Madrid left in the dark over Edificio España project

Madrid regional government and City Hall officials are pessimistic about the future of the Edificio España after sources told EL PAÍS last week that the Chinese conglomerate Dalian Wanda Group has backed down from its plans to refurbish Madrid’s iconic skyscraper because of technical difficulties.

Dalian Wanda is yet to notify either the Madrid regional government or City Hall about its decision. EL PAÍS also learned last week from sources from the group’s representative offices in Spain that Dalian Wanda may end up selling the building, which it bought in 2014 and planned to turn into a shopping center and luxury hotel.

The decision was presumably made after studies showed the technical difficulties involved in tearing down the 25-story building. The Chinese firm has not given any reasons, or even explained its decision to close its office in Madrid, as Okdiario first reported.

The point of contention between Madrid government officials and Dalian Wanda has been the conservation of certain parts of Edificio España.

The Local Historical Heritage Committee had ordered the firm not to touch the façade and side wings because of their historic value to the city. For safety reasons, Dalian Wanda had offered to tear down and rebuild the façade brick-by-brick. The two sides had been in loggerheads since the project was first announced.

Last October during a lecture at the Harvard Business School, Wang Jianglin, the chairman of Dalian Wanda, said that “it was not the Spanish government that vetoed the proposal, it was a personal campaign against us by Madrid.

“This is a perfect example of freedom in the West – anyone can express their view and use signatures on a website to protest our rebuilding efforts,” Wang said in response to a question about the Madrid project.

“This is a perfect example of freedom in the West – anyone can express their view and use signatures on a website to protest our rebuilding efforts”

“You are bound to encounter problems, whether it be through investment or through the development process,” he explained.

“What do you do when you encounter a problem? You be patient. Slowly, they state their reasons. You can give me suggestions, and I can hire a PR team or lawyers to rebut you, right? This matter is still ongoing, and we wait patiently for an outcome.”

This is not the first time that Madrid officials have had problems attracting private investors.

In 2013, American business magnate Sheldon Adelson abandoned his plans to build the casino complex EuroVegas in Alcorcón after he was unable to get the Spanish government to relax certain laws, which included allowing customers to smoke while they were betting.

In April 2014, British architect Norman Foster also canceled his plans to establish a foundation in one of Madrid’s historic buildings after the Local Historic Heritage Committee imposed conditions.

Dalian Wanda is yet to notify the Madrid regional government or City Hall about its decision

Recently, Madrid’s leftist mayor, Manuela Carmena, has come under fire from both the Popular Party (PP) and Ciudadanos for the cancellation of the Wanda project. This is despite the fact that the Local Historical Heritage Committee falls under the Madrid regional government’s jurisdiction, which is controlled by the PP with the support of Ciudadanos.

Since last week, both the regional government and City Hall have been unable to contact anyone who can give them precise details about the future of the project.

On Friday, Mayor Carmena said that no one has notified her whether the plans have been cancelled.

“What has happened – if something has happened – I don’t know...” she said. “No one has notified us, so City Hall is going forward and, if everything goes well, they should start on their remodeling work in two-and-a-half months.”

A City Hall source said that if “Wanda arrives here next week, it will surely be to meet” with government officials.

The point of contention between Madrid and Dalian Wanda has been the conservation of certain parts of Edificio España

“This is a serious matter,” said Esperanza Aguirre, the PP municipal spokeswoman. She claimed that City Hall didn’t want to issue permits to allow Dalian Wanda to do what it wanted to do with the entire structure.

“They are saying that there is an opinion issued by the Heritage Committee’s board of directors. That’s not true,” Aguirre said.

In fact, the panel issued not just one but two opinions about the project.

In March 2014, the committee, which is presided by the director general of Cultural Heritage Paloma Sobrini, decided to allow the partial demolition of the building.

The 1950s-era structure, which has been lying vacant since 2007, was described as being “very dilapidated due to inactivity.” But the committee still insisted that the Chinese investors preserved the façade and side wings because of their architectural value. A study had been conducted by Spanish bank Santander, which at the time owned the building.

In July 2014, Edificio España was sold to the Dalian Wanda group for €265 million

Four months later, in July 2014, Edificio España was sold to the Dalian Wanda group for €265 million.

The Chinese firm filed its own study in July 2015 when it sought permits to tear down the entire building, including the façade, and rebuild a new structure. According to Dalian Wanda, it wasn’t safe to work around the preserved façade. In any case, it offered to dismantle it brick-by-brick and rebuild it.

José Manuel Calvo, urban development councilor and a member of Carmena’s Ahora Madrid party, was against the offer. But he passed along the petition to the Heritage Committee, which in October again ruled that Dalian Wanda’s plan “wasn’t viable.”

In its second opinion, the committee stated that the Chinese firm must guarantee precise security in the remodeling” project, especially when it comes to preserving the façade.

This is not the first time that Madrid officials have encountered problems attracting private investors

The committee’s first opinion was issued when Ignacio González – a member of the PP who had been Aguirre’s right-hand man – was regional premier. The second ruling was issued under the current regional government of premier Cristina Cifuentes, who is also a member of the PP.

Cifuentes is currently in office thanks to the support of Ciudadanos.

Begoña Villacís, Cuidadanos leader in Madrid, has publicly blamed Mayor Carmena for Dalian Wanda’s reported backing out of the project and told her to “stop putting obstacles and scaring off investment” possibilities.

English version by Martin Delfín.