The building is reportedly being sold to Murcian based group, Baraka Global Invest
Holding group Baraka Global Invest, registered in the Region of Murcia and spearheaded by Orihuela-born businessman Trinitario Casanova, is reported to have offered 265 million euros for the emblematic Edificio España in Madrid, the same amount paid by Chinese group Wanda in 2014 when it was purchased from Banco Santander.
The deal between Baraka and Wanda has been agreed, although paperwork has yet to be completed, according to reports in the Spanish media on Wednesday, reports which neither party is willing to officially confirm.
The building has been a constant source of conflict between its new Chinese owners and the government of Madrid ever since it was first purchased, due to differences in opinion over plans of the Chinese group to refurbish and market it.
The Edificio España is an iconic part of the Madrid landscape, built by architect Julián Otamendi and his brother in the Neo-Baroque style between 1948 and 1953.
When built, the 25 story block was the tallest building in Spain and was the subject of a great deal of propaganda, becoming a “symbol of prosperity” during the years of dictatorship.
Originally built to house the Crowne Plaza Hotel, a shopping centre, offices, rooftop pool and luxury apartments its iconic profile is very much a part of the Madrid landscape, although gradually its status diminished as it was swallowed by more modern giants, and today is only the 14th tallest building in Madrid.
Eventually it became dated and in 2005 owners Metrovacesa sold it to Santander, the aim being to renovate it and maintain the iconic façade and lobby intact. However, by 2010 the economic crisis was biting hard, the property market was in freefall and the over-ambitious and badly-timed plans had become symbolic of the excesses of the urban construction boom and its collapse.
The building was sold on to Dalian Wanda in 2014 for a third less than Santander had paid for it just nine years before.
Chinese real estate investor Wang Jianlin planned to create a luxury hotel, 300 luxury homes and a retail space within the shell of the building, but found itself in constant conflict with the town hall of Madrid over the conservation of the emblematic façade and renovation project.
The group wanted to demolish the original façade and build an identical copy, a plan totally rejected by the council as the existing building is protected.
Such were the differences, that the Chinese finally decided to throw in the towel, blaming the “lack of understanding” between owner and council for their failure to complete the project, "the obstacles put in our way by the town hall have been insurmountable," they said.
Wanda also owns 20% of the shares of Atlético Madrid football club and is behind another leisure and residential property project called Operación Campamento, which is a potential 3 billion euro investment project in the capital.
If the deal goes through as anticipated, this will be one of the most important real estate transactions of the year in the city, and one of three investments made by the Murcian group in Madrid recently. The group acquired nine parcels totalling 114,000 square metres in the Valdebebas area for 75 million euros in May, purchasing assets from the Cort family who initiated residential development in the area, but whose real estate business went bankrupt several years ago, and purchased an office in the Gran Vía of Madrid which was sold for a 2.6 million euro profit just weeks later.
Baraka is one of a new breed of investors taking advantage of the fallout from the property construction sector implosion in Spain.
As the economy starts to revitalise, Spain is once again being seen as a lucrative potential investment market for companies looking for cheap buys. Property across Spain has devalued by 40% since the first quarter of 2008 when the sector imploded, and although values have decreased nationwide, the major cities have held their value better than areas such as the Mediterranean coastline where many developers fell foul of over-ambitious construction of poor quality second homes, some of which have never sold.
Major cities have weathered the storm better than coastal areas, mainly due to there being more work in the cities, and therefore more demand. As the Spanish economy is now considered to be on an upward path, investors are once again starting to build new develpments in the main cities of Madrid and Barcelona, as well as the affluent and industrially active Basque Country.
Baraka is a group based in the Murcia Region of Spain, the name Baraka an Arab word which means “blessed” or “fortunate”, headed up Trinitario Casanova, a businessman who made his money during the construction boom years.
The holding company Baraka Global Invest is a group of businesses with a number of activities under their umbrella, including stock market investment, concert promotion, construction, purchase and rental of apartments, agricultural activity, supermarkets, commercial centres and international estate agency investments.
Along with other investors the group has been increasing its activity in Madrid, one of its best buys being a 500 metre square office in the Gran Vía which it purchased from Bankía for 20 million euros in 2015, turning a profit of 2.6 million euros on the re-sale just a few weeks later.
No indication is given as to how the Edificio España will be developed.