The Spanish press has buzzed with rumours of China’s Wanda Group pulling out Madrid having failed to reach an agreement with City Hall over the redevelopment of the iconic Edificio España building. Now Wanda Group has put the property back on the market, in a clear sign of lost interest, which other international investors will notice.
After weeks of speculation in the Spanish press questioning Dalian Wanda Group’s commitment to redevelop one of Madrid’s most famous buildings, Wanda have finally issued a somewhat gnomish statement saying that “the project is currently being completely reconsidered,” whilst at the same time putting the building up a for sale with a price tag of €265 million, which is what Wanda paid for the building back in 2014 when it bought it from Santander, a banking group.
Finished in 1953, the “the Edificio España (Spain Building) is the 14th tallest property in Madrid, Spain, and one of the city’s most iconic buildings,” explains Wikipedia. “It is an example of 20th-century Spanish architecture built in the neo-baroque style.”
Wand bought the building with plans to develop and sell 300 luxury flats, a hotel with 200 rooms, and a shopping centre, requiring an investment of €700 million. However, Wanda now argue that the project is unfeasible without tearing down the building and starting from scratch, whilst Madrid City Hall insists the existing structure’s façades must remain intact.
Wanda have not ruled out going through with the project, but looking to off-load the building now is hardly a good sign. If Wanda can’t find a buyer, and don’t get permission to do what they want, they might put the project on ice for four years to see if a change of local government goes in their favour, say press reports. Madrid is currently run by left-wing Mayor Manuela Carmena, and some commentators suggest her team have not done enough to keep Wand on board. Carmena denies that, saying at a recent press conference “we want to do everything possible” for the project to go ahead.
ANXIOUS NOT TO LOSE FACE
Chinese businessman Wang Jianlin, the head of property developer Dalian Wanda, who is often called the richest man in China, is anxious not to lose face selling at a loss, say press reports. He is asking €265 million – the same as he paid Santander back in 2014 (Santander paid €389 million for the building in 2005, at the height of Spain’s construction boom). But commentators say Wanda’s prices expectations are too optimistic, with €180 million to €220 million a more achievable price range, though €240 million might also be possible were the planning authorities to agree to tearing the building down, reports El Mundo.
The building had stood empty for several years before Wanda took it over, and now looks set to continue in limbo for years to come. This is bad news for Madrid, which doesn’t benefit from such a landmark building standing empty. It also drags down the Gran Via / Plaza de España area where the building is located.
The company has already cancelled all the contracts it had with companies to develop the building. Everybody is a loser if the redevelopment doesn’t go ahead, and the message it sends to other international investors looking at Spain is far from positive. It’s difficult to imagine Wand Group investing again in Spain if they sell Edificio España, despite recent reports of their interest in the Marbella area.