The affluent are running out of houses to buy in Madrid: only 35 are available in the Salamanca neighborhood.

Excerpt from El Economista, Lorena Torío

Spain is one of the countries in the world that most attracts large fortunes to invest in the real estate sector. A significant portion of that interest is due to Madrid. However, the Spanish capital has a drawback: there is hardly any new prime housing. Finding a property within the M-30 is almost impossible. Proof of this is that in the exclusive Salamanca district there are only 35 homes available for purchase.

These are luxurious apartments spread across 11 developments (both new construction and comprehensive rehabilitation), including Núñez de Balboa 3, Velázquez 53, Hermosilla 47, General Oraá 9, and Hermanos Bécquer 8.

According to data from the consulting firm Knight Frank, the number of luxury homes available in this area of the capital has decreased by 47% in the last four years. Specifically, in December 2020, there were between 70 and 75 units. This decline is primarily explained by three factors: scarcity of available land, increased construction costs, and rising interest rates.

Regarding the land scarcity, the consultancy indicates that, since the 2008 crisis and the recovery in 2014, urban planning Processes "have not been a priority for public administration, being slow" to advance with new developments.

"Everything sells very well because there is little supply and the reality is that there is no land. Also, it is very difficult to find buildings to renovate," explained Carlos Zamora, director of the residential area at Knight Frank.

The scarcity of supply and high demand have caused a 20% increase in prices over the last four years, and the forecast is for further rises. They will rise by an average of 5% this current year. Currently, the average price per square meter in Madrid is marketed at 16,500 euros.

The consultancy emphasizes that the existing prime housing stock takes on significant relevance because it gathers what the most sophisticated buyer seeks at this time: buildings with history in the best locations, classical facades, homes with high ceilings and moldings, and adapted to modern and sophisticated life.

United States, on the rise

Most prime housing buyers are nationals, although internationals are gaining more significance. Currently, the former represent 60% while the remaining 40% are foreigners.

By geographical regions, American investors stand out, who until now did not hold a significant market share but are emerging as buyers attracted by real estate opportunities, lifestyle, and leisure offerings that the Spanish capital offers and also, above all, by the currency exchange. Currently, they make up 2% of the market.

Latin Americans represent 22%. Noteworthy are Mexicans, Venezuelans, Colombians, and Peruvians, to which Argentines and Chileans have joined in recent years. European buyers have also grown, now accounting for 13% of the market. There has also been a slight increase in the presence of buyers from Africa (representing 1%) and the Middle East (2%).

Robust demand

The number of high-net-worth individuals will increase globally in the coming years, which will sustain robust demand for prime homes. Specifically, in the case of Madrid, the number of individuals with a net worth of 1 million dollars or more will increase by 30% by 2027 compared to the volume of people with wealth of this category as recorded at the end of 2022.

On the other hand, the number of individuals with a net worth of 30 million dollars or more will increase by 10% by 2027 compared to the number of individuals with wealth in this category as recorded at the end of 2022.

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