Hedging our risk in Madrid

Alejandro Cartagena-Unsplash

The ghost of Marcos Jr.’s presidency is real. Some may be looking forward to it, others may be anxiously awaiting it. My regular readers know that I watch the Marcos Presidency with fear. My feelings would not be so negative if Marcos Jr. had been clear about his intentions from the beginning. Even at this last stage of the campaign, he did not speak about his economic agenda, his position in the western Philippine Sea, his position on national emergencies such as education and poverty. The call for unity is not a plan. The absence of a leadership agenda does not inspire confidence.

As a parent and businessman, I must be prepared for the worst. Poorly considered policies could very well lead the country into an economic recession and plunge everyone except Marcos into a terrible crisis. We’ve seen this happen before.

In the midst of so much uncertainty, my wife and I decided to do the responsible work and diversify our investment portfolio abroad. This is the way to hedge our risk. After studying many options, we decided to invest in property in Madrid. With the help of our consultant, L&L Consultant Luis Perez (e-mail: [email protected]), We have put together a survey that examines Madrid as the best investment option compared to other European cities. In the event of martial law or any such national catastrophe being imposed on us, residential status with investment is a bonus and an exemption. Luis Perez has handled our questions efficiently and guided us through every step of the investment process. It was a simple and painless experience. Let me share the results of our research.

Madrid is the only city in the world to have a financial center, a cultural center, an educational center and a political center whose property prices are among the most affordable in Europe. By the way, Paris is the most expensive city where the average price of a 50 square meter one bedroom apartment is € 620,000. Follows London with costs of 581,000. It can be bought in Madrid for just 246,000 euros.

Of course one can opt for cities with low housing costs. The average price of an equivalent flat in Lisbon, for example, is € 228,000, and in Brussels a 1 221,000. However, these cities cannot be compared to Madrid’s global gravitas, prestige and resale value..

The Spanish capital has overtaken its sister city Barcelona as a leading destination for investment, corporate headquarters and tourism. Political instability, due to Barcelona’s desire to secede from the Spanish state, has moved many Catalan businesses elsewhere – especially to Madrid, Valencia and Malaga. Even Barcelona-based banks such as Caixia and Banco Sabadell have relocated part or all of their headquarters to alternative cities. Madrid hosts 90% of all corporate headquarters in Spain and Barcelona hosts only 5.4%.

In terms of tourism, Barcelona attracted 12 million tourists in 2019 while Madrid attracted 10.4 million tourists. Interestingly, however, Madrid has registered more investments in new hotels from 2019 to 2021 than Barcelona. With Madrid positioning itself as a center of art, culture and gastronomy, analysts predict that the Spanish capital will occupy the lion’s share of foreign tourism.

Property prices in Madrid have plummeted to zero since the 2008 financial crisis. At that time, the average price of a house in Madrid was € 4,000 per square meter. Prices dropped to 2,000 per square meter in 2013 due to high national debt and bad debts. The Spanish government has tightened the screws on cheap mortgages to curb artificial inflation in property prices. As a result, prices have steadily recovered from 2014 to 2019. Just before the epidemic hit in March 2020, housing costs were € 3,100 per square meter.

The impact of the epidemic on housing prices in Madrid was at least only 5%. The recovery in 2021 was better than expected as prices have doubled across all Madrid Barrios.

The forecast for 2022 is an average increase of 6.1% per square meter. However, three months of the year and Madrid have already exceeded expectations. Data from the Spanish property portal, Idealista, shows a strong demand for Madrid homes, with 23% of all listings sold out in seven days.

Over the next five years, property prices have risen sharply due to increased demand due to the influx of high quality immigrants, students and expatriates.

Madrid is divided into barrios, each with distinct features and investment perspectives. Here are more popular neighborhood profiles:

Hub: Centro is the historical and cultural center of Madrid and Spain. It is home to the wonderful Shopping Street, Gran Via, Iconic Square, Plaza Mayor and the magnificent Royal Palace. Masterpieces hang out at the Prado Museum, while nearby retro park has access to former royal gardens. Known as the LGBT Quarter, Chueka has a vibrant nightlife, and Barrio La Latina has a vintage tapas bar. Barrio de las Letras where Jose Rizal lived. Art of the City of Malasana, Bohemian Corridor. The average price of accommodation here today is € 4,987 per square meter. Last year the growth was 3.2%.

Salamanca And Lifting: Barrio Salamanca and Retiro are technically different inside the Centro but for their extraordinary character. Here live rich and elegant. Grand 19M Glamorous Salamanca century boulevards line up with fine-dining restaurants, designer boutiques and art galleries. Embassies of different countries are nearby. The average price of accommodation here today is € 6,200 per square meter. Last year the growth was 6.6%.

Chambri: Barrio Chamberí A royal residential area with many cultural attractions, including the Sorola Museum and the Transport Museum. It is home to the Avant-Garde theaters on the Tetros del Canal, where live dramas are staged. Locals of all ages gather for tapas at the Plaza de Olavide, and the young Madrillenos go to the superior nightclub of Almagro. Younger families prefer chambers for their wide, tree-lined sidewalks and central location. This bar was also an apple orchard at one time. The average price of accommodation here today is € 5,454 per square meter. Last year the growth was 3.9%.

Chamartin: Chamartín is a residential area near the Central Business District. It is proud of its high quality shops and bistros in the Principe de Vargara St. Wide paths line the magnificent gardens, high-rise office buildings and the Santiago Calatrava Casa Madrid Obelisk. Soccer fans flock to the Santiago Bernabeu Stadium to watch Real Madrid. The average price of accommodation here today is € 5,219 per square meter. Last year the growth was 3.2%.

The proposed suburbs of Madrid are Aravaca, Puerta de Hiero, Mazadahonda, Pozuelo, La Finca and La Moraleza Pueblos. These places are the Alabang or Nuvali version of Madrid, if you will. Prices vary by suburb but can range from € 4,500 to € 6,500 per square meter. Last year the growth was 3.9%.

Whether for risk mitigation or for investment, our comparative study shows that Madrid is a city to invest in this year.

Andrew J. Michigan is an economist

[email protected]

FacebookAndrews. Masigan

Twitter @aj_masigan

Leave a Reply

Your email address will not be published.