With a population of some 3.2 million people, the Spanish capital Madrid is the second largest city in the European Union after Berlin, as well as being the economic, political and cultural centre of Spain. It is also extremely popular among property buyers; a fact reflected in the consistently high excess level of demand. “The residential property market in Madrid is currently seeing very positive growth, despite geopolitical tensions. With inflation rates rising, real estate is perceived as a crisis-proof investment that promises price stability, and Madrid is positioning itself as an attractive city with a high quality of life. Foreign buyers are also being drawn back to the Spanish capital after a period of restraint and reservation during the pandemic,” says Juan-Galo Macià, CEO of Engel & Völkers Spain, Portugal and Andorra.
Compared to the previous year, the prices of properties brokered by Engel & Völkers in Madrid rose by 12 percent in 2021, to an average of 4,923 euros per square metre (2020: 4,350 euros). With the exception of the Balearic Islands, this is the sharpest rise anywhere in Spain. Prices are much higher, however, in especially sought-after locations. In the prestigious district of Salamanca, for example, with the elegant neighbourhoods of Recoletos, Goya and Lista, Engel & Völkers recorded the highest average prices in the city in 2021, at 6,100 euros per square metre (2020: 5,700 euros). Premium apartments here commanded top prices of as much as 13,043 euros per square metre (2020: 12,000). Alongside domestic buyers, French buyers and a growing number of Mexican and Argentinian buyers are now entering the market. In the centrally located districts of Chamberí, Centro and Chamartín, average prices in 2021 also exceeded the 5,000-euros-per-square-metre mark.
The needs and buying criteria of prospective buyers in Madrid vary very strongly. Demand in central locations tends to focus on spacious apartments with at least 150 square metres of living space, and a terrace. Overall, the pandemic has led to an increase in the desire for larger-sized homes and outdoor space. In line with this trend, the highest demand on the outskirts of the city is for detached houses of at least 450 square metres in size, with five bedrooms and a garden. In this segment, up to 3.5 million euros are being fetched for top properties in prime locations. The high level of demand means that buyer focus is now also increasingly shifting towards the region surrounding Madrid. Pozuelo de Alarcón, Majadahonda and Las Rozas remain the most expensive municipalities, with average prices per square metre of between 2,438 and 3,223 euros. Towns such as San Lorenzo del Escorial, Collado Villalba, Guadarrama, Alpedrete and Collado Mediano near Madrid are becoming increasingly popular too, with significant year-on-year price rises here of up to 9 percent - reaching between 1,960 and 2,143 euros per square metre on average.
At the presentation of the latest “Engel & Völkers Market Report for Spain and Andorra”, the Economics professor Gonzalo Bernardos estimated that a maximum of 145,000 new apartments can be occupied in Madrid in 2022. “Even with such a seemingly large figure, demand still exceeds supply by far,” Juan-Galo Macià reveals. “In our view, this trend is certainly here to stay for now, and we expect the low number of property listings to put increased pressure on prices,” he adds.
The Engel & Völkers Market Report for Spain 2021/22 can be found in full (in Spanish) here.