Chinese developer exits Spanish market with sale of landmark Madrid building

Spanish real estate company Baraka is planning to buy Madrid¡¯s Edificio Espa?a from Chinese billionaire Wang Jianlin¡¯s Dalian Wanda Group for €272 million.

Wang paid $265 million for the 1950s landmark site in 2014.

The two companies signed a memorandum of understanding (MOU) on July 12, which is valid until October 15. ¡°The Board wishes to emphasize that the MOU may or may not lead to any formal agreement,¡± said the Chinese company in a statement.

Once Spain¡¯s tallest building, the 117-meter-high tower block built in 1953 sits at the western end of the capital's Gran V¨ªa thoroughfare and dominates Madrid¡¯s Plaza de Espa?a, but has been vacant since 2005.

Wang has warned Chinese enterprises looking to enter Spain that planning permission should be obtained in advance for every investment?

Spain¡¯s Banco Santander bought Edificio Espa?a in 2005 for €389 million. In 2007 it presented a project to redesign the interior, but this came to nothing, and it sold the building to Dalian Wanda.

Dalian Wanda was planning to reconvert the 25-story building into a luxury hotel and shopping complex. The deal was Wang¡¯s first real estate project in Spain, which he said was aimed at strengthening his group¡¯s brand and targeting mainland Chinese tourists.

But Madrid City Hall refused permission to carry out extensive reform work on the listed building. Wanda said on China Central Television earlier this year that he was still negotiating with Madrid City Hall.

¡°If it fails, we would sell the building and never invest in Spain again,¡± Wang said during the interview. He added that it was a ¡°lesson¡± for Wanda and other Chinese enterprises aspiring to enter overseas markets, and that planning permission should be obtained for every investment in advance.

Baraka Global Invest is based in Murcia, and its owner, Trinitario Casanova, has taken advantage of the collapse in real estate prices since 2008 to buy and sell key properties, among them 114,000 square meters of land in the Madrid suburb of Valdebebas, a former bank on the capital¡¯s central Gran V¨ªa thoroughfare, and the former headquarters of French carmaker Peugeot.

Casanova has been investigated by the Spanish Tax Agency for alleged fraud to avoid paying €6 million in VAT, and in 2008 he was sentenced to a year in jail over a share scandal and was banned from the financial markets for 12 months.

English version by Nick Lyne.