In Madrid, foreign buyers now account for 15 per cent of purchases in prime neighborhoods, according to a report by Knight Frank. This is, in part, driven by foreign investment funds, such as Blackstone, which have been buying large blocks of rental apartments in key districts.
This is a twist for Spain, where foreign buyers typically invested in the ‘costas,’ where they could enjoy the sand and sun. But the Madrid numbers provide more evidence that foreign investors these days are more interested in the deals offered in the cities.
The phenomenon is evident around Spain. In Barcelona, developer Corp attracted long lines when it recently released apartments in a new development. The number of home sales in Barcelona jumped 50 per cent in March compared to a year earlier.
The cities represent a much different investment than the coastal areas. In many of the most popular, high-end beach areas, prices have held steady or risen in the past year for the best properties. Markets such as Ibiza and Marbella have continued to see a stream of buyers willing to pay for the right beachfront property, despite the downturn, which has made it harder to find bargains.
Spanish cities didn’t see the same level of mass construction as the tourist areas along the coast, which means it’s already difficult to find new product. Only 9 per cent of sales in prime areas were new homes last year, Knight Frank reports.
But prices are still down 40 per cent or more in many cities, which is a sharp contrast to the trend in other European cities, which have already rebounded from the economic crash. Prices in London and Paris continue to soar.
The foreign buyers targeting Spanish cities are primarily coming from Latin America, Europe, Asia and the Middle East, according to coverage in El Mundo. In Madrid, the neighborhoods of Salamanca, Jerónimos, Chamberí and Justicia are attracting the most interest, the paper reports.