2024
KEY FINDINGS
Madrid Insight
Research
Latest analysis of the capital’s most exclusive €1m+ residential market, focusing on prime locations.
Figure 1. Annual average prime price variation in Madrid
Source: Knight Frank Research
s a global trend, average prices for
premium homes are pushing ever
higher. Specifically, the average
price per sqm rose 2.1% in the last
12 months*, the fastest growth rate since Q3
2022.
It points to a stabilisation in the real estate
markets, echoing the findings of Knight
Frank’s Prime Global Index — despite the
economic uncertainty still hanging over the
world. Indeed, 67% of the 46 cities studied
saw year-on-year growth.
Even so, higher interest rates are having
a dampening effect, holding the rate of
increase at 2% in the last three months (July–
September 2023).
Madrid saw the fastest growth in prime
housing prices of any city in Europe in Q3
2023, ahead of Paris, London and Frankfurt.
This market is expected to continue to see
strong growth over the next few years, thanks
to Madrid’s good economic performance
and the confidence offered to both local and
international investors, as well as the more
challenging outlook facing other parts of
Europe.
Over the last 12 months*, the average price
of prime residential property in Madrid has
increased by 5.5% per sqm — outmatched only
by Dubai, Shanghai and Manila, according to
Knight Frank’s Prime Global Index (Figure 1).
This growth has largely been driven by the
large number of national and international
investors with substantial funds at their
disposal.
Q3 2023’s performance did not come out of
the blue. Rather, it reflects a longer-term trend
that has been taking shape since Q3 2021. Since
that point, year-on-year growth has hovered
between 2% and 6% in every new quarter.
The average for 2013 to 2019 — before
COVID-19 — stood at 5.8%.
Some of the latest trends shaping the market
include:
1. Continued strong demand for
prime residential property
At the global level, a growing influx of new
high-net-worth buyers will continue to drive
up demand for prime homes over the coming
years.
In Madrid’s case, by 2027 the number of
individuals with a net worth of $1 million or
more is set to rise by 30% compared with the
end of 2022.
Meanwhile, by 2027 the number of people
with a net worth of $30 million+ will expand
its membership by another 10% compared
with the end of 2022.
Madrid’s prime housing market is
sufficiently mature that potential buyers
are raising the bar, demanding ever-higher
standards of quality and finish as well as
11.9%
-4.0%
5.5%
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-6%
-3%
0%
3%
6%
9%
12%
Variación anual precio medio
prime
Madrid
The number of high-net-worth
individuals has increased — and
this is expected to continue to be
the case over the coming years.
All over the world, price tags for
prime homes continue to rise.
And in Europe, nowhere is the
prime market growing faster
than in Madrid.
The average price of a prime home
in Madrid will rise by 6.5% in 2023,
outperforming forecasts released in
the early part of the year, with further
growth of 5% in 2024.
A
*Period: from September 2022 to September 2023
knightfrank.com/research
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sweeping views, impressive ceiling heights
and an extensive range of amenities.
2. Madrid: appealing and competitive
The Spanish capital has two major
competitive advantages: a prime housing
market with solid fundamentals and the
promise of much more for your money:
a million dollars will get you three times
more prime space in Madrid than it will in
London. In terms of price per sqm, Madrid
is currently ranked 17th out of 46 global
cities featured in Knight Frank’s Prime
Global Cities report (Figure 2).
3. Lighter burden of rising interest
rates on prime residential demand
Most prime buyers have no need to seek
financing to purchase this type of property,
and those that do finance part of the price
rarely require a substantial LTV.
This explains why soaring interest rates
have not cast a pall over demand for luxury
housing, and nor is this likely to change.
What’s more, the current mortgage market is
looking relatively relaxed; for a prime buyer,
accessing finance is no great hurdle. At the
close of Q2 2023, around 57% of housing
purchases were mortgage-financed — far
from the feverish heights of 2007–2008,
before the financial crisis, when more
mortgages were granted than homes
ultimately sold (Figure 3).
4. Compelling offer of Madrid’s
upmarket hotels, restaurants and
high-street shopping
In the last five years alone (2018– H1 2023),
eight new five-star hotels were opened in
Madrid, adding more than 2,000 new beds
to the luxury segment (+20% compared to
2018).
At Knight Frank Research, we view
growth in high-end hotels as an early
indicator of future international demand for
prime residential property — the reasoning
being that luxury hotels largely cater to
international tourists.
Fine dining is also flourishing in the
capital. Three new Madrid restaurants won
spots in the Michelin Guide in 2023. Word-
class cuisine is just one more ace up the
capital’s sleeve when it comes to appealing
to the high-net-worth market.
Meanwhile, luxury on the high street
proved fairly resilient during the pandemic.
Since the end of 2022, there has been a
certain upward pressure on prime rents in
Madrid’s major shopping streets, primarily
driven by the luxury segment.
5. Upwardly mobile prices in Madrid’s
prime zones
All of Madrid’s prime zones recorded
price growth of over 5% by the close of Q3
2023, with the sole exception of El Viso
(Chamartín), where values have held steady
since 2022. It was the central neighbourhood
of Justicia that saw the steepest price rise,
with the average price per sqm climbing by
8%. Almagro (Chamberí) and Jerónimos
(Retiro) were close behind on 7%, followed by
Recoletos and Castellana (Salamanca) on 5%.
When we look at the picture five years ago, it
is clear that certain areas have appreciated
faster than others: prices in Salamanca are
up more than 22% since 2018, Chamberí and
Retiro around 13%, Chamartín a little over
6% and Centro approximately 4% (Figure 4).
6. Branded residences
Knight Frank’s 2023 Global Branded
Residences report highlights our prediction
that the global market for branded
residences — housing developments with
hotel-style services, mainly operated by
international luxury hotel chains — will be
55% bigger by 2026. Our analysis identifies
186 such developments in cities around the
world, with another 32 expected to open later
this year. By region, this model has made
the greatest inroads in North America (40%
of the total), followed by Asia-Pacific and
Europe. In terms of market share, Ritz-
Carlton and Four Seasons are currently the
dominant names in this segment.
Luxury hotels are a major growth sector
in Spain, particularly in Madrid, Mallorca
and Malaga: beloved by international luxury
brands. Many operators are readying to
launch their own versions, keen to mirror
their previous success in other regions of the
world.
Madrid’s branded residences market
is flourishing, following the success of
Four Seasons Private Residences Madrid,
launched in 2020 with 22 private residential
apartments and an average price of €15,500
per sqm. Another three projects are currently
in development: Mandarin Oriental
(Hermosilla 47), Sagasta 27 and Infantas 40.
Overall, the capital is set to receive around
80 apartments in this format, uniquely
interpreted by every brand. Average prices
can be expected to range from around
€12,000 per sqm to €20,000 per sqm.
Demand for these kinds of properties is
likely to hold up well over the longer term,
braced by wealth creation, tourism and
solid investment fundamentals. We are
therefore likely to see further growth in
this sector in the years to come.
7. Prime new-builds: strong
demand hampered by low
supply
In the first nine months of 2023, the
volume of prime new-build housing
launched to the Madrid market fell by
approximately 30% compared with the
same period of 2020.
There are three main factors behind
this dip:
- Rising construction costs:
Essential materials used in housing
construction, including steel, concrete
and wood, have become more costly
since 2022. Forecasts indicate that prices
will not return to the kinds of levels seen in
early 2019.
- Higher interest rates:
While prime home buyers are not
particularly reliant on bank financing,
developers are.
After successive interest rate hikes, the
cost of financing has driven up overall
construction costs.
- Lack of serviced development land:
Between the 2008 financial crisis and the
2014 recovery, land management and urban
planning were not treated as priorities by
local government. Consequently, developers
have had to move at a slower pace with their
new build projects.
8. The most well-off households have
increased their net wealth by 29%
In the first half of 2023, household net
wealth in Spain grew by 29% compared
with the average for the five years
immediately preceding the COVID-19
pandemic (Figure 5).
Net wealth is the difference between the
total value of a household’s assets (property
and financial) and its liabilities and loans
(debts).
At Knight Frank Research, we use this
indicator as a proxy for the country’s
highest net-worth families. According to the
National Institute of Statistics:
“It is worth stressing that this measure has
a high number of wealthy households in
the sample. Asset distribution is highly
asymmetrical, and certain assets are
concentrated in the hands of a very few.
Investment in certain asset types
is restricted to a small fraction of the
population, generally those households
with the greatest wealth.”
9. Buyer diversification
Madrid’s prime housing market now carries
increasing international prestige, and the
range of nationalities among potential
buyers has broadened in recent years. These
buyers are drawn to the city’s superior
quality of life and world-class leisure,
sporting and cultural opportunities.
The bulk of demand remains domestic
in origin, but the share of Spanish buyers
dropped from 70% in 2018 to 60% in 2023.
While North American buyers were rare
in this market in 2018, they now make up
2% of the total.
Latin America accounted for 18% of demand
five years ago, but 22% in 2023. Buyers from
How much prime space will $1m buy in
each of the selected cities?
LOCATION €/sqm/ US$1M
7%
5%
8%
0%
7%
13.4%
22.1%
4.0%
6.2%
12.9%
0%
5%
10%
15%
20%
25%
Jerónimos
(Retiro)
Recoletos y
Castellana
(Salamanca)
Justicia (Centro) El Viso
(Chamartín)
Almagro
(Chamberí)
Evolución del precio
prime
por zonas
prime
de Madrid.
% variación anual % variación últimos 5 años
Fuente: Knight Frank Research. Datos a T3 2023.
Source: Knight Frank Research. Figures to Q3 2023.
Source: Spanish Development Ministry | INE
Source: Knight Frank Wealth Report
7%
5%
8%
0%
7%
13.4%
22.1%
4.0%
6.2%
12.9%
0%
5%
10%
15%
20%
25%
Jerónimos
(Retiro)
Recoletos y
Castellana
(Salamanca)
Justicia (Centro) El Viso
(Chamartín)
Almagro
(Chamberí)
Evolución del precio
prime
por zonas
prime
de Madrid.
% variación anual % variación últimos 5 años
Fuente: Knight Frank Research. Datos a T3 2023.
7%
5%
8%
0%
7%
13.4%
22.1%
4.0%
6.2%
12.9%
0%
5%
10%
15%
20%
25%
Jerónimos
(Retiro)
Recoletos y
Castellana
(Salamanca)
Justicia (Centro) El Viso
(Chamartín)
Almagro
(Chamberí)
Evolución del precio
prime
por zonas
prime
de Madrid.
% variación anual % variación últimos 5 años
Fuente: Knight Frank Research. Datos a T3 2023.
variation last 5 years
annual variation
Figure 4. Prime housing prices in prime Madrid locations over time.
Figure 3. Mortgages/transactions ratio
Madrid Insight 2024
Madrid Insight 2024
Figure 2.
148%
161%
164%
157%
137%
132%
84%
70%
59%
64%
65%
61%
62%
66%
72%
64%
66%
57%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 T2
2023
Ratio hipotecas/transacciones
Fuente: Ministerio de Fomento | INE
17
21
33
34
34
37
39
43
44
44
58
60
64
70
87
105
106
113
218
231
Mónaco
Hong Kong
Nueva York
Singapur
Londres
Ginebra
Los Ángeles
París
Sídney
Shanghai
Pekín
Tokio
Miami
Berlín
Melbourne
Dubái
MADRID
Bombay
Ciudad del Cabo
São Paulo
knightfrank.com/research
countries like Mexico, Venezuela, Colombia and
Peru have also grown in number; others, like
Argentina and Chile, are starting to appear.
European buyers (excluding Spain) grew
from 11% of the total in 2018 to 13% in 2023.
Finally, there has been a slight rise in the
numbers of potential buyers from Africa (1%
of the total) and the Middle East (up from 1%
to 2%).
10. Forecast for year-end 2023 and 2024
Price projections for the residential sector are
sharply polarised between mainstream and
prime markets.
The mainstream market is feeling the bite
of rising interest rates, although, in Spain at
least, average prices are now expected to fare
better than predicted in 2023, with projected
growth of 1.2%. However, experts are warning
of a 2% contraction over the course of 2024,
according to Bankinter's forecasts.
Meanwhile, the prime segment seems as
resilient as ever and impervious to Spain’s
ongoing political and economic challenges.
As 2023 draws to a close, the average price
in the prime market is anticipated to have
risen by around 6.5% year on year; just a
few months ago, forecasts were pointing to
4%. What has changed? Quite simply, the
feared recession — which seemed like a
real possibility until quite recently, casting
a shadow of uncertainty over the market —
failed to materialise over the course of 2023.
Forecasts for 2024 remain encouraging,
indicating annual growth of 5% (Figure 6).
This improved outlook, assuming
continued price progression in the prime
segment over the next few years, is endorsed
by a rise in the number of high-net-worth
individuals entering the arena — itself a
reflection of the sound fundamentals of
prime areas in the capital. These areas have
risen to the challenge of a demand profile in
constant flux, continuously adapting their
cultural, retail and dining offer to evermore
sophisticated tastes. Their proven agility has
helped keep Madrid firmly on the radar of
high-net-worth buyers.
Contact details
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The Wealth Report 2023
Research
Daniel Caprarin
Head of Research
+34 600 919 087
Sales
Carlos Zamora
Head of Residential
+34 600 919 041
RESEARCH
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Figure 6. Annual variation in prime prices
0
500
1,000
1,500
2,000
2,500
Millones
Riqueza financiera neta de los hogares (M€)
Figure 5. Net household wealth (€million)
Madrid
Source: Bank of Spain
Source: Knight Frank Prime Global Cities Index. Figures
at year-end. Base 100= Q2 2016
-0.4%
3.5%
5.1%
5.0%
3.0%
10.6%
8.1%
5.1%
-4.0%
3.0%
6.0%
6.5%
5.0%
0
20
40
60
80
100
120
140
160
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2024
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Fuente: Knight Frank Prime Global Cities Index. Datos a cierre de año. Base 100= T2 2016
-0.4%
3.5%
5.1%
5.0%
3.0%
10.6%
8.1%
5.1%
-4.0%
3.0%
6.0%
6.5%
5.0%
0
20
40
60
80
100
120
140
160
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(P)
2024
(P)
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Variación anual precio prime Madrid
% variación anual (izquierda) Índice precios prime (derecha)
Fuente: Knight Frank Prime Global Cities Index. Datos a cierre de año. Base 100= T2 2016
-0.4%
3.5%
5.1%
5.0%
3.0%
10.6%
8.1%
5.1%
-4.0%
3.0%
6.0%
6.5%
5.0%
0
20
40
60
80
100
120
140
160
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(P)
2024
(P)
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Variación anual precio prime Madrid
% variación anual (izquierda) Índice precios prime (derecha)
Fuente: Knight Frank Prime Global Cities Index. Datos a cierre de año. Base 100= T2 2016
Madrid Insight 2024
annual variatioin (left)
Prime price Index (right)