After 6 years of declines Madrid’s real estate market is back on the move. Investors with cash to spare are once again looking at Madrid for solid rental yield and value appreciation over the upcoming years.
8 years ago things got crazy in Spain. Following the example set by the US market Spanish real estate prices soured, causing a construction frenzy. Thousands of labors from South America poured in for construction work while the economy grew into a massive bubble.
This time around things are calmer, cooler and memories of the recent economic disaster caused by the last property bubble are still fresh in investor’s minds. Property valuations are quietly improving as well as the number of sales in the Spanish capital.
Most publications will talk about Spain’s investing opportunities in Chamartín or Barrio Salamanca, the more exlusive areas in the heart of the city of Madrid, while they ignore some of Madrid’s more undervalued luxury areas.
The city of Madrid is continually expanding out in all directions with some of the nicest areas lying in the north. One of the most notable developments in the northern part of the city is in the area of Arroyo Fresno where roughly 30 new apartment complexes are being built (several already finished). Arroyo Fresno is one of the nicer areas in the city with a mix of well valued apartment communities and single family homes. This area is surrounded by Fuentelarreina and Mirasierra, two of Madrid’s wealthiest communities, and also touches on the upper middle class area of Montercarmelo. While this new development is well located, due to price and other factors we don’t consider these properties to be great investments.
As developments continue to extend the city north some of the outside areas are still being overlooked. Just an 18 minute drive north on the A1 highway leads to a large private neighborhood in a gated community with private security. In this community, Fuente del Fresno, you can find large beautiful villas at reasonable prices.
A large selection of houses between 300 and 350m² can be purchased for 800-900,000€ while the same size properties in Mirasierra (which lies just at the north edge of the city) go for anywhere between 1-2 million euros. An even better example would be the smaller 200-250m² houses with starting asking prices at 350,000€ with comparable properties starting at 700,000€ in Mirasierra. In fact, owning a house (as opposed to an apartment) in any part of the city is hard to come by for under 500,000€.
Not only does Fuente del Fresno have gated security and street patrol but it also has public tennis courts, basketball court, children’s playground, as well as a pharmacy, bar and some shops inside the community. It’s located just north of 2 large shopping areas including a shopping outlet, Ikea, Leroy Merlin, Media Markt, Fnac, countless restaurants, a hospital and more.
If you don’t like the hustle and bustle of the city but would like to stay nearby for work or whatever reason and you are looking for a nice quiet area with lots of space to enjoy and raise a family, then Fuente del Fresno is the place to go. If you’re an investor and you want to get a foot in the luxury market in Madrid, we believe Fuente del Fresno is a good opportunity for capital appreciation over the next 10 years as Madrid’s city lines and growing economy keeps expanding.