Edificio España, the Chinese investor Wang Jianlin of Wanda, and Madrid City Hall saga

[Mark Stücklin]

“Edificio España – 05” by Carlos Delgado – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0

MADRID — In June, one of China’s richest men, Wang Jianlin, bought a landmark office tower in Madrid that had stood empty for years. The Franco-era building, Spain’s tallest skyscraper when it opened in 1953, had become a symbol of the Spanish real estate market’s collapse in 2008.

The New York Times says Spain has an opportunity to attract Chinese investors, but not without some challenges on the way > read the full article

As far as the Golden Visa scheme goes, Chinese investor numbers are growing, but from a small base – I’ll publish the numbers later. However, I know for a fact that the Portuguese scheme is much more interesting, so Spain is failing to achieve its objectives with this scheme because it’s been badly put together. Very typical!

[DBMarcos99]

Has work started on that Madrid building? Last time I passed by was in July and nothing had commenced. It’s going to make a huge difference to that side of town.

[Mark Stücklin]

Yes, I agree, it will really help lift the area. I don’t know if work has started yet, but I doubt it.

[Chopera]

If you can’t wait then there are some very nice flats in Torre Madrid next door: http://torredemadrid.propiedades-singulares.es/

I noticed that the top penthouse (that was advertised at €4,704,000) has been sold:

http://www.propiedades-singulares.es/madrid/edificio-torre-de-madrid-planta-32-vivienda-3/

 

[Mark Stücklin]

News is that at least some of this building will be given over to luxury flats.
http://www.elmundo.es/economia/2014/10/23/5448b22aca4741e3708b4572.html

[Mark Stücklin]

Latest news is that Wang Jianlin’s Wanda Group, which bought the Edificio España a year ago for €265m to convert into a hotel, shopping centre and luxury flats, has decided that it needs to demolish the building and rebuild it if the project is to be viable.

The previous city council said it would never allow the façade to be demolished. The new city council, which is left wing and by nature opposed to any private business, is also against allowing the façade to be torn down and rebuilt. They now say they will hold a city-wide referendum.

[Chopera]

I read somewhere that Wanda Group wanted to take down the fachade brick by brick, and then rebuild it brick-by-brick. I guess because they either can’t do the internal construction they want without removing the fachade, or they’re planning on “losing the bricks” at some point later on.

[Mark Stücklin]

I don’t know. I guess they just discovered it’s much more expensive to preserve the façade. Shouldn’t have come as a big surprise.

[Chopera]

When you consider the building’s structure, you can guess their problem: it’s impossible to get a crane in there, or any large materials or equipment for that matter. The façade surrounds the building, and the building tapers towards the top. They need to remove at least some of the top levels to drop a crane down, but somehow they’d also need to knock out the floors first. It’s not like most buildings where you can easily leave the façade standing while you demolish everything else behind it.

[Mark Stücklin]

Yup, the work is tricky. Now Wanda are having a public ding-dong with Madrid City Hall about what to do. Wanda want to knock it down and start again, City Hall say no way.

In the meantime, Wanda have gone ahead and put up commercial signs:

The project they are working on includes and luxury hotel and 180 swanky flats, to sell for as much as 10,000 €/sqm, according to press reports.

[Mark Stücklin]

In the end it looks like Wanda will maintain the façade of Edificio España in its refurbishment. So it lost that battle with City Hall

[Mark Stücklin]

Rumours in the press today that Wanda Group are getting cold feet and might be thinking of pulling out of this investment / selling up, with ramifications for other big (potential) investments in Spain, like taking a majority stake in the Costa del Azahar resort development Marina D’Or. Spain desperately needs foreign investors like Wanda, let’s hope this story comes to nothing.

[Mark Stücklin]

The latest news in this saga is that the Mayoress of Madrid, Manuela Carmena, is making a big concession to Wanda Group and letting them at least partially tear down and rebuild the façade of Edificio España. That should make the development more appealing to the Chinese investor, though I wouldn’t be surprised if it leads to much wrangling over the details.

[Mark Stücklin]

UPDATE. Madrid says Wanda are satisfied with the City’s latest proposal, and accept the conditions, namely partial demolition of the façade. On the other hand, Wanda still have the building on the market. I doubt we’ve heard the last of this.

[Mark Stücklin]

Now it seems Wanda have decided to sell the building but continue to work the planning side to add value and protect the price. Madrid Mayoress Manuela Carmena has said today that there are four investors interested in buying it off Wanda, who don’t want to sell for less than the €265m paid in 2014. This saga never seems to end.

[Mark Stücklin]

Maybe this saga does have an ending. The news today is that a Spanish holding company from Murcia called Baraka has agreed to pay Wanda Group more than €265 million for the building. There is no news yet as to what the new owner plans to do with the building.

[Mark Stücklin]

Reuters reported yesterday that:

Chinese real estate giant Dalian Wanda has finalised a deal to sell an iconic Madrid property, citing uncertainties over Spain’s market and the local political environment, the firm’s hotel unit said in a stock exchange filing on Friday.

Wanda Hotel Development Co Ltd (0169.HK) will sell the property to Spanish property developer Baraka Global Invest in a deal valued at 272 million euros ($283.15 million), it said.

The Chinese firm, which bought the property in 2014, flagged the potential sale in July after plans to develop the historic building into a luxury hotel ran into resistance.

Wanda Hotel said the disposal was driven by “the market and political environment in Spain and the resulting uncertainties” around the project.

[Mark Stücklin]

Wang Jianlin and Wanda have finally managed to sel Edificio España in Madrid,, reportedly for €272m to Spanish property company Baraka Global Invest SLU, having paid €265m for it back in 2014, so a €7m profit to save some face. Wand has reportedly lost $29m from the deal due to exchange rates. Baraka sold the building to the RIU Hotel Group from Mallorca an hour later , price undisclosed.

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