5 March 2015 – Expansión
For the first time, the Spanish capital enters the top 20 on the list of locations preferred by wealthy individuals for investing their capital.
The improved perception of the economy and the possibilities for obtaining returns on investments have placed the Spanish market and more specifically its major cities, Madrid and Barcelona, amongst the destinations of choice for investors with estates worth more than $30 million (€26.8 million).
Specifically, Madrid is ranked at number 18 on the list of large investors’ favourite locations around the world.
“Firstly, vulture funds make purchases, then institutional investors arrive and finally the wealthy individuals come”, explains Humphrey White, Director of Capital Markets at Knight Frank in Spain.
Amongst the attractive features of Spain’s cities, Mr White highlights the price of their luxury properties, which are much more affordable than those of other European capitals. Thus, according to Knight Frank’s report, with one million dollars, an investor can purchase just 20 square metres of residential property in London, 50 m2 in Paris and 68 m2 in Rome, whereas in Madrid he/she can acquire 133 m2. “If you have a lot of money, you can achieve a very attractive return from luxury housing in Spain. The highest prices currently stand at around €10,000/m2, compared with the levels they reached at their peak of €14,000/m2”, explains Alberto Costillo, Managing Partner of the Luxury Residential Department at Knight Frank.
Nevertheless, the price of luxury housing increased by more than 5% in Madrid in 2014. “It is worth noting that the price of premium property in Madrid rose by 5%, in contrast with the downward trend in Europe, where prices decreased by 0.4% on average. We expect this trend to continue”, says Kate Everett-Allen, partner in International Research at Knight Frank.
By country, wealthy investors from Mexico, Colombia, Argentina and Venezuela tend to opt to buy property in Madrid, whereas other millionaires, such as the Russians, prefer Barcelona and other coastal regions. Importantly, Spain’s cities have an opportunity in the Russian market, given that more than a third of the wealthy investors from that country have indicated that they intend to leave Russia during 2015, according to findings by The Wealth Report.
Although Spain has now entered the elite ranking of locations desired by millionaires, the first position on the list is held by London, which ousted New York a few years ago as the most favoured destination. New York moved down to second place; Hong Kong is ranked third. In terms of where these wealthy investors live, London leads that list too, for another year, with 4,364 resident millionaires, followed by Tokyo with 3,575 and New York with 3,008.
Meanwhile, Madrid is home to 544 individuals with estates worth more than 30 million dollars, whilst 438 live in Barcelona. “There are 63 new millionaires in Spain this year and one third of them are living in Madrid and Barcelona”, says Humphrey White.
Original story: Expansión (by Rocío Ruiz)
Translation: Carmel Drake