Why is Madrid a good place to Invest in Real Estate?

Madrid a good place to Invest in Real Estate

Why Madrid?

As we all know, Madrid is the capital of Spain, so many people (both Spanish and foreign) decide to invest in a home there. Furthermore, another fact that places Madrid as one of the best cities to invest is that it has established it self as the largest economy in the entire country, surpassing Catalonia. According to data from the INE (National Institute of Statistics), the GDP of Catalonia in the last year was 236,739 million euros, while the GDP of Madrid was almost 3,000 million higher. Another of the main reasons that make Madrid a good place to invest in Real Estate is its location, in the center of the Iberian Peninsula, being one of the best cities in the entire European continent, and being the place where a large number of very important companies (national and international). This makes the capital a city that receives thousands of tourists every day, and people who move to the capital to seek a good future on a professional and personal level.

Current context

Dueto the current situation we are experiencing, due to Covid-19, you can find properties at very attractive prices, and with a great possibility of revaluationin the future. In addition, another of the elements that characterize Madrid isthat there is a great offer, that is, a great variety of properties, both newand second-hand, as well as luxury villas or more affordable properties. Thereare all kinds of real estate and properties to invest in.Oneof the actions that most people carry out is the purchase of a property andthen rent it to third parties, since the demand for rental housing grows daily in the capital, obtaining a great profitability from it.

Some comparisons

In a comparison with the main European capitals, according to Moody’s (Americancompany of financial and commercial services) in Paris it is necessary, to buy a house, to allocate the entire income of 18 years, and in Amsterdam the completeincome of 22 years, while In Madrid it is still relatively cheaper to buy anapartment, both new and second-hand.Also,comparing prices in Madrid with other cities, Madrid continues to win. London leads the ranking as the most expensive city in Europe in terms of housing(70m2 flat: € 651,000), followed by Paris, Amsterdam and Milan. In contrast,the last city on the list of most expensive European cities to buy a flat is Madrid, with an average price of € 238,000 for a 70m2 flat. But it must also beadded that Madrid is one of the European capitals with the lowest salaries,which makes it more attractive to invest in foreign investors than in Madrid.

Taxes to face

But we must not forget that when investing in Madrid, and when acquiring a property, you have to face different taxes and state, regional and municipal taxes, which would be; VAT (if the house is new), and the Tax on Patrimonial Transmissions and Documented Legal Acts (if it is second-hand). In addition, in either case, you must also pay the IBI (Real Estate Tax). It is also necessary to take into account if the person who is going to invest is Spanish or foreign, since foreigners have to assume two taxes that Spaniards do not, which are, the Income Tax on Non-Residents (IRNR) and the tax on the Increase in the Value of Urban Lands (IIVTNU), a tax popularly known as the capital gains tax. For this reason, it is important to have legal residence in Spain when investing, since you will not have to face the payment of those last two taxes. For this, one possibility is to obtain the Golden Visa, whose steps to obtain it can be found in the post that we wrote about the Golden Visa. Also, it should be noted that the Golden Visa is aimed at buyers from countries that are not part of the European Union. In case of being European, the procedure to obtain Spanish residency would be to obtain the NIE.


In conclusion, we can say that Madrid is a great city to invest, both for Spaniards and foreigners. Finding the latter, greater facilities by obtaining the Golden Visa to face less taxes.

Do you plan to invest in Madrid? Contact us for more information. Beahost Real Estate has years of experience managing real estate throughout Europe. We can offer help in different languages ​​to make your real estate investment more profitable.