RESIDENTIAL RESEARCH INSIGHT 2019

CARLOS ZAMORA, HEAD OF KNIGHT FRANK’S RESIDENTIAL TEAM IN MADRID, SHARES HIS KNOWLEDGE AND INSIGHTS ON THE CITY’S EVOLVING PRIME RESIDENTIAL MARKET.

HOW IS THE MARKET PERFORMING? and the historic heart of the city close to Plaza Mayor. CARLOS ZAMORA Average prices in Madrid declined 30% in peak- Head of Madrid Residential Dept to-trough terms following the financial crisis but Proximity to El Retiro, Madrid’s 350-acre park – +34 915 959 097 now sit 46% above the market low reached in roughly the same size as Hyde Park – is also a [email protected] Q3 2012. key draw.

The recovery of Madrid’s prime residential market gathered pace at the end of 2016 and HOW IMPORTANT ARE OVERSEAS since early 2017 Knight Frank’s unique Madrid BUYERS IN MADRID? Prime Residential Index has outperformed our Around 65% of prime buyers originate from 43-city average with luxury prices accelerating within , either from within Madrid or from FIGURE 1 8.1% in 2018. its major cities including Barcelona, Malaga and MADRID’S PROPERTY MARKET Seville. A decade ago, this figure would have IN NUMBERS WHAT IS DRIVING DEMAND? been closer to 90%. The volume of luxury new homes sold by the Of the city’s overseas prime buyers, around Knight Frank team increased by 50% between 18% originate from Latin America, but unlike 2017-18 and 2018-19, with almost all of the two years ago when Venezuelans dominated, 85,169 new units launched in the last two years now 2018 saw Mexican purchasers increase their NO. OF RESIDENTIAL UNITS SOLD under offer. market share, many consider Madrid to be a ACROSS THE COMMUNITY OF In Madrid, the upturn in the commercial sector safe haven, personally and financially. MADRID IN 2018, UP 61% SINCE 2014 was a precursor to the residential market’s In terms of buyer motives, around 50% of recovery. Madrid has evolved into a key business our prime buyers are seeking a permanent centre with a strong finance, tech, logistics and or second home exclusively for their own 35% communications bias. According to the Ministry personal use, 22% are looking purely for a rental of Economy, six out of every €10 invested in OVERSEAS BUYERS AS A PERCENTAGE investment and the remaining 28% cite a mix of OF ALL KNIGHT FRANK PRIME Spain is invested in the capital. reasons; holiday home, rental investment and a BUYERS IN 2018 Madrid is also now firmly on the tourist map with base for their child whilst at university. over 6.7 million tourists visiting the city in 2017. Madrid Airport operates direct flights to WHAT’S YOUR OUTLOOK FOR 203 airports globally, and passenger numbers THE MARKET? 8.1% have surged 50% since 2004, from 38 million to Madrid’s prime residential market is now well- ANNUAL CHANGE IN MADRID’S 57 million in 2018. established and a key safe-haven destination PRIME PRICES IN 2018 for Latin American wealth. According to the HOW ARE PRICES PERFORMING? 2019 edition of the Knight Frank Wealth Report, At €8,000 per sq m not only are prime values 71% of UHNWIs in Latin America now have 11,011 highly competitive compared with other first a second passport or dual nationality and of tier European cities but Madrid’s cost of living those considering emigrating, Spain was their NO. OF RESIDENTIAL UNITS COMPLETED is low and it is ranked 46th out of 231 cities preferred destination. ACROSS MADRID IN 2018, COMPARED for its quality of life according to global TO A HIGH OF 61,626 IN 2006 Of the 20 global cities we track, we expect consultants Mercer. Madrid to lead our prime residential forecast in 2019 with prices edging 6% higher in 2019. WHERE ARE MADRID’S PRIME 41,278 NEIGHBOURHOODS? Spain is forecast to see a 27% rise in UHNWIs over the next five years, this equates to nearly NO. OF MILLIONAIRES IN MADRID Traditionally, Madrid’s prime markets were 1,100 more individuals with US$30 million+ in IN 2019* located across the city’s northern districts such net assets in real terms, as well as over 62,000 as , Chamberi, Chamartin and . more millionaires nationally. We believe that a Source: Knight Frank Research, Ministry of Development, GlobalData WealthInsight Since 2016, more attention has been paid to large proportion will want a slice of the capital’s *Forecast central areas which takes in , luxury bricks and mortar.

MADRID INSIGHT 2019

MARKET INTELLIGENCE Knight Frank’s Research team take the pulse of Madrid’s residential market by handpicking the latest data, indicators and trends to help buyers and vendors gauge current market conditions.

FIGURE 2 FIGURE 3 FIGURE 4 MADRID IN A GLOBAL CONTEXT THREE THINGS TO CONSIDER MADRID OUTPERFORMING OTHER Prime prices € per sq m, Q4 2018 GLOBAL PRIME MARKETS SINCE 2017 60,000 Mexican buyers accounted for Prime prices, annual % change around 9% of Knight Frank’s 14% prime purchasers in Madrid 43-city Knight Frank Prime Global City Index Madrid 12% 50,000 in 2018. Monaco 10%

8% Hong Kong 40,000 Madrid Barajas Airport now offers direct flights to 203 6% airports globally and handled 57 4% 30,000 London New York million passengers in 2018, up 50% from 38 million in 2004. 2% Singapore Los Angeles 0%

20,000 Paris

Sydney The city’s PRS sector is maturing -2% Shanghai with new regeneration projects Berlin such as Norte set to -4% Miami 10,000 Mumbai Madrid see 2.3 million sq m of mixed-

Dubai -6%

Sao Paulo used development, including 10,500 new homes.

0 2011 Q4 2012 Q2 2012 Q4 2013 Q2 2013 Q4 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2017 Q2 2017 Q4 2018 Q2 2018 Q4

Source: Knight Frank Research Source: Knight Frank Research

FIGURE 5 FIGURE 6 KEY DEVELOPMENTS IN CENTRAL MADRID FUTURE WEALTH GROWTH Population of UHNWIs* 2018, and forecast % growth 2018–2023

MODESTO LAFUENTE 12 UNITS / 2-4 BED PLAZA DE SAN JUAN DE LA CRUZ JAVIER FERRERO C R 41 UNITS / 1-4 BED 87 UNITS / 1-4 BED N I 2,919 450 D 1,029 SERRANO 1,193 9 UNITS / 4 BED JOSÉ ABASCAL 17 UNITS / 3-4 BED F 4,505 S S PRINCIPE DE VERGARA N 4,768 4,111 13 UNITS / 1-3 BED 3,261 ALFONSO X 8 UNITS / 2-3 BED BARAJAS AIRPORT R 215 A 1,722 NICASIO GALLEGO L 13 UNITS / 1-2 BED 689 G ALCALÁ G 20 UNITS / 1-3 BED 704 C 14,047 UK FERNANDO VI 205 12,559 26 UNITS / 1-3 BED JORGE JUAN P 6 UNITS / 2-3 BED 737 H 213 P MONTALBÁN 589 9 UNITS / 2-5 BED B 1,598 M FSPRM 223 22 UNITS / 1-4 BED O

I 6,983 S 4,083 3,824 MADRID El Retiro Park CENTRE

SANTA ISABEL PASEO DEL PRADO 24 UNITS / 1-3 BED 11 UNITS / 2-3 BED Under 20% 20% to 25% 25% to 30%

* Individuals with net assets of US$30m+ excluding primary residence Source: Knight Frank Research Source: GlobalData WealthInsight

CONTACTS

Carlos Zamora Kate Everett-Allen Astrid Recaldin Head of Madrid Residential Dept International Residential Research International PR Manager +34 915 959 097 +44 20 7167 2497 +44 20 7861 1182 [email protected] [email protected] [email protected]

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