Building Sale Madrid

The town planning regulations discourages the purchase

Loss of developable. This is the main reason why many investors - both national and international - do not end up embarking on the purchase of office buildings in the center of Madrid. The town planning regulations currently in force in the capital is discouraging, when not scaring, investors to the time of acquiring property that need to be rehabilitated to adapt to the demands of the demand, according to explain to the Confidential several experts, who believe that the urban planning legislation in the capital are causing the inevitable aging and gradual of the city.

Although each building is a world and, although it is possible that in some cases there is no really that loss of developable, the truth is that to achieve quality buildings in Madrid it is necessary to carry out considerable work and costly, which, without doubt, plays against the real estate investment in the capital, call the experts.

"It may be the case that an investor buy a building, the pull and lose up to one-third of developable or that a six-storey building is located on five in such a way that the buyer or investor hardly going to be willing to pay a very high price for a building to some income that you're not going to reflect", explains Ignacio Buendía, the team of research consultancy JLL.

The office market in Madrid offers very few opportunities for the investor looking for a building with a very good location in prime area - and with very good qualities. "The rate of availability of offices in Madrid reaches 11.9 %, but if we look at only the central business area (CBD), the figure drops to 7.3 %. And if we look at the buildings in good quality within the M-30, the percentage is reduced to 2 % ," point from Knight Frank. "There is hardly half a dozen buildings of very good quality in Madrid, and even they are in good locations," adds Buendía.

The buildings that fall within this percentage - and that some investors qualify as grade A-, would be, roughly, those new or rehabilitated completely less than 10 years ago and with optimal technical qualities. Examples of these buildings in Madrid would be the Four Towers, Tower Serrano -recently rehabilitated-, the Titan tower in Méndez Álvaro… In prime area, according to consultancy, rents may be between 28 and 30 euros per square meter per month.

Compared to other countries, it is true that the office market in Madrid is very outdated, lacks good quality buildings in prime locations and that, in addition, comply with the expectations of the most demanding funds, which is a huge disadvantage compared to other cities.

"I should not be surprised if that shortly that any company that works in the Ibex be hired only sustainable buildings", recently explained Benoît du Passage, president and CEO of JLL Spain during the presentation of the survey report Investors in Commercial Real Estate, developed by the IESE and the consultant JLL. "In Paris, the percentage of buildings with quality does not exceed 15 %, while in London he moves between the 20-25 %. In Spain, therefore, there is a lot of work to be done".

There are many advantages to invest in Spain at the moment, according to this report. The market is in full recovery process - with the potential increase in the income and the value of real estate that implies-, there are good opportunities, and is a volatile market, but one of their main drawbacks is the lack of quality buildings.

In other words, it is here where apparently open opportunities for the real estate market of Madrid, in the rehabilitation, change of use or overhaul of many buildings; however, the large stone in the road and the great obstacle to that in the future we will look great operations is mainly legislative.

"The buildings in the capital are very protected, the best built twenty or thirty years ago and the rehabilitation of putting the engine of a Ferrari to a six hundred. The ideal would be that an investor might be able to build a modern structure, without to criminalize the allowable floor area of the building," says Ignacio Buendía. "The technology not to forward, but the adjustment is anchored in the past".

Three are, in essence, the regulatory obstacles which the investors are at the time of rehabilitating or change the use to a building in the center of Madrid and, depending on the degree of involvement of works to be carried out to achieve these aims are on all three:

  1. Set to the maximum height. "This implies high economic costs arising from the structural works to be undertaken. Many buildings in the center of Madrid does not have a place of garage, in its General Plan 1997 requires that comply with the allocations of parking spaces. Sometimes, for structural reasons or geological is not always possible and these places cannot be built, while the LAND also includes looking for seats, whether public or private, in a radius of 200 meters from the building in question. The problem is in the downtown area, these squares are exhausted," explains Jaime Vicente-Rodr íguez Palau, lawyer of the department of urban planning of JLL.
  2. Set to the maximum height that requires the General Plan of Madrid can also involve loss of developable. "With regard to the loss of developable and heights, it may be the case that, at the present time, a building license has been granted to build in the entire footprint of the plot, but after performing an operation on the same that affects the entire structure, is considered as a new building and, accordingly, has to be adjusted to the zoned allowed and the surface plot of computable in accordance with the existing land", explains this expert. The minimum height of the floors is regulated in article 6.6.11 and following of the land of Madrid, which, as a general rule, establishes "a minimum clearance of floors of two hundred and fifty (250) centimeters for habitable parts that may be reduced in parts not habitable until a minimum of two hundred twenty (220) centimeters" (article 6.6.13 ). "But we should also bear in mind what set each ordinance for each particular case," warns of Vicente-Rodríguez Palau ."For example, for those buildings covered by the Ordinance Zonal 1 (article 1.8.16 ), the minimum height of the floors will be of 360 centimeters on the ground floor and 300 centimeters in higher plants; in the zonal Ordinance 8 the height of the floors will be of 280 centimeters, with the exception that the works are carried out in interior of existing buildings (article 8.8.11 ). For those buildings which applies the zonal ordinance 4, the height of the floors will be of 285 centimeters for plants and floor 310 centimetres for the ground floor (article 285).
  3. Recovery of free spaces (patios of apple) with the loss of developable that this implies. "It also loses developable and that loss is not retrieved in economic terms, without counting the lace that we have to do with structure in the project of rehabilitation," says Ignacio Buendía"Those buildings not catalogd to which you applied the Zonal Ordinance 1, most of the area of the historical center, we find ourselves with cases in which requires the recovery of a patio, which leads to the loss of developable in case of a restructuring that would affect the morphological and structural conditions of the building and a new building, given that could not be build on hump in the space, and should be strengthened its recovery".

To all of this would have to be added in addition, and among many other things, the rules of safety, wiring, piping and a long etcetera just impact negatively on the developable on each floor and to the that requires, not only in PGOUM, but also the Technical Building Code (CTE).

"The recovery of the historical helmets through rehabilitation of buildings without doubt improves the quality of a city. Urban must be encouraged and fiscally more this type of action, especially because it means retrieve part of our history, and would work, it would enhance tourism in general and contribute to economic growth", concludes Jaime Vicente-Rodr íguez Palau.