Real Madrid will press ahead with a €400m (£359m/$441m) redevelopment project at the Spanish LaLiga football club’s Santiago Bernabeu stadium next year after finally reaching an agreement with the local council.

Under the project, a new retractable roof will be installed at the famous venue, with construction work expected to be completed by 2020.

Real has been keen to revamp the Bernabeu for several years, but previous attempts have been turned down by the council. Original plans to include a hotel and shopping centre as part of the development have been scaled back, although some of the facility may still be used for commercial areas.

In order to secure the council’s approval for the redevelopment, the club will not be allowed to increase the total size of the structures already in place, so some offices will be transferred to Real’s headquarters in Ciudad Real Madrid in the outskirts of the city. Additionally, one of the four corner access towers will be covered by a new façade that will wrap around the stadium.

Abu Dhabi-based International Petroleum Investment Company is helping to finance the project.

“We will see a dramatic transformation of the Santiago Bernabéu,” Real president Florentino 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.

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

Perez added that the Bernabeu would retain its name, but may gain a “surname” from a sponsor.