Madrid’s poorest neighborhoods lead the resurgence in the Spanish capital with a 12% increase on average in areas like Usera, Ciudad Lineal and Villa de Vallecas.
Next in line are Madrid’s high end areas in the city’s center. Places like Retiro, Arganzuela and Barrio Salamanca are seeing increases of 10-11%, while the average increase in the rest of the city is around 7%.
Madrid Real Estate Price Adjustment
Prices for Real Estate in Madrid dropped 40% from the highs in 2007, with the average price dropping from 3947 euros per square meter to 2378 euros. Barrio Salamanca currently sells for 3935 euros per square meter on average while the cheapest areas, Puente de Vallecas and Carabanchel cost 1424 euros and 1554 euros per square meter respectively.
Increased Sales and Investment in the Madrid Property Sector
While the average time to sell a house in Spain is currently 9.5 months, in Madrid it has been reduced to 3.4 months. In June 2017 sales rose by 32.6% with 7298 purchases. The demand for property in the capital is increasing partly due to an increase in investors as the return on rental investments can reach 10% in some areas.
Small investors can find properties between 80,000 and 130,000 in the modest parts of Madrid like Ciudad Lineal, Canillejas, Villa de Vallecas, Barajas, Latina and Moratalaz. These areas offer between 5 and 6% return on investment with a low risk of renters who default on payment.
Other areas like Puente de Vallecas, Carabanchel , Usera and Vicalvaro have apartments that cost between 50,000 and 80,000 euros but typically need work done costing between 10,000 to 20,000 euros. You can expect a return on investment of roughly 7%.
More average areas of Madrid like Arganzuela, Fuencarral, Moncloa, Hortaleza and Tetuan can cost anywhere between 130,000 and 300,000 and usually bring an average return of 4-5%.
Areas like Barrio Salamance, Chamberi , Retiro and Chamartin can cost anywhere from 300,000 to over a 1 million euros and tend to bring lower returns for investors.
Rent Prices in Madrid
The average rent has gone up 0.4% in the month of July settling at 11.55 euros per square meter. Prices in Madrid are 43% higher than Spain’s average of 8 euros per square meters and is the second most expensive city to rent in Spain after Barcelona.
Rental prices in Madrid reached their peak in September 2007 at 11.81 euros per square meter, since then dropping 2.2%. The highest increase in rent has come from the southern area of Rivas and the smallest increase has come from a northern suburb of Madrid, San Sebastian de los Reyes. The biggest drop in the community of Madrid has been in San Lorenzo del Escorial, a town to the east of the city, with a 5% decrease to 7.92 euros per square meter.