Madrid leads in luxury real estate investment appeal

Madrid lidera el atractivo inversor en inmobiliario de lujo en Europa, según Knight Frank.

Madrid leads in luxury real estate investment appeal

Madrid continues to solidify its attractiveness as a hub for luxury real estate investment. This is evidenced by the performance of prime residential properties in the capital, which are expected to appreciate again in 2024.

According to Knight Frank data, the average price of luxury properties in Madrid has seen three consecutive years of increases – in 2020, the pandemic year, there was a 4.0% decline. In 2022 and 2023, the index compiled by this consultancy reflects increases of over 6%. Furthermore, the trend is forecasted to continue in 2024. Knight Frank predicts an additional 5% advance this year, positioning Madrid as the European capital with the highest price growth.

Madrid also stands out as one of the most competitive locations for luxury real estate. According to Knight Frank’s index, one million dollars buys three times more prime space in the Spanish capital than in London. In this regard, Madrid significantly outperforms cities like Monaco, New York, Paris, Tokyo, or Berlin.

Why invest in luxury real estate

While not within everyone’s reach, investing in luxury real estate represents a great opportunity to diversify portfolios and achieve attractive returns in an exclusive market.

One of its main advantages is its immunity to market fluctuations. Luxury properties tend to hold their value even during times of market volatility. Prime locations and exclusive features make these assets less susceptible to economic fluctuations, offering long-term stability to investors.

In addition to providing good protection against financial risks, luxury real estate typically offers higher potential returns compared to standard properties. Premium rents and long-term capital appreciation can yield attractive returns, albeit with a significant initial investment.

Real estate crowdfunding helps overcome the price barrier to entry, as collective investments require less capital from each participant. The demand for such assets is notable. At Urbanitae, we have financed over 90 million euros in luxury residential projects across thirty projects. While Marbella has played a significant role, with seven projects since January 2023 and nearly 22 million euros in investment, when including La Moraleja, located in Alcobendas, Madrid collectively encompasses over 28 million euros in Urbanitae investment. And with very interesting returns. We’ve just repaid the investment in the Goya project, with an annualized return of 11%.

Most desired areas

Knight Frank reports that prime housing prices increased in 2023 in all luxury zones of Madrid. The Salamanca district leads with an average price per square meter increase of 14%. Urbanitae has financed three projects here. Last March, we funded the Lagasca project, involving the renovation of a property exceeding 500 square meters on the street of the same name. The aforementioned Goya project, also by the same developer – VG Investment – was completed shortly thereafter, with the goal of acquiring, renovating, and selling a prime property on Goya Street.

Luxury real estate extends beyond the residential segment. Last month, over 800 investors participated in the Local Prime project, which involved purchasing a retail space in Madrid’s golden mile, currently leased to the luxury brand Chanel.

Areas like Justicia attract, according to Knight Frank, a younger international buyer profile. Almagro and El Viso also garner notable interest from buyers seeking tranquility. And of course, La Moraleja epitomizes residential luxury. Solely at Urbanitae, we’ve financed three projects in this development, totaling over 12 million euros.

Luxury real estate remains an attractive option for investors looking to diversify and achieve solid returns in a selective market. With its stability, attractive returns, and diversification potential, luxury real estate offers a unique opportunity to build wealth and secure a stable financial future. With Urbanitae, some of these opportunities are accessible even to everyday investors.

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