Madrid office block sold to China

SPAIN has sold an entire office block to China. The Madrid landmark, that is Spain’s tallest skyscraper has been sold to China’s wealthiest man Wang Jialin.  The purchase of the Franco-era building by Mr Wang’s corporation, Dalian Wanda Group, was agreed at €265 million.

Dalian Wanda’s purchase of the block called, Edificio España is demonstrative of the deals that investors can find in Spain’s battered property market. The Chinese conglomerate is paying about a third less than the €389 million that Banco Santander paid in 2005, at the height of Spain’s construction boom.

The office tower, which had been left empty since the recession, was built whilst Franco was in power and was inaugurated in 1956. Dalian Wanda plans to renovate the building, to include luxury apartments and a hotel. Chinese investors are particularly interested in hotel properties because “they believe Chinese tourists should feel like at home when they travel,” said Ms. Casaburi of Esade.

Another Chinese group also recently acquired the Valparaíso Palace, a hotel resort on the island of Majorca, for €48 million. And in May, HNA, another Chinese conglomerate, announced it was raising its stake in NH Hoteles to 29.9 per cent.

The investment into the NH group, was well received by the Madrid Corporation, who were left short of cash after the Eurozone’s debt crisis.

Spain is keen to cement ties with China, the government has granted residency for any foreigner who purchases a property of €160,000 and above, and  Mariano Rajoy, the Spanish Prime Minister, is to begin a three-day state visit to China on Wednesday. It will be his first since he took office in 2011.

It is thought that Spain’s property market is on the mend after the collapse, and the sale of Edificio España will prompt more Chinese investors, who feel more comfortable once one big transaction has gone through. Fernando de Góngora, the founder of Reliance Star Partners, explained, “The deal put Spain on the map for Chinese institutional investors, who generally feel a lot more comfortable about going into a new market once they have seen at least one large transaction go ahead.”

The Spanish real estate market rose in the second quarter for the first time since 2008.