Elena Jori, Director of Real Estate at Home Select, explains how Madrid has established itself as the second most attractive European destination for high-end residential investment, only behind London. The restoration of historic buildings and new luxury projects, including branded residences, have drawn international investors from Latin America, the United States, and Europe. With steadily rising prices, top-tier cultural and leisure offerings, and an exclusive market with luxury amenities, Madrid positions itself as a city that combines investment, history, and lifestyle, approaching the standards of Paris.
The Marquis of Salamanca was a pioneer in envisioning the potential of those empty lands, next to the Puerta de Alcalá, in the Villa y Corte of Madrid. In 1864, he conceived an ambitious project, alongside engineer Carlos Mª de Castro and architect Lecumberri, to build two single-family hotelitos for the aristocracy, along with 14 blocks of multi-story housing for the bourgeoisie, between Lagasca, Serrano, Alcalá, and Goya streets. These buildings were designed with only three floors, garden courtyards, and wide streets with broad sidewalks. Don José María de Salamanca y Mayol died alone and ruined, without completing his most ambitious project.
Today, those late 19th and early 20th-century buildings he envisioned in streets like Columela, Villanueva, or Conde de Aranda have gained value, representing the summum of Madrid’s high-end residential market and reaching Parisian-level prices without hesitation. For the first time, Madrid has become the second European destination for residential investment, behind London but ahead of Paris, according to PWC and the Urban Land Institute. But when exactly did Madrid begin to resemble Paris?
Madrid’s prime residential market has seen ten years of sustained growth. Prices have risen from €6,000/m² to €15,000–18,000/m² in highly sought-after units such as penthouses. In new developments, we are seeing €25,000/m². And this refers to registered square meters, including apportioned common areas. In Paris, prices are calculated only on usable square meters, which means Madrid’s figures are starting to look very similar to those of Paris. In ultra-luxury Madrid real estate, a new rule has emerged in recent months: “the 1-2-3 rule”: one bedroom equals €1 million, two bedrooms €2 million, three bedrooms €3 million…
First came the Venezuelans, then Mexicans, and later Colombians. Madrid has benefited from each political crisis that erupted in Latin America, but the city has also built the foundations for foreign capital to feel at home: physical and legal security, investment-friendly conditions, and a real estate, cultural, and leisure offering on par with other major European cities.
In terms of real estate supply, we have seen new-build projects evolve into increasingly exclusive products: from Núñez de Balboa 84 or Don Ramón de la Cruz 26 (by Impar Grupo) to the latest launches such as Velázquez 53, Hermanos Bécquer 8 (by ARD), and Velázquez 21 (by Inbest). Not to mention branded residences marketed off-market such as Mandarin Oriental (Hermosilla 47), Banyan Tree (Padilla 32), or SLS (Infantas 40). All of them are exclusive projects with amenities, renowned architects, and interior designers dedicated to creating warm, unique atmospheres.
This new buyer also demands a cultural and leisure offering that meets the highest standards. Groups like El Paraguas, with Quintín, Amazónico, or Aarde, have found a gold mine in this new clientele seeking 24-hour service and a more international gastronomy. Other fashionable options include Los 33 and Charrúa in the Justicia neighborhood, or Giselle, Salvaje, and Toni2 for nightlife enthusiasts. These are gastronomic and leisure plans, but we must not forget our wonderful cultural offer, with three of the world’s most important art museums: the Prado, the Thyssen, and the Reina Sofía.
Investors ask us: how long will this trend last? How far can it go? The answer is that there is still upward potential. Madrid remains “cheap” compared to other major world capitals, and its sunny weather, quality of life, and the warmth of its people make it an extremely attractive destination for international investors. Recently, Americans and French have also been investing in Madrid’s premium residential market. Other nationalities will arrive, eager to bring wealth and prosperity, provided legal and tax stability is maintained.
The only factor that could cloud this prosperous outlook is the implementation of restrictive and unbalanced legislation designed to “fence in the open field,” ruthlessly tax property owners, and scare off foreign buyers. Such measures, loudly announced by our Government, reveal a total lack of understanding of market economics, the most basic laws of supply and demand, and the real estate sector in general. Market intervention always results in reduced supply, higher prices, and an exodus of private investment. Interventionist measures perversely worsen the very problem they intend to solve which, in Madrid and in Spain as a whole, has a very specific name: lack of supply.
Let us trust that our democratic system will prevent these legislative missteps from going further and that Madrid will continue to be the favorite investment destination for international buyers of residential property. Let no one take away our dream of becoming… more and more like Paris.
Link Article Idealista