Major real estate investors, both national and international, are increasingly redirecting their capital towards Madrid, gradually moving away from traditionally established markets such as the Costa del Sol and the Costa Blanca. This shift, already apparent in recent years, has accelerated in 2024 and is expected to gain further momentum in 2025, particularly within the luxury segment and the development of landmark infrastructure, according to K&N Elite.
Madrid continues to strengthen its position as one of Spain’s key hubs for real estate investment. According to data from CBRE, investment volume in the sector is set to exceed €18 billion in 2024, with more than 35% of that figure concentrated in the capital. This growth has positioned Madrid as the second most attractive city in Europe for real estate investment, surpassed only by London.
The growing interest in Madrid can be attributed to several key factors. Firstly, the capital’s property market is considered more stable than that of the coastal regions, which tend to rely heavily on seasonal tourism and are therefore subject to greater volatility in returns. Additionally, Madrid’s luxury housing segment offers attractive rental yields, typically ranging from 4.5% to 6.5% annually.
Another significant driver of this influx of capital is the development of new infrastructure and high-end property projects. The transformation of historic buildings into luxury residences, along with the rise of branded residences, which blend real estate investment with the prestige and management of renowned hotel brands, has further enhanced Madrid’s appeal.
The surge in investment in Madrid is driving the revaluation of historic and prime districts such as Salamanca, Chamberí, and the city’s historic centre, where 65% of premium property transactions are currently concentrated. At present, there are over 35 active luxury developments in the capital, with prices ranging from €1.8 million to €16 million per property, according to idealista data.
However, this trend also presents certain challenges. The strong demand for high-end properties is pushing prices upward, which could have implications for housing affordability among local residents. In Madrid’s most exclusive areas, the average price has reached €13,000 per square metre, compared to approximately €7,500 per square metre on the Costa del Sol — another of Spain’s most dynamic property markets.
Looking ahead to next year, forecasts suggest a continued rise in investment in Madrid, particularly in mixed-use developments that combine residential and commercial components. The ongoing professionalisation of the sector, coupled with the adoption of advanced technological tools – such as big data analytics for project evaluation – will be key to maintaining competitiveness in a market that is increasingly attractive to major investment funds.
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