Real estate in Spain is diverse and contributes significantly to the country's economy. Promising properties with high profitability at relatively low costs are concentrated in Madrid and Barcelona. However, the real estate markets of these two major cities each have their unique characteristics. In this article, we will consider the main differences.
Content:
- Geographic influence on the market
- Real Estate Prices
- Architecture of Madrid and Barcelona
- Return on Investment
Geographic influence on the market
- Madrid, the capital of Spain, is located in the country's center, while Barcelona is located in the northeast, close to the border with France. This geographic separation as well as cultural heritage influences the architecture, design, size, and cost of real estate properties.
- Barcelona is one of the most popular tourist destinations in the world, with resorts and beaches that attract millions of travelers annually. Many investors see potential in renting properties for short-term stays. Madrid, however, lacks the sea, so tourism is not the primary driver of the market.
- Both cities have well-developed infrastructure, but Madrid, as the capital, boasts a larger number of educational and medical institutions as well as commercial properties. Barcelona, due to its geographical location, is famous for its rich selection of restaurants and entertainment options.
Real Estate Prices
Housing prices vary significantly, even within the same city. In Madrid, the cost of real estate ranges from $433,000 to $4.3 million. Prices increase as you get closer to the capital's central part, with districts like Salamanca, Retiro, and Chamberí being the most expensive. Here the starting price per square meter of an apartment is $5,370, and it increases depending on the property's size and condition. Similar apartments in the center of Barcelona, in districts like Eixample, Gràcia, and Sarrià-Sant Gervasi, are available for $5,230 per square meter. In these areas, many investment properties have an average cost of $540,000.
The overall situation in the real estate market in 2022 showed an increase in housing prices and demand. The price of apartments in Spain increased by an average of 9% on average. The previous year recorded 649,494 real estate transactions; however, experts don't predict such a rush in 2023. According to Jesús Duque, vice president of the renowned real estate agency Alfa Inmobiliaria, this year will see a decline in the cost of houses in Spain that fall in the medium and low price categories. On the other hand, the premium segment's housing will continue to grow.
Architecture of Madrid and Barcelona
The architecture of the cities is absolutely different. In the capital, traditional construction prevails, incorporating classic Spanish motifs. In central Madrid districts, such as Salamanca and Retiro, one can find beautiful buildings with facades executed in neoclassical and modernist styles. These houses often have luxurious decorative elements, high ceilings, and very spacious apartments. In these areas, real estate prices are traditionally significantly higher, especially for restored historical buildings.
Barcelona is famous for its unique buildings and has a large number of properties created by famous architects, including Antoni Gaudí. Some famous landmarks, such as the Sagrada Familia, Casa Milà, and Park Güell, are striking examples of his work. Gothic style and modernism predominate in the city's architecture. Barcelona is full of unconventional and extravagant houses and apartments that attract the attention of both locals and foreign investors. The prices of properties in such buildings may be higher due to their historical and architectural value.
Return on Investment
The return on investment in Spanish cities depends on several factors, including location, property type, and the current market state. In Madrid, real estate yields are typically more stable and predictable, reaching 8.2% in 2022. The Spanish capital has high demand for rental accommodation, especially in central districts, which can ensure a steady flow of tenants. However, the expected return can vary depending on the specific district and property type. For instance, commercial spaces in Madrid's business center could yield higher returns than residential properties in suburban areas.
In Barcelona, the ROI was 8.5% in 2022. Being one of the most popular tourist destinations, providing short-term accommodation to travelers could be in high demand and generate substantial income. However, with restrictions placed on short-term rental properties in Barcelona, the yield in this area may not be as high as before. The city government has suspended the issuance of tourist licenses and prohibited apartment conversions.
The real estate markets in Spanish cities have their unique characteristics and differences. Barcelona attracts tourists and lovers of unconventional architecture, while Madrid offers more opportunities for stable income and diverse services. The choice between these two cities depends on the investors' preferences and goals. Barcelona has a thriving restaurant and entertainment scene. In contrast, the capital offers a wider selection of educational and commercial organizations. Each city has its advantages, and the decision to buy property should be based on a thorough analysis of your plans and needs.