Prices down, rents up: madrid becomes sure bet for buy-to-let

Madrid has become a sure bet for buy-to-let investors, as the Spanish city's property prices decline and rents increase.

The capital's property market has been on its own particular rollercoaster ride of late. In 2015, Knight Frank's Prime Global Cities Index placed Spain's capital second in Europe for luxury home price growth. Tinsa went on to report in late 2015 that Madrid had the most liquid market of Spain's five largest cities, with the average property taking just 6.1 months to sell (much quicker than Valencia's 14.3 months).

But buy-to-let has become the order of the day, rather than capital growth, thanks to a rare combination of falling prices and rising rents. According to the latest report from Kyero.com, home values in Madrid are down 18.35 per cent on the same time last year to a median price of €445,000 in February 2016. At the same time, rents have risen 6.3 per cent in the year to November 2015, according to Fotocasa, positioning Madrid as the second most expensive place to rent in the country.

The figures follow Madrid's high ranking in the Urban Land Institute and PwC's European real estate investment report for the second year in a row. As the Spanish economy has improved, both institutional and opportunistic investors have flocked to Madrid. The city was Europe’s fifth most active real estate market in the four quarters ending Q3 2015, turning over €5 billion.

"We're seeing a really unique situation in Madrid right now," comments Martin Dell, Kyero.com's Director, "with a range of factors combining to make the city a particularly exciting prospect for those looking to purchase a holiday home that's also an investment. Not only can they benefit from owning a second home for their own use in this vibrant and exciting city, but the prospects for renting it out are excellent."