Real Madrid will be adding a retractable roof to the Santiago Bernabéu after finally reaching an agreement with the city to remodel the stadium. Madrid’s president, Florentino Pérez, said the project will €400m and construction is expected to start next year.

The revamped venue, which will also carry a new facade, is expected to be fully completed by 2020. “We will see a dramatic transformation of the Santiago Bernabéu,” Pérez said. “This stadium is one of the emblematic icons of our city and we want to make it one of the best stadiums in the world and the undisputed symbol of the strength of our capital.”

Madrid have been trying to remodel the stadium for several years but earlier projects were turned down by the city and court decisions. The new deal was announced at an event with Madrid Mayor Manuela Carmena.

“With this agreement we will start a process of modernisation and transformation that will convert the stadium into an avant-garde architectural icon,” Pérez said. “This stadium will act as an economic and touristic invigorator and will contribute to strengthening the image of our city.”

The existing exterior of the Bernabéu will be completely altered.

The venue originally inaugurated in 1947 will maintain its capacity of more than 80,000, although the seating sections may be redesigned. One of the stadium’s most notable features, the four corner access towers, will be covered by the new facade.

Perez said the Santiago Bernabéu will maintain its name, but it may gain a “surname” from a sponsor like at stadiums “everywhere in the world.” Abu Dhabi investment fund International Petroleum Investment Company is helping finance the renovation.

Because of the agreement with the city, Madrid won’t be allowed to increase the total size of the structures already in place, so it will have to rearrange the current constructions to be able to remodel the stadium. Some office spaces will be transferred to the team’s base in Ciudad Real Madrid, in the city’s outskirts.

The club’s initial plan was to build a hotel and a shopping centre along with the remodelled stadium, something that had prompted fierce opposition across the city. The club will still be able to use the new space commercially, but not how it originally planned.

Officials praised the fact that one of the stadium’s car parks will be transformed into a large public area, and that the new roof will help reduce noise in the neighbourhood.

“This deal happened to promote the modernisation project of the stadium and to improve the urban environment around our beloved Bernabéu,” Carmena said.

The Bernabéu stands in the middle of the wealthy district of Chamartin.

In March, La Liga rivals Barcelona announced their own remodelling project for the Camp Nou, increasing capacity from 99,354 to 105,000 after construction is fully finished in about five years. The stadium will also have a new roof covering all seating sections.