Real estate investments in Madrid. Beginners Guide.
Madrid enjoys some of Europe’s highest returns. The entry price is extremely low, and Madrid’s average property investment returns are some of Europe’s best, especially among leading capital cities.
Madrid is one of Europe’s most visited cities, both by visitors and business people, and is host to many important local and multinational companies. Therefore Madrid receives both a significant influx of visitors and people wanting to stay and work in the city to improve their careers.
Buying a “fixer-upper” and renovating it is one of the easiest ways to make money while investing in properties. This is particularly true in a city like Madrid where the housing stock is old. This article discusses why Madrid is such a good place to invest money, and then presents a case study from one of Pierre’s past clients.
Is it a good idea to invest in property in Madrid?
Madrid’s real estate portfolio offers a wide range of investment and acquisition options. The actual asset where you decide to invest will depend on your own personal investment priorities and plans; but as an example, business premises often give higher yields, with ROIs up to 8.9%.
In Madrid, demand for rented apartments and houses has risen so much that in a matter of days owners can find tenants. The city’s most central areas have always had the highest demand, but increasingly the peripheral areas within the M-30 ring-road and beyond are also beginning to see higher demand for housing, leading to higher rent prices and thus higher returns for the investor/owner.
Where is the best place to purchase an estate in Madrid?
Until determining where to invest, one of the crucial things to learn is which places deliver the highest returns on investment.
Neighborhood La Latina
La Latina is a specific multicultural melting pot in the center of Madrid, making it a perfect place to buy and rent to tourists or visitors staying a short time.
Other neighborhoods where you can make a strong return on your investment are Tetuán or Vallecas, due to their range of buildings and high demand for lower-cost apartments.
Chamberí and Moncloa-Aravaca Neighborhoods
These neighborhoods are where most national and international students are looking for apartments for rent. In this area renting your property is simple and profitable.
Barrio de Salamanca
With its prominent Golden Mile and aristocratic houses, it is one of Madrid’s most exclusive and high-end neighborhoods. The streets are full of luxury boutiques and restaurants. If you can purchase a house in this area, you’ll make a good, safe investment. In the event of a market downturn, prime real estate is less vulnerable to devaluation and rental properties are still on demand in this region.
Can foreigners buy property in Madrid?
There are no restrictions on the purchase of real estate in Spain, whether commercial, residential or land. Spain actually encourages investment by both resident and non-resident foreigners.
You’ll need a financial number that can be obtained with your passport by visiting a police station. This usually happens for Spanish or EU people on the day but it can take several weeks for others to do so.
Is it a good time to invest in Madrid real estate?
The property market in Madrid definitely suffered in the financial crisis of 2008 – but that’s a thing of the past now. People are looking for investment in real estate here for a variety of reasons, and in spite of issues such as Brexit, UK investors will still greatly benefit from buying property here.
Of course, there are many reasons you may want to invest in property, whether you are planning to move to Madrid in a couple of years or you want a sunny vacation home. But one scenario is buying for the holiday market which is becoming increasingly popular (especially with foreign investors). Properties can now be listed on platforms like Airbnb and generate a substantial return on investment.
The reason this could be appealing in 2020 is that Spain’s holiday market is still on the rise. In 2018 Spanish tourism grew to record levels – with 82.6 million tourists arriving in the country. The retail market for vacations is very much in demand.
If you have the funds to invest in a property deposit, there might not be a better way to make successful use of your money than to buy in Madrid – there are several reasons for that. The fact that interest rates are currently at historically low levels is one of the most important. That means the borrowing money has never been cheaper. Your mortgage is then cheaper than at any time before.
This is exacerbated by the fact that there are limited investment opportunities elsewhere; the aforementioned low interest rates make savings weak. Historically, investment in property has been one of the best and soundest approaches for returns on investments. Now is the perfect time, with Spain’s Central Bank forecasting a 10.5 percent return on residential properties.