Madrid 2015-2025: why it is still Spain's safest real estate bet despite a decade of price rises

Madrid has now strung together a full decade of property price increases — and each new record only reinforces its position as the number-one European city for real estate investment, according to the Emerging Trends in Real Estate Europe report by PwC and the Urban Land Institute (ULI) 2024 and 2025 [1]. Why? Because structural demand — limited supply, a powerful jobs market, institutional weight, regional tax competitiveness and international capital — is still growing faster than prices.

Price evolution: how much has Madrid gone up in 10 years?

Spain's House Price Index (IPV) from INE shows residential prices in the Region of Madrid have risen +78% cumulatively between 2015 and 2024, against a national average of +55% [2]. Tinsa (appraisal-based IMIE) places the average price in Madrid city at around €4,250/m² at the end of 2024, up from ≈ €2,450/m² in 2014 — +73% in a decade [3]. Idealista (asking prices) even hit €5,100/m² across Madrid city in 2025 [4].

Sources: Tinsa IMIE Local Markets and Spanish Land Registrars' statistics [3][5].

District map: winners and laggards

The rally has not been uniform. Cross-checking Idealista with the City of Madrid Economic Observatory shows that prime districts have nearly doubled while southern districts are only now entering their own up-cycle [4][6].

Sources: Idealista — district price reports (2015 and 2025 series), and Madrid City Council Economic Observatory [4][6].

Three key takeaways:

• Prime is still rising in absolute value but no longer accelerating the fastest. Salamanca and Chamberí keep setting records (point sales above €12,000/m² in Recoletos and Almagro), but their growth rate now trails peripheral districts.
• The most recent up-cycle is concentrated in the south and southeast: Carabanchel, Puente de Vallecas, Villaverde and Usera lead percentage gains, driven by gentrification, institutional build-to-rent capital and transport upgrades.
• Tetuán and Arganzuela are the standout central-north winners, with prices closing the gap on long-consolidated districts.

Why Madrid remains attractive despite the rally

1. Europe's top real estate investment market

The Emerging Trends in Real Estate Europe 2025 report (PwC + ULI) ranks Madrid as Europe's number-one city for investment and development prospects, ahead of London, Paris and Berlin — the third time in five years [1]. CBRE recorded real estate investment in Spain at €14 billion in 2024, with Madrid absorbing roughly 50% of total volume [7].

2. Structurally insufficient supply

The Bank of Spain has repeatedly warned that Spain delivers less than half the new housing needed to absorb household formation, with Madrid among the most stressed markets [8]. The Ministry of Housing estimates a cumulative deficit of hundreds of thousands of homes, putting a structural floor under prices.

3. Job market strength and talent magnet

The Region of Madrid contributes around 20% of national GDP and hosts the headquarters of virtually every IBEX 35 company, plus the main banks, law firms and consultancies [9]. Its unemployment rate is consistently among Spain's lowest, and the region has been the main destination for relocations from Latin America and other European countries.

4. Favourable regional taxation

Madrid maintains a 100% rebate on Wealth Tax (partially offset by the national Solidarity Tax on Large Fortunes), a property transfer tax (ITP) of 6% — among Spain's lowest — and rebates on Inheritance and Gift Tax, a clear differential vs Catalonia, Valencia or the Balearics [10][11]. Quantifiable savings for foreign and high-net-worth buyers.

5. International capital: Latin America and the (former) Golden Visa

According to the Spanish Land Registrars, foreign buyers account for around 15% of transactions in the Region of Madrid, with a strong weight of Mexicans, Venezuelans, Colombians, Americans, Chinese and French [5]. Although the real estate Golden Visa was abolished in April 2025 [12], the Latin American flow has held up on family, tax and legal-security grounds.

6. Corporate and office hub

Madrid is Spain's top office market: the Cuatro Torres on Paseo de la Castellana, AZCA, Méndez Álvaro and the A-1 corridor concentrate prime demand. This pulls high-end residential and build-to-rent along with it.

7. Infrastructure and connectivity

Adolfo Suárez Madrid-Barajas Airport hit an all-time record of 66.2 million passengers in 2024 (AENA), cementing its status as a major Europe–Americas hub [13]. Metro, Cercanías and a high-speed rail network (Madrid-Barcelona, Madrid-Seville, Madrid-Valencia, Madrid-Alicante in 2h20) place the capital at the logistics centre of the country.

8. Build-to-rent and a new asset class

Madrid accounts for ~60% of Spain's build-to-rent pipeline, with funds such as Greystar, AXA, Patrizia, DWS, Nuveen and Aedas Homes Living deploying thousands of institutional rental units, especially in the southeast (Los Berrocales, El Cañaveral, Valdebebas) [14]. The market professionalises and gains liquidity for investors.

Gross rental yields in Madrid

According to Idealista, the gross rental yield in Madrid city sits at around 5.0% in 2025, with district extremes [4]:

• Puente de Vallecas, Villaverde, Usera, Carabanchel: 6.5% – 7.5% gross.
• Tetuán, Arganzuela, Latina: 5.0% – 6.0%.
• Centro, Chamberí, Retiro: 4.0% – 5.0%.
• Salamanca, Chamartín: 3.5% – 4.5% (offset by stronger capital appreciation and lower vacancy).

Risks to watch

• Rental regulation. Spain's Housing Law 12/2023 allows regions to declare stressed zones; Madrid has not applied it, but a change in regional government could shift the picture [15].
• Tighter short-term rental rules in the Centro district, with new licences frozen.
• Interest rates still above the historical average, raising financing costs.
• Solidarity Tax on Large Fortunes (≥ €3M) partly neutralising Madrid's regional Wealth Tax rebate.

Tax obligations for the non-resident buyer

If you buy in Madrid without being a Spanish tax resident, you will have recurring obligations under Modelo 210:

• Imputed income tax (1.1% or 2% of cadastral value) if the property is not rented out.
• Rental income tax: 19% with deductions for EU/EEA residents, 24% with no deductions for the rest.
• Capital gains on sale, with the 3% withholding refund.
• Full guide: What is Modelo 210? · Madrid hub · Madrid city.

Bottom line

Ten years of price increases have not deactivated Madrid's appeal — they have consolidated it. Tight supply, growing demand, competitive regional taxes, international capital and unmatched institutional weight explain why PwC and ULI keep Madrid at the very top of Europe's real estate investment ranking for 2025. For non-resident buyers, it remains Spain's deepest, most liquid and most predictable market — always alongside the recurring Modelo 210 obligation.

Quellen

• 1[1] PwC & Urban Land Institute — Emerging Trends in Real Estate Europe 2025
• 2[2] INE — Spanish House Price Index (IPV), Region of Madrid
• 3[3] Tinsa — IMIE Local Markets, Madrid city
• 4[4] Idealista — Madrid district sale and rental price reports
• 5[5] Spanish Land Registrars — Real Estate Registry Statistics (foreign buyers, Region of Madrid)
• 6[6] Madrid City Council — Economic Observatory, City of Madrid Economic Barometer
• 7[7] CBRE Spain — Real Estate Market Outlook Spain 2024-2025
• 8[8] Bank of Spain — Annual Report 2023, chapter 4: housing market
• 9[9] INE — Spanish Regional Accounts, Madrid GDP share
• 10[10] Region of Madrid — 100% Wealth Tax rebate
• 11[11] BOE — Law 38/2022 (Temporary Solidarity Tax on Large Fortunes)
• 12[12] Government of Spain — End of the real estate Golden Visa (RDL April 2025)
• 13[13] AENA — Traffic statistics Adolfo Suárez Madrid-Barajas Airport 2024
• 14[14] JLL / Savills — Spain Living & Build-to-Rent Market Report
• 15[15] BOE — Law 12/2023 on the Right to Housing (stressed zones)