How would you sum up the property market in Madrid during 2016?
The property market in Madrid has grown during 2016 with a notable increase in transactions during the last quarter of the year. Political uncertainty earlier on in the period dampened activity, particularly with national buyers, however growth has been consistent. Demand for quality renovated property still far outweighs supply in the market, especially in the mid-market range and this has been a limiting factor. Madrid remains on the radar of international investors as a place with an excellent potential to achieve good returns and long-term capital growth.
How does it compare to 2015?
We have seen continued growing demand from international buyers throughout 2016, which was a similar trend during 2015. The 6% average price increase for Madrid this year continues to reinforce confidence in the property market.
What are the notable trends?
Latin American investors continue to be the most popular international buyers in Madrid, especially for properties over €1 million and located in prime areas of the city, including the districts of Salamanca, Chamberí and Justicia. Their main reason for buying is for second home use to be able to enjoy the quality of life the Capital has to offer during. We have also seen increased interest from British and French buyers, looking for rental income properties in the mid-range (€450,000 – €900,000) of the market. The Golden Visa programme is attracting more investors from the Middle East and Asia, who are searching for an exit strategy and future security for their families.
What have been the main challenges?
The shortage of quality product available in the market has been our principal challenge during 2016. Although there are a good number of New Development/rehabilitation projects currently under construction, availability has remained limited throughout the year. A temporary slowdown was felt in national market transactions earlier in the year due to Spain’s non-conclusive election results. However this is now well behind us.
What types of properties are proving most in demand?
Prime located luxury apartments in classical buildings that have been renovated to a high standard, with 2 to 3 bedrooms and 2 bathrooms, between 150m² and 200m², and priced between €1 million and €1.5 million are mostly sought after. Also 1-2 bedroom properties of at least 50m² that are centrally located, in the €500,000 range for rental income investment.
What do you expect will be the key trends for 2017 in Madrid?
I believe that the Spanish property market in general will continue to increasingly attract international buyers, whether it be for lifestyle, residency or purely investment. Madrid remains an affordable European capital, easily accessible nationally and internationally that satisfies the investment needs of most potential property buyers whatever their motivation. As time moves on, more and more nationalities are discovering this exceptional city and want to take part in the potential growth. In 2017, we expect we will continue to see increased demand from Latin America, the US, Northern European countries, the Middle East and Asia. As Spain’s economy recuperates further, national market transactions will also increase for both investment and ‘pied-à-terre’ purposes. Based on the current pipeline of New Development/rehabilitation projects in process in Madrid, there is reason to be optimistic and we expect to see a higher volume of real estate transactions for purely investment reasons and for buyers wanting to take advantage of the Golden Visa residency scheme. As a result, I expect that we will continue to see prices increase at a steady rate, which are still between 20-30% lower than the peak of 2007.