Spanish football giant Real Madrid has agreed a deal with the local council to redevelop its Santiago Bernabeu stadium, and the surrounding area.

The La Liga club’s president Florentino Perez made the announcement alongside mayor of Madrid Manuela Carmena, delegate of sustainable urban development Jose Manuel Calvo and council president of Madrid’s Chamartin district Mauricio Valiente.

Last December, Calvo’s department blocked the €440m (£398.4m, US$486.8m) development proposal in “the interests of the public”.

The council’s concerns appear to have been quelled, and Perez pledged to Real Madrid fans they will have the “best stadium” while the club’s neighbours will enjoy a “more sustainable remodelled environment”.

“With this agreement we will start a process of modernisation and transformation that will convert the stadium into an avant-garde architectural icon,” he added.

“The stadium will act as an economic and touristic invigorator and will contribute to strengthening the image of our city. This plan will also improve the whole area around of the stadium.”

German architects GMP Architekten and Spanish partner Ribas & Ribas are behind the project. Plans for the remodelled arena include the installation of a retractable roof, increasing the capacity to 90,000 and building a hotel, shopping centre and underground car park.

Carmena said the deal was a “good agreement for the city of Madrid”.

She added: “I have great satisfaction to offer an important new agreement to Madrid and especially for what it means for the city and Real Madrid’s emblematic Bernabeu Stadium. We always want to go forward and the best procedure is to meet, listen and understand.”