Salamanca: Madrid's most attractive area for investments

One of the wealthiest and most expensive areas in Madrid has the highest price per square meter of residential property
Salamanca is a favourite district of both investors and citizens, presenting the highest sale and rental prices in Madrid, according to a study carried out by the real estate consultancy company CBRE.

According to the company's 'Corazones de Barrio' report, the Salamanca district has the highest price per square metre of residential property in Madrid, exceeding 5,700 euros at the end of last year.

It is also the second highest rental price, only behind Chamberí, at around 17.5 euros/month per square metre. However, due to the pandemic, rental prices have fallen by 11% in the last two years, breaking the upward trend until the beginning of 2020.

Besides, Salamanca is the district of Madrid with the lowest rate of main residence, only 75%. It also has a high vacancy rate of around 16%.

the center of Madrid
Paloma Relinque, director of the CBRE Madrid office, said that "this can be explained by two factors: on the one hand, by the value of the homes in this district as an investment product and not by their intensive use by the buyer; and, on the other hand, by the existence of very old, unrefurbished homes, which are not in ideal condition".

CBRE has also highlighted the scarcity of available land in the Salamanca district, which limits the development of new construction, concentrating on the Fuente del Berro and Guindalera neighbourhoods, which have less protected buildings and are undergoing a major renovation process.

Price differences between neighbourhoods

Salamanca is located to the northeast of the historical center of Madrid
Salamanca is located to the northeast of the historical center of Madrid
This article meant that, if a property was sold with this particularity, the new owner could lose his property to the legitimate heir, although he would still have to pay his or her mortgage.

In addition, banks are reluctant to grant mortgages in this case, which also makes it difficult to obtain financing. The buyer of an inherited flat could lose the property, but would still have to pay the mortgage.

On the other hand, the heir had problems selling his home until two years after the death of the previous owner. On the other hand, he or she was forced to sell it for a below-market price if heir needed to sell it before this period because of the risks involved.

High office occupancy

Price distribution is not the same throughout the district, with Guindalera and Fuente del Berro being the cheapest neighbourhoods. In fact, the neighbourhood of Recoletos reached double the selling price of Guindalera, but sold 418 less homes last year.

On the other hand, Calle Rosario Acuña is the most expensive street in Salamanca, while Calle José María Sánchez Silva is the cheapest. In addition, Calle Campanar is the street whose price per square metre has increased the most in the last five years.

High office occupancy

Salamanca also has large differences in the office market between its neighbourhoods, ranging from the heart of the financial district, with Paseo de la Castellana, to areas with almost no office-only buildings, such as Fuente del Berro or Guindalera.

The Recoletos and Castellana districts have around 70 buildings and 430,000 m2 of office space each. As for the average rental price, it is around 26 euros/month per m2, with buildings in Recoletos reaching 40 euros.

Relinque also pointed out that occupancy "exceeds 90%, with the Goya area standing out".

Increase in available premises

As a result of Covid-19, between December 2019 and December 2020, the number of commercial premises available increased from 12 to 19%, these being small shops, which have not been able to cope with pre-pandemic rent levels.

However, Relinque has indicated that, "since the end of 2020, we have detected a reactivation of the rental of premises in this district".

High hotel investment

Finally, the high tourist demand in the area, combined with the limited hotel supply, has led to a strong interest from the investment community in the district's hotels.

"It is expected that, throughout 2021, Salamanca will maintain its relevance in the hotel investment market," concluded Relinque.

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