Entire building to become housing?
Following up on a story here a few days ago, more details are emerging of Pestana’s plans for the old Madeira Palácio hotel
Grupo Pestana made a proposal of around €45 million to buy the Madeira Palácio. The Diario is still incorrectly reporting that the property “was de-deactivated more than a decade ago”, and is currently in the hands of BCP. If the business moves forward, the ECO newspaper (part of media group Sapo) says that the hotel group will transform the entire building into housing.
Madeira Palácio was actually bought in 2018 by the Enotel Group for €40 million, according to accounts on this blog. At the time, the objective of one of the most well-known groups in Madeira was to transform it into the “Enotel Madeira Palácio”, with the works even starting in 2018. The forecasts pointed out that in the summer of 2020 everything would be concluded.
Last year, Enotel applied to increase the project by 46% , which now has 318 accommodation units, in a total of 728 beds. The idea was to build an independent hotel unit with 80 accommodation units and 160 beds. At the time, according to the planning director of the Enotel Group, the investment would be 237.5 million euros.
According to Jornal da Madeira , this project ended up falling apart, after BCP rejected the proposal by the Enotel Group. However, in December last year, Madeira Palácio was put on the market again for more than 60 million euros, according to the Diário – this is where the Pestana Group came in.
The CEO of Dionísio Pestana’s group told ECO that the proposal was around €45 million. And according to the newspaper, it seems that the business has legs to walk: “We are in a period of due diligence. We made a proposal, they [BCP] made a counter proposal and we accepted it,” said José Theotónio to ECO, referring that the amount end of the deal is not yet closed and it depends on the financing conditions and the possibility of exercise of preemptive rights by the residents of one of the lots, where there are houses.
The Pestana Group CEO also said that the objective is to invest in real estate, as the hotel industry is experiencing moments of “agony”.
Madeira Palácio is divided into four lots: the hotel, apartments, a building site next to Pestana Bay and a lot with colony dwellings: “It is a regime that only exists in Madeira. The houses are inhabited and the settlers have the right of first refusal. If they exercise this right, they can buy them and pay directly to the bank”, explained José Theotónio. This is one of the factors that can influence the final value of the business.
COVID-19 in Madeira: daily updates can be found on an earlier post.
Vaccinations in Madeira: updates can be found on an earlier post.