Madrid is the third top city in the world with the highest demand for luxury properties
Madrid has been named the third most attractive city for large international real estate investors this year. It has already been ranked the third top city popular among millionaires, following the Portuguese cities of Lisbon and Porto. 'The Spanish capital will become the main destination for luxury property buyers and investors in 2019,' says the Barnes report which was presented last Thursday by its president Thibault de Saint Vincent and Anna Molgo, the district manager in Madrid.
The capital's real estate market is experiencing the record development and growth rates of property prices. Last year, Madrid was ranked the tenth among the 50 cities in the world that attract elite real estate buyers, having climbed 5 positions up in just a year. Though, it is worth noting that Barcelona wasn't included in this rating. It hasn't been ranked for the past three years. "Barcelona was on the 20th place until 2016 but the main problem that changed the situation is the political instability which discourages investors," explains Barnes president.
Madrid is the global leader in real estate investment growth. Although property prices per square meter have increased and are expected to grow by 2% in 2019, they are still lower than in other European capitals so that buyers can afford properties in the city center. In addition, the rental income in Madrid is about 4.7% which makes it one of the highest among the major cities in the world with the lack of rental housing. The luxury housing prices in Madrid range from €6,000 to €13,000 per square meter. According to Barnes, the most popular properties are apartments priced from €800,000 to €1,000,000 (for redesigning) and from €1.5 to €1.9 million for already redesigned properties.
Almost 70% of the clients of this company, which offers 180 properties for sale and rent in Madrid, are Hispanics mostly from Mexico and Venezuela due to their local political situation in the country. "A strong increase in the number of buyers from Mexico has been observed because López Obrador has been the President of the country, while the number of buyers coming from Venezuela is slightly decreasing," says Molgo. The most popular districts in Madrid are Salamanca with its Recoletos, Chamberí and Justicia.
Some of their luxury property buyers belong to the special group of more than 25,000 people around the world who have acquired over five properties in different countries. Their goal is to become residents of the main economic centers, international cities and best holiday spots and buying real estate in such places means preserve their assets and positions among the largest investors at the world stage.
Benefits given by Brexit
One of the reasons of Madrid's popularity among investors is the Brexit situation in the UK. Madrid gets plenty of benefits thanks to Brexit. The London real estate market is losing its popularity and large investors are looking for new directions. Property sales in London fell by 10% in 2018 and the decline in 2017 was 30% comparing with 2016. Prices have been falling over the past three years (-25% in euros and -15% in pounds) and a 5% decrease was observed in prices of properties in central London in 2018. Paris also took advantage of the property investment decrease in London. The prices in this city rose by approximately 8% in 2018, ranging from 5% to 15% depending on the district.
But it is Portugal that took most advantage among the European countries. Now, investors treat Lisbon and Porto as the main international destinations for real estate investments. Apartments in the city center cost from €6,000 to €12,000 per square meter. The average price in the Old Town of Lisbon varies from €7,500 per square meter to €15,000 per square meter when it comes to super luxury properties.