Spain: According to a report in The Financial Times, overseas investors from Latin America are increasingly snapping up properties in Madrid’s prime residential market, following a period of economic instability in the city following Spain’s financial crisis.
The report, which gathered research from independent real estate consultancy firm Knight Frank Madrid, states that buyers from countries such as Venezuela, Colombia and Mexico are beginning to settle in the city, with the appeal of a lack of a language barrier and the city’s gateway status to the rest of Europe being prime factors behind the trend.
Rod Jamieson of full-service real estate agency Lucas Fox told the newspaper: “For Latin American investors, Madrid is a status symbol. Many spend three to six months a year here.
Spain experienced one of its most significant and well-documented financial crises between 2008 and 2014, which came to be known as ‘The Great Recession’ or ‘The Great Spanish Depression’ in the country itself. At the peak of the recession, the housing bubble burst and several entire sections of the economy collapsed, leaving almost half of under-25s jobless and half a million families were evicted from their homes as they could not afford to pay their mortgages.
After a forgettable period of economic instability, Jamieson says Madrid is rebuilding itself as an attractive proposition for both investors and tourists alike.
“Madrid has had to reinvent itself and now foreign investors are seeing its potential. The rejuvenation of city centre areas such as Justicia — the equivalent of London’s Soho — has made it fashionable,” added Jamieson.
This upturn in fortune can be attributed to several factors, including the resurgence in growth of Spain’s overall economy (a 2.5 per cent in 2018 was the quickest rate among the major Eurozone nations) and an improving employment outlook is set to create more disposable income and raise demand among consumers wanting to stay in Madrid.
Carlos Zamora, who heads up Knight Frank Madrid’s residential department, highlighted Madrid’s strengthening of its commercial sector and focus on finance, tech, logistics and communications as further reasons for this resurgence in fortune for Madrid’s prime residential market.
Meanwhile, Savills Spain’s head of residential, Arturo Diaz, expressed further optimism by telling The Financial Times that wealthy buyers were attracted by apartments that were equipped with hotel-like amenities and facilities, such as “wine cellars, gyms and concierges”.
Now, an ambitious new housing project is in the pipeline, called ‘Nuevo Norte’, which aims to take over 10,000 homes and expand the city centre towards the northern area of Madrid, where international students, young business professionals and families are intended to be housed. As a result, the supply of accommodation and balance out the increase in demand, leading to greater profitability for wealthy buyers from overseas.
Holiday rentals in Madrid are feeling the same benefits with Jamieson saying that short-term let investments are being sought out by so-called “sophisticated city buyers” who have budgets of around €500,000 to complete furnishings and interior design projects within the apartments.
With that in mind, Jamieson believes short-term lets represent more fruitful and appealing investments than long-term lets.
“Demand for short lets is stable year-round. There’s a big business traveller segment, sports tourism and people come for the culture and gastronomy,” he added.
The trend of acquiring units to operate units as short-term lets may yet accelerate in the coming weeks, with average property prices on the rise and a high quality of life balancing out a lower cost of living compared to other major capitals in Europe.