Investors from the UK, North America and Latin America cause Luxury Real Estate Expansion in Madrid

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Madrid and Barcelona are seeing heavy rehabilitation of high priced real estate in the heart of the city. The traditional Spanish buyer (38%) is accompanied by an increase of investors from the UK, North America and Latin America, who are coming in with significant purchasing power.

After years of decline the Spanish market has steadied and is again attracting investors with the volume of sales on luxury homes valued above 900,000 euros increasing by 27%, according to the Ministry of Public Works, mainly due to the increase in international demand.

Foreign investment funds, family offices and national investors, as well as SOCIMIs are taking interest in the residential luxury market. The purchase of luxury homes for rehabilitation homes is especially in demand in Madrid with several high profile luxury developments.

Increased Sales on Luxury Properties in Madrid

Sales have increased about 30% in the past year, according to luxury real estate agent Lucas Fox. “Compared to most northern European cities, homes in Madrid still offer good value for money,” said Alexander Vaughan, one of the founding partners of Lucas Fox.

“The Spanish capital attracts more and more international buyers who are choosing it as the best option to invest, thanks to the high yields in the medium and long term, which can reach between 4% and 5%, good rental income and the excellent lifestyle it offers,” says Jamieson. “We have recorded a sales increase of almost one third compared to last year’s transactions and we expect to increase them five-fold by the end of this year.”

The traditional Spanish investor, which accounts for 46% of purchases, is being joined by an in-surge of Latin American buyers (31%). Over 60% of these purchases by foreigners are purely for investment purposes. According to Lucas Fox, the total value of transactions has increased by 169% in the first half of 2017 after increasing 26.6% between 2015 and 2016.