Investor preferences are shifting, particularly among smaller players (those with less than $10 billion in assets under management). These investors are moving capital into residential properties. One of their primary European targets is Madrid’s luxury neighborhoods. This article explains why, and presents the key luxury real estate markets in Madrid.
Shifts in investor preferences
CBRE is a global leader in commercial real estate services and investments. Every year they survey their European clients about their investment intentions for the year. Their clients cover a broad spectrum of investors from EU countries, Switzerland and the UK. 85% of these investors are asset managers, developers and high net worth individuals/family offices.
CBRE’s Investor Intentions Survey questions investors about their expected asset allocation across the following real estate classes:
- Living– multi-family homes, build-to-rent and student housing
- Office space– grade A, B and C office space in prime locations
- Hotels– full-service, luxury and limited-service properties
- Logistics– both modern and aged facilities in major cities
- Retail– retail parks, supermarkets, prime shopping centers and high street retail
- Other
This year’s survey highlights a shift in preferred investment sectors. For the first time in the Investor Intentions Survey series, Living (residential real estate) emerged as the most sought-after sector. 32% of respondents stated they were targeting this sector in their 2025 investment strategies. This was driven by respondents’ views that there will be an increase in occupier demand in the next three years.
While down on the previous year, Logistics remains a strong second at 27%. Office (16%) continued its decline, but Retail deviated from the trend, with 10% of investors choosing it as their most preferred sector for 2025. Due to strong returns, Hotels (9%) recorded an increase compared to 2024.
Capital appreciation more important than returns
Favorable real estate pricing is most frequently cited (53%) as the main reason for increasing fund allocations to real estate in general. Improved expected returns (40%) was the second reason given for investors increasing fund allocations to the real estate sector.
Preferred countries
Most cross-border respondents selected the UK as the market with the highest expected total property returns in 2025, driven by strong interest in London. Spain ranked second, with investors showing interest in Madrid and Barcelona.
Madrid vs. Barcelona
Although investors highlighted both cities as desirable, Madrid ranked above Barcelona in the cities rankings. Madrid ranked second (after London), while Barcelona was ranked fourth. Paris fell in between the two, ranking third.
Both of these cities are benefiting from the strong Spanish macroeconomic climate, which is driving demand in the real estate sector.
Recent years have seen an interesting shift in European economic performance. Countries in the south, specifically Spain, Portugal and Greece, have the best performing economies on the continent. Spain’s strong macroeconomic performance is best illustrated by examining the country’s notoriously stubborn unemployment rate. For years it was the highest in Europe, but it has steadily fallen as Spain’s economy has improved. In 3Q25 it clocked in at a half what it has been in past years, at 10.45%.
Spain unemployment rate: 2015-2025
Why Madrid?
This international ranking underscores the strong institutional confidence in Madrid’s market compared to not just Barcelona, but other more traditional European capitals.
Madrid leads Spain in residential property sales. This high volume reflects market liquidity well above the national average, which reduces investor risk and supports both entry and exit strategies. This can be seen in the following map, courtesy of Idealista (presión de demand corresponds to demand pressure).
Moreover, Madrid has recorded the highest year-on-year increase in price per square meter in Spain, with gains of over 24%, again according to Idealista. This reflects persistent investor demand and a clear trend of asset appreciation, especially for high-quality properties in prime locations. As investors focus on sustained asset appreciation and high transaction volume, as opposed to rental returns, this potential for price appreciation is the key factor in asset allocation.
Book a private investment consultation to identify Madrid’s most stable high-value properties. You can contact our founder Fabiana Greci directly at fabiana@madrid-estate.com or WhatsApp +34 680 306 337
Preferred Madrid neighborhoods
The most profitable properties are typically located in prime areas, where buyer demand is high and the potential for capital appreciation is strong. Madrid’s prime real estate areas remain highly liquid, secure assets.
Traditionally, the top districts are Salamanca and Chamberí—luxury real estate hubs with exceptional price stability and appreciation. Retiro, adjacent to premium real estate in Salamanca, recently joined this club. The neighborhood has seen extremely high price appreciation in recent months. The average price per square meter of real estate in Retiro increased 22.5% from November 2024 to November 2025. Chamberí saw the next strongest price appreciation, with prices increasing 21.2% over the same time period. Tetuán, which is not traditionally a premium neighborhood, has also seen strong price appreciation. This neighborhood, which sits directly to the north of Chamberí, is in the middle of a renaissance. Once a solid working class neighborhood, it has dynamic new restaurants and cutting edge retail concepts. The neighborhood is sandwiched between residential Chamberí and Castellana, Madrid’s central business district. As those two neighborhoods become increasingly expensive, real estate investment is creeping into Tetuán from both sides.
Another of Madrid’s luxury neighborhoods is La Moraleja, which is in the suburbs. Located just 15 kilometers north of Madrid, this leafy green neighborhood is arguably the most prestigious residential area in Madrid. It is home to many successful business people, diplomats and Real Madrid players. Many celebrities are drawn to La Moraleja because it has luxurious gated communities that offer excellent security. We like to think of it as the Beverly Hills of Madrid.
Madrid’s most luxurious neighborhoods
Castellana and Recoletos
The above neighborhoods are all considered premium neighborhoods in Madrid. However, there is a great deal of variation in these neighborhoods. Salamanca, for example, is quite large. Painting it with a broad brushstroke obscures the true character of its sub-neighborhoods. Salamanca is divided into six sub-neighborhoods:
- Castellana
- Recoletos
- Lista
- Goya
- Fuente del Berro
- Guindalera
Fuente del Berro and Guindalera lie to the east of the other four sub-neighborhoods; these are not considered luxury neighborhoods. Real estate is cheaper here, bringing down Salamanca average pricing numbers. Castellana and Recoleteos have the most expensive pricing and are considered the most luxurious neighborhoods in Madrid.
Spain’s “golden mile,” the city’s premier shopping district, is located in Recoletos. In Recoletos you can find the Madrid outposts of luxurious big brands such as Tiffany & Co, Valentino and Dior.
Trafalgar & Almagro
Chamberí, like Salamanca, is divided into sub-neighborhoods. Pricing in staid older sub-neighborhoods such as Vallehermoso, Gaztambide and Arapiles pulls neighborhood average pricing down.
Beautiful Almagro, with its beautiful Parisian-like architecture, high end boutiques and top-rated restaurants, has some of the most luxurious properties in Madrid. Neighboring Trafalgar, which always had premium pricing, is seeing demand surge from international buyers after the prestigious Brewster Academy opened its first international campus here.
El Viso
El Viso is a sub-neighborhood of Chamartín. Located at the north end of Calle Serrano, it is Madrid’s ultimate “stealth wealth” neighborhood. As opposed to the rest of the city center where people live in apartments, El Viso is a small enclave of detached homes. It offers the tranquility and privacy sought by the discreetly wealthy. Designed in the 1930s by architect Rafael Bergamín (1891-1970), El Viso was envisioned as a garden city clustered with hotelitos—small houses with lush outside spaces.
The neighborhood has the highest per capita income in Spain, according to the country’s National Statistics Institute. To put things in perspective, Real Madrid players tend to live in La Moraleja and Pozuelo de Alarcón. The President of Real Madrid lives in El Viso.
There are a limited number of properties in El Viso and they don’t often change hands. If they do, they are almost always sold off-market. If you are interested in purchasing one, it is imperative you work with an exclusive buyer’s agent that has access to any El Viso properties that may be for sale.
Because properties in El Viso are not often put up for sale, looking at aggregate pricing can be deceiving. Idealista posts the average price per square meter of property in El Viso as 9,196€. However, if you are interested in a detached home in El Viso, expect to pay much more than this.
