Why invest in Madrid real estate?
You are interested in investing in property, and Madrid is on your radar screen. Why do you want to invest in Madrid real estate? Perhaps you know and like the city? Or maybe you have noticed that it has topped the global rankings for real estate investment and is now in a growth phase?
Whatever your reason, you would like to know why Madrid is the up and coming city for property investment and why it will be beneficial for you to invest in Madrid real estate.
This article answers all of your questions about investing in Madrid. We explain why it is the ideal city for real estate investment. We provide trends, explanations, hard numbers and useful tips.
Madrid, the third largest city in the EU, has a unique growth potential
Question: How does Madrid rank, in size, compared to other cities in the EU?
Answer: Madrid is the 3rd largest city in the European Union! Do you find this surprising? Most people do.
Madrid’s sunny climate and relaxed lifestyle make it a very livable city
Although Barcelona gets a lot of fanfare (and the prices have risen in tandem), Madrid is the diplomatic, political and economic capital of Spain. In addition, it is three times the size of Barcelona. Virtually every multinational company with a presence in Spain has offices in Madrid. To learn more about the benefits of doing business in Madrid, please visit: Why Madrid.
Madrid real estate prices are low compared to similar cities
According to data from Cushman & Wakefield, Madrid leads global growth in real estate investment. It saw an increase of 164% between June 2014 and May 2015. Furthermore, the taxes of investing in Madrid property are the lowest of Spain. All-in property taxes in Madrid around 6-7%, compared with 10-12% in Barcelona and Valencia.
Real estate prices in Madrid are 4-5 times lower than in Paris or London, with average income much closer than these indicators. This means that the Madrid market is much healthier and better supports future growth. These low prices carry over to rental yields. The average yield in Madrid is 4% in Madrid’s city center, vs. 2-3% in London and Paris.
Sale prices have continued to increase in Paris. However, rental rates have stagnated. They flounder below 25€ per square meter. Conversely, Madrid prices have steadily increased at a faster path than sale prices. For example, average yields were 4% in 2010 vs. 5% in 2016.
If you want to learn more about average rental rates and returns, email us at email@movingtomadrid.com . We have some of the best information on rental rates available in the market and would be happy to share it with you.
Key selling point: Lower property prices mean you might still be able to acquire a top quality property in the center of an elegant European capital. This has become virtually impossible in Paris and London for all but the 1%. This is a unique opportunity.
6 reasons to invest in Madrid real estate
Yields are high in Madrid- they currently average around 4.5%. This is significantly above Paris and London. One reason is that there are not enough rentals in Madrid: only 17-20% of the properties in Madrid are for rent, compared to 35-50% in most European capital cities. Madrid desperately needs more investment to improve properties and put them on the market as rentals. This fits within the broader demographic trend of people increasingly emigrating to capital cities.
Madrid is now in a new positive cycle. It is time to take advantage of this growth.
To conclude, here is a summary of the reasons why to invest in Madrid real estate:
- Madrid leads global growth in real estate investment
- Real estate prices are low compared to other cities
- Rental rates continue to increase, outpacing real estate prices
- Rental yields average 4.5%, some of the highest among major global cities
- There is an under-capacity of rental units
- Lower property prices mean you might still be able to acquire a top quality property in the center of an elegant European capital.
Madrid continually attracts expats
Expats are continually attracted to Madrid’s best in class lifestyle and relatively low cost of living. Moreover, Spain has universal health care and is one of the safest cities in Europe, according to a variety of published indices. This combination of great weather, attractive work/life balance, low crime and excellent health care make it an ideal refuge to raise children, particularly in today’s uncertain world. For those with young families, Madrid boasts more than 650 international schools and bilingual high schools. It is also a relatively easy place to purchase real estate. Click here to learn how we can help you invest in Madrid property.
If you need help deciding if Madrid is the right place to invest in property, please contact Moving2Madrid today. We’re here to help!
Posted on 9 May, 2017 by Pierre-Alban Waters in Return on investment - Invest, New? Start Here
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