Spain: A Magnet for International Capital in Luxury Housing
Spain has emerged as a leading destination for international capital in the luxury housing sector, according to the latest report by Knight Frank. The annual analysis, ‘The Wealth Report’, ranks Spain second globally, surpassed only by France. Italy, the United Kingdom, Greece, Switzerland, Portugal, Croatia, Ireland, and Germany also feature in the top ten.
Madrid: The Preferred Choice in Spain
Within Spain, Madrid is the preferred city for luxury residential investment. The Spanish capital is among the top 20 cities globally and the fifth “most exclusive” city in Europe. A million dollars can buy 106 m2 of residential property in Madrid.
European and Global Rankings
In the European ranking, Monaco leads the pack, where the same amount can only buy 17 m2. London, Paris, and Berlin follow. Globally, Monaco also holds the top spot, followed by Hong Kong, New York, and Singapore. Madrid ranks 17th globally, just after Dubai.
Price Growth in Madrid
In 2022, prices in Madrid rose by 6%, reaching close to €3,000/m2, the highest since 2011. This increase is slightly less than in Marbella and Barcelona, where prices rose by almost 7%. Knight Frank predicts a further growth of 4% by 2023, placing Madrid sixth among cities with the highest growth rates.
Resilience of Madrid’s Market
The significant growth in prime residential prices in Madrid since 2018 indicates a resilient market, even in times of economic uncertainty. Carlos Zamora, Knight Frank’s director of Residential in Spain, confirms this positive trend. The report also highlights Madrid’s significant contribution to Spain’s appeal.
Global Trends: Dubai Leads
Globally, Dubai tops the Knight Frank Prime International Residential Index (PIRI 100), reinforcing its status as a global hub for individuals with assets over $30 million. The city recorded a price increase of 44.2% in 2022. Other cities with significant price increases include Aspen (27.6%), Riyadh (25%), Tokyo (22.8%), and Miami (21.6%).
Performance of 100 Markets in PIRI
Out of the 100 markets included in PIRI, 85 recorded positive or flat growth in 2022. Coastal and rural locations in sunnier climates saw an average growth of 8.4%, slightly ahead of ski resorts, which rose by 8.3%. Major urban markets saw slower price growth, with an average increase of 4.2%.
Price Fluctuations During the Pandemic
Markets that saw the highest price growth during the pandemic experienced the most significant price drops in 2022. These include Wellington (-24%), Auckland (-19%), Stockholm (-8%), Vancouver (-7%), and Seoul (-5%).
Investment Trends: Private Sector and Art
The report also reveals that the private sector has become the largest investor in traditionally institutional products in terms of profitability. Meanwhile, art has emerged as the most profitable alternative luxury investment worldwide.
