Real estate investment in Madrid
Real estate investment in Madrid is synonymous with high profitability. The economic prosperity and dynamism of this city encourage a constant demand for housing, which leads to the upward trend in rents. Why not take advantage of such an opportunity with Muppy?
Madrid attracts real estate investors and tenants alike. The reason is obvious: as a capital, it is a destination full of possibilities. After all, it hosts the headquarters of the main companies in the country, as well as its most iconic cultural events. We can expect nothing less from the financial and cultural center of Spain.
The real estate investment outlook in Madrid is as challenging as it is encouraging. On the one hand, the strong competition makes it essential to have specialized managers. On the other hand, the economic stability and the sociocultural magnetism emanating from this city make it a juicy delicacy from an investor point of view.
Current real estate market
Numerous reports corroborate the suitability of the Madrid real estate market for investing. Thus, the Spanish capital is the second most attractive European city for investors according to the study prepared by PwC and the Urban Land Institute (ULI). Other 2024 studies that confirm this pre-eminence are the European Investor Intentions Survey and the Global Property Guide.
Numerous objective data highlight the good health of the real estate park in Madrid:
- The profitability of real estate investments in Madrid is around 6%.
- Rental prices are characterized by the constancy of their upward trend. In November 2024, its price was 20.5 €/m2 (15.5% more than the previous year).
- The lack of supply causes demand to skyrocket. Not in vain, for every house that is rented there are 115 interested parties.
In view of these figures, it is obvious that the apartments for investment in Madrid are ahead of those in other Spanish cities. Thus, its profitability exceeds that of cities such as Cadiz (4.7%), A Coruña (4.8%), Bilbao (5%) and even Barcelona (5.8%). Likewise, the average price per square meter exceeds Valencia by 39.46% and Seville by 72.27%.
Strategic advantages
Privileged location
When Philip II decided to establish the capital of the kingdom in Madrid, he knew what he was doing. The fact of being located in the geographical center of the peninsula gives it a strategic location. Thanks to this, this city has fast and efficient connections not only with all Spanish cities, but also with the main international destinations.
Business and technology hub
The dynamic and avant-garde spirit is a constant in the Madrid business fabric. Consequently, the capital is a veritable hive of startups, entrepreneurs and digital nomads. In such a stimulating ecosystem, innovation and networking are the main protagonists.
Infrastructures and communications
Madrid has infrastructures and communications at the height of any other large European city. The second airport with the largest capacity in Europe and the second most extensive metro network on the continent are precisely in this city. The same applies to the motorway (15,000 km) and railway (3,400 km) networks that connect it with dozens of national and international destinations.
Economic stability
Any real estate investment expert knows the importance of opting for an economically stable market. At this point, Madrid reveals itself as a city endowed with sustained and predictable growth. The constant job creation, together with a GDP growth higher than the Spanish average, show this stability.
Tourism and international students
From the Prado Museum to the Oriente Palace, the streets of Madrid are home to some of the most representative jewels of the Spanish historical-artistic heritage. This cultural richness can be felt in the high level of its academic centers, making the city a real magnet for foreign students.
Real estate investment opportunities in Madrid
It is possible to detect in advance when a real estate investment in Madrid is destined to succeed. It's all a matter of considering certain variables that will put us on the track of the best strategy to follow.
Average returns by area
| Neighborhood | Profitability |
|---|---|
| Villaverde | 10,3% |
| Bridge of Vallecas | 9,5% |
| Usera | 8,6% |
| Carabanchel | 8,3% |
| Villa de Vallecas | 7,8% |
| Vicálvaro | 7,1% |
| Latina | 5,5% |
| Center | 4,0% |
| Chamartin | 4,0% |
| Retirement | 3,7% |
| Chamberí | 3,7% |
| Salamanca district | 3,0% |
Emerging areas
As we have seen in the previous table, the pleno centro has a lower profitability than the so-called emerging areas (Tetouan, Vallecas, Usera, etc.). These neighborhoods are ideal for investors looking for profits in the short and medium term. The most central locations, on the other hand, would be oriented to long-term investments focused on luxury rentals.
Profiles of tenants
Technology, training, culture... the strengths of the capital say a lot about those who want to live in it. Digital nomads who are strongly committed to coliving, enthusiastic entrepreneurs, high-profile tourists and students of all levels are among them. It is, in general, a young audience, with a high socioeconomic level and a love of innovation.
The most profitable types of properties
The most innovative housing solutions are also the most attractive (coliving, corporate living and smart living are a vivid example of this). Therefore, the most profitable real estate investment in Madrid is that housing that has multiple rooms, which allows multiplying the number of tenants.
Practical aspects
Legal framework
- Law 29/1994, of November 24, on Urban Leases (LAU).
- Law 12/2023, of May 24, on the right to housing.
- Royal Decree-Law 7/2019, on urgent measures in the field of housing and rental.
- Regional regulations: Decree 181/1996 (deposit of bonds), Order 61/2008 (Arbitration Council) and Order 1/2008 (measures to promote residential rental).
Taxation
The tax treatment that rents receive in the Community of Madrid presents an extremely encouraging picture. Thus, tenants under the age of 35 can deduct 50% of the rent. The deductions for the owners are even more advantageous, being able to reach 100% in some cases.
Financing
Owners who wish to acquire flats to invest in Madrid have a wide range of possibilities at their disposal when it comes to financing. At this point, the mortgage loan remains the preferred option of those who invest in real estate.
Rental management
The real estate market in Madrid is overwhelming and complex for the average investor. Thus, more and more people are choosing to leave the management of the rent in the hands of specialists like Muppy. The all-in-one service and professionalism provided by this option is key to achieving more lucrative and secure investments.
The flats to invest in Madrid gather all the incentives that can be demanded of the best investments. The high profitability of its real estate market and the multiple attractions of the capital form a difficult combination to overcome. No wonder it is among the most sought-after cities by renters with the greatest purchasing power!
The advantages of investing in real estate in the capital paint a particularly intricate picture. After all, the devil is in the details (tenant selection, insurance, home staging, etc.). Not for nothing, the highest returns are those obtained by the owners who choose to professionalize the management of their rental.
Do you want to turn your real estate investment in Madrid into the key to your financial freedom? At Muppy we will take care of EVERYTHING necessary to make your dream come true: try our comprehensive property management and get returns of between 6 and 8%
