund and in fact, it is already in talks with some of the large funds operating in Spain regarding possible investments.

The group’s activity focuses on investment and management of residential plots of land for development. (…). It sources its assets from banks, individuals, bankruptcy proceedings and from Sareb.

To date, it has invested more than €80 million purchasing land for the development of around 570 homes, located in Puerta de Hierro (Madrid), Sotogrande (Cádiz), Playa Natura (Estepona), Playa San Juan and General Marva (Alicante) and Cala de Bou (Ibiza). The development in Madrid will have between 150 and 170 homes split into two phases, which will be sold for around €3,500/m2. Next week, Kronos will close its eighth operation – in Barcelona – investing another €20 million and adding another 250 homes to its portfolio. Next year, the group will continue focusing on Madrid, Barcelona, the Costa del Sol and Levante, but it will also look for land in Málaga, Sevilla, Valencia and the other provincial capitals with little stock and strong latent demand.

According to Manuel Holgado, a partner at the company, “We are interested in locations that make sense from the point of view of supply and demand, given that we want to develop and not speculate. This year, we have focused on Madrid, Barcelona and the coastal areas where the market is working well (Estepona, Sotogrande, Alicante), but next year we will expand our focus to include other towns with built-up demand and limited new housing supply”. The group’s residential portfolio is currently split 50:50 between first and second homes.

One of the aspects that distinguishes the group is that it does not necessarily purchase land that is ready to build on (suelo finalista), but rather it is capable of managing all types of land, if necessary. “We look at relatively small plots, as well as large sites that require urban planning and development. The price of a plot of land must be sufficiently attractive to allow us to sell the end product at a competitive price in the current market environment”, says Holgado.

The company, which has offices in London, Madrid and Luxembourg, does not have any projects up for sale yet. Next year, it will launch five and so will implement a network of national and local agents, as well as its own website for clients who want to reserve their homes online. (…).

Original story: El País (by Sandra López Letón)

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

Construction To Resume In Valdebebas

30 January 2015 – Cinco Días

The Governing Board of Madrid’s City Council has finally approved the “Project for the Economic Redistribution of Plots in Valdebebas”, once all of the necessary administrative processes have been completed. “This is a particularly important milestone for Valdebebas, since it will allow not only for new building permits to be granted once more, but also for a return to normality for the first occupancy licences and building permits that have been already granted; the latter have been affected by litigation claims”, said the team responsible for the complex, located to the North of central Madrid.

Following the administrative decision, construction of almost 1,000 new homes (mostly non-subsidised dwellings) will begin in the next few months, adding to the stock of more than 4,000 homes that have already been built. “In terms of social housing, and once the existing supply of land has been used up, around 350 of the 1,000 new homes will be subsidised”. In addition to this new supply of housing, the urban restructuring will be completed with a shopping centre, comprising 56,000 constructible square metres, and a plot of land destined for private educational use, where the Joyfe Valdebebas College will be built. The parks in the area, which will occupy 1,000 hectares, are due to be opened between March and April.

The plans permit the construction of 12,500 homes, of which almost 4,200 have already been build and a further 800 are in the final phase of construction. Around 5,000 people currently live in Valdebebas, but it is estimated that the neighbourhood will have a residential population of between 30,000 and 40,000 people once the project has been completed. If we add the people that are expected to work in the nearby offices and shops, then estimates indicate that more than 100,000 people will pass through Valdebebas on a daily basis. The average price of non-subsidised housing in the new neighbourhood amounts to around €2,550 per square metre.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake