Living in the heart of the most prestigious area in Madrid property market, where the most well-known fashion firms and some of the most luxurious shops of the city are found, comes with a price.
The Madrid district of Salamanca-Goya-Recoletos is the most expensive in the area and in all of Spain. According to facts analyzed by the housing site fotocasa.es, the price of renting in this zone reaches €14.24/m2 per month, more than double the average in Spain, which in August was situated around €7.05/m2 per month.
The Gold Mile of Madrid
“In the Salamanca-Goya-Recoletos area, the most exclusive commercial streets of the capital are concentrated, with the maximum amount along the Gold Mile. In addition, it’s a central zone that is well-connected, which explains the price per square metre for rentals being double the national average, and in the case of sales, the price per square metre grazes 5,000 euros,” explains Beatriz Toribio, coordinator of this analysis.
In spite of being the most expensive neighborhood in Madrid, the economic crisis didn’t pass it by. Following the tendency that the rental market is experiencing in almost all of the districts of the country, the Salamanca-Goya-Recoletos area is also registering falls in price. In August, the average price of renting fell -0.7% in comparison with the previous month, and when comparing the same month of the previous year (from August 2012 to August 2013), the fall was -6.5%.
“This prestigious area is noticing the crisis, but less. The fall in the price of rentals has kept repeating itself in the last six years in Spain, but it came to this district one year later. And while renting in Spain is on average 30% cheaper than it was in 2007, in the Salamanca-Goya-Recoletos area, prices have fallen 24% since the crisis erupted,” adds Beatriz Toribio.
While the Spanish average recorded its highest rental price in May of 2007, Salamana-Goya-Recoletos didn’t reach its highest point until September of 2008. Five years ago, renting a home in this prestigious zone came with a cost of €18.71/m2 per month, while the average in Spain was €9.15/m2 per month.
An X-ray of the ‘typical flat’ in Salamana-Goya-Recoletos
In the Salamana-Goya-Recoletos district, the most abundant type of home is a flat (90%), followed by lofts (8%) and duplexes (1%). The average home in this area is a 102 square metre flat, with two bedrooms and two bathrooms. Renting a home with these characteristics in this district currently costs 1,452 euros per month, 733 euros more than the Spanish average regarding a flat with the same characteristics.
Age wise, flats between 30 and 50 years old (33%) and those older than 50 (33%) are more abundant in this zone, followed by 20 to 30 year old flats (18%), 5 to 10 year old flats (6%), those that are younger than 5 years old (6%), and finally, those between 10 and 20 years old (4%).
Living from renting in Madrid, a tendency on the rise
Traditionally, the Spanish housing market and also that of Madrid has always had more homes for sale than for rent. However, in the last few years, due to the economic crisis, the amount of flats for rent as well as the demand for them has increased substantially, with renting being a firm option compared to buying now. In August 2013 the amount of flats for rent in Madrid represented 40% of the total amount on the housing market, while three years ago, it was 30%. On the other hand, flats for sale make up 60% of the total, while in August of 2010 they made up 70%.
In regards to the demand for flats for rent, the rising tendency is also accelerating since the start of the crisis. Since 2010, the demand for buying a home has been going down, however, searches for flats for rent have been progressively growing, currently reaching 74% of the total of demand for housing in Madrid. As few as 26% of citizens looking for a flat in Madrid want to buy one.
Renting in Madrid is quick if the price is reduced
According to the last survey, “The experience of selling and renting a home,” completed by fotocasa.es, 75% of surveyed people from Madrid affirmed that they had been able to rent their homes, unlike the 25% that could not. Of those that were able to rent, 78% did so in a period of one to three months. In addition, the survey about rentals also revealed that owners are adjusting prices. 53% of those surveyed from Madrid had reduced the price to be able to rent out their properties, and on average, they applied a 97 euro discount. Those that still haven’t been able to rent out their property confirmed that, on average, they were willing to reduce rent by a maximum of 95 euros a month.