Knight Frank: Demand Rises For Luxury Housing In Madrid
23 November 2015 – El Mundo
The luxury residential sector in Madrid has now emerged from the crisis, according to the Prime Residential Report from Knight Frank (KF) for the third quarter of 2015. The study points to price growth of 5.2% in the Spanish capital, i.e. above the levels observed in markets such as London and Paris. The average sales period has also decreased to between 3-6 months, down from 10-12 months.
In fact, Madrid is the European city with the second highest rate of price growth YoY in the prime residential segment, where prices have recorded a cumulative decrease of 22% since the beginning of the crisis, according to KF. Thus, Madrid is ranked behind only Monaco (9.4%) in a classification, which is led by Vancouver (20.4%) (in global terms).
Nevertheless, the consultancy firm acknowledges that the level of activity has slowed down since the summer due to the political uncertainty. In this sense, it stresses that if a stable government emerges from the upcoming general election, then the market will grow at a faster pace, given that “investors have money, desire and intent, but are currently waiting to see what will happen”.
According to the report, the areas of Jerónimos and Salamanca have led the recovery, with price rises of 8% and 7%, respectively, for second-hand homes. Next in the ranking are Chamberí (3%); Justicia and Paseo de la Habana (2 %); Viso (1 %) and finally, Castellana, where prices have remained stable.
In terms of new homes, price rises have been more moderate. Salamanca and Chamberí lead the ranking, with price rises of 4%, followed by El Viso (2%). Justicia and Habana have seen decreases of 2% and 4%, respectively, marked by the low level of stock comprising undesirable properties. In general, the most coveted districts are Salamanca, Jerónimos and Chamberí, which account for 70% of the demand and where the most coveted homes have prices that range between €1 million and €2 million.
By type of investor, 70% of the buyers of luxury homes are Spanish, whilst 30% are international, double the rate recorded two years ago. The overseas demand is coming, primarily, from Latin America buyers, who are seeking luxury products in the centre of Madrid and second homes.
According to Ernesto Tarazona, the Director of KF’s Residential and Land department, average prices are expected to grow by between 5-10% and new homes are expected to enter the market leading to a trend in prices that “we are not used to seeing”.
Canalejas will be one of the iconic projects that will shape the near future, says the Director General of KF, Alberto Prieto, who warns that Spanish demand for that product will exceed international demand. The firm, which will be involved in the sale, has also expressed its interest in participating in the Grupo Villar Mir’s equivalent Canalejas project in London, which is being developed in the former war offices of the British capital.
Over the next 18 months, KF expects to see the development of 80,000 m2 of projects in Madrid, such as Lagasca 99 (Juan Bravo, 3); Lamarca on Fernando VI; José Abascal 48 and Antonio Maura, 8. (…).
Original story: El Mundo
Translation: Carmel Drake