Madrid dubbed 'The new Miami' as Latin American cash floods into Spanish capital

Sun, fun, 23 restaurants with at least one Michelin star, Real and Atletico Madrid, 350 days of sun a year, and a safe city with a good standard of living. Madrid has a lot to offer Latin American investors.

It's become an alternative to traditional safe havens in the U.S. like Miami, L.A. or New York, as prices grow further out of reach in those cities, and is still cheaper than London, Paris, or Berlin with the advantage of being Spanish-speaking.

‌Many investors from Central and South America are seeking ways to keep savings secure from political and economic instability with some fearing election wins in Colombia, Brazil, Argentina and beyond could lead to a situation similar to Venezuela.

‌This trend has brought inward investment to the capital but has also inflated the domestic property market during a cost of living crisis.

Latin American investors buy without even seeing the property

‌CGTN meets with Angeles Nieto, a property personal shopper who runs 'Luxury Angels,' a one-stop shop for property seekers - 'The No.1 personal shopper in Spain and Latin America,' she says.

Nieto shows us a beautiful home with a large swimming pool in Pozuelo - one of the favored neighborhoods for Madrid's elite.

‌"This house we're in right now is around 500 square meters and the property is 1000 square meters when you include the garden and pool," Nieto says.‌ "The (Mexican) owners bought it for around 1.7 million euros ($1.9m) a year ago, it's a marvel of a house. They did a full renovation but when they actually came to live here, if they had put it on the market, they would have made a massive profit because property values are going up so fast."

‌Foreign clients often buy without even visiting in person.

‌"We are the clients' eyes and ears when they want to buy a home here in Madrid," she continues. "In 2010 a lot of Venezuelans came, now they are coming from Mexico, Colombia, Chile, Peru, Ecuador, Argentina -all of these countries with changing governments."

Mexicans alone have spent over $700 million since 2020

‌Mexicans are leading the way in Madrid's great buy-up, spending more than $700 million on Spanish real estate since 2020 according to Government FDI data.‌ The International Institute of Finance records that almost $140 billion took flight from Latin America's five biggest economies in 2022, a 41 percent rise on 2021 numbers.

‌Another very attractive lure is that Spain and around 16 other European countries offer a golden visa for high-net-worth individuals for an investment of at least $550,000.‌ Nieto has seen a sharp rise in buyers like the Heinz family who have just moved from Colombia.

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What's it like to live in Madrid?

‌"Love Madrid, there's a lot to do, there's a lot to see, the way that people live here is just phenomenal, there's just joy for life and being outdoors," Cristina Heinz tells CGTN. Nieto helped the Heinz family to find their dream home in the well-heeled Barrio Salamanca in Madrid.

‌"Living in Bogota we feel that things are becoming less and less safe not just for ourselves but our children," continues Cristina.‌ "Here they can be outside and be with their friends in the street and we don't have to worry about them."

‌The Heinz family aren't the only ones using property to secure their family and financial situations and there are others using different routes.

‌"We have friends in Colombia that have also invested here, several that have taken the real estate route, and some just moving their money," says Heinz.

‌Life is good here in the city's upscale neighborhoods, but foreign investment has helped send prices skyrocketing, putting property out of the reach of many madrilenos.‌ House prices have risen around 50 percent in five years according to Bloomberg.

‌Spain has some of the lowest wage levels in Europe and getting on the property ladder, particularly for younger people, is increasingly out of reach.

‌"In the case of Madrid, we've seen two phenomena: touristification and gentrification," said Irene Lebrusan, a Harvard-educated expert in urban sociology and a researcher at the International Centre on Aging.

‌"Families have to compete with investment funds or foreign investors. Housing is still looked at as an investment, not as a good that has a social function."

‌A 13 percent rise in 2022 was faster than any other region in Spain, and some local resident groups point to the many apartments now on tourist platforms as another driver of price inflation.

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Madrid's apartments often used by tourists over locals

‌Vicente Perez Quintana is with the Madrid Neighbors Association (FRAVM) and tells CGTN that short-term tourist let platforms like AirBnB are exacerbating the problem.

‌"In the center of Madrid alone, right now there are 7,000 apartments being used as tourist lets, that's 7,000 homes that could be available on the residential rental market, helping prices to fall," explains Perez.

Nieto also agrees that all this investment from Central and Latin America has pumped up prices too.

‌"People are coming without being advised and guided by professionals here, companies like ours, because when you don't know the market - what the prices are and what you should pay for a home in certain zones, you end up paying the asking price.

‌"Then the prices, particularly in the prime neighborhoods like Barrio Salamanca, Pozuelo, La Moraleja, don't come down. So you need local knowledge, insider advice, and pay an adequate price for each house."

‌All of this money leaving Latin America has consequences on the other side of the Atlantic too.

‌Gayle Allard is an economy expert at Madrid's prestigious IE University, she says "of course it's a tragedy for the country because you don't get the tax revenue, you don't get investment coming from these great fortunes."

‌Madrid is the new Miami say industry experts, but balancing foreign investment with serving the local community on both sides of the water has become increasingly difficult.

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