Madrid’s Canalejas Project Boosts Economy

Madrid's Canalejas Project Boosts Economy

Madrid’s Canalejas Project Boosts Economy

A major makeover is under-way in the centre of Madrid which will boost the economy and create a substantial number of jobs.

The so-called Canalejas project – referring to the emblematic Canalejas square at the heart of the new urban development – is spearheaded by Spanish businessman Juan Miguel Villar Mir, chairman of builder OHL and its private conglomerate parent Grupo Villar Mir.

It has already attracted a slew of investors, both domestic and overseas, including top hotel group Four Seasons. The Canadian chain will open its first hotel in Spain, a luxury 215-room establishment. At the end of last year, China’s Platinum Estates Group bought the Hotel Asturias in Canalejas square.  It plans to refurbish the building and turn it into luxury apartments.

Spain’s restaurant sector is also set to benefit from the Canalejas project, as Catalan gourmet burger restaurant Bacoa rubs shoulders with the US chain Steak and Shake. The development will also be home to a three-story, 16,000 square metre shopping complex with underground parking.

Buildings and commercial spaces in the area are changing hands rapidly as property investors and commercial firms vie to participate in this urban renewal initiative.

 

VILLAR MIR BETS ON SPAIN’ RECOVERY

Villar Mir’s dream for transforming the heart of Madrid’s busy centre began with the acquisition of 7 buildings from Spain’s biggest bank Santander for 215 million euros. These buildings, which were adjoining and located in and around the Canalejas square, had been empty for over 10 years. Some of them date back to the 19th century.

The Villar Mir group prospered abroad during Spain’s crisis, but with the economy now growing at its strongest pace since 2007, it is betting fairly and squarely on the country’s sustainable recovery and convincing other investors to follow suit.

In December 2014, the Villar Mir group and OHL closed the financing for the Canalejas project by signing a credit agreement for a maximum amount of 268 million euros. This makes it the largest financing operation granted to a real estate development venture in Spain in recent years.

 

JOB CREATION A KEY FEATURE

During the construction phase of the Canalejas project – from 2013 to 2017- 600 direct jobs and 1,200 indirect jobs will be generated.

The operational phase is expected to create over 3,000 direct or indirect jobs, including the Four Seasons hotel and the shopping centre. These new jobs are more than welcome in a country still struggling with one of the highest unemployment rates in Europe at around 23.7 percent.

The budget for the project, which is expected to be up and running in 2017, is estimated at 500 million euros, including the purchase price of buildings and additional construction. This is no small commitment on the part of Grupo Villar Mir and other industrial firms involved, but the Canalejas development looks likes it’s going to be a main driver for future Spanish economic growth.

For information on investing in Spain, contact corporate law firm Argali Abogados.

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