Over the years, Israeli clients have consistently been some of our most significant buyers; this has increased since the regional conflict as many are seeking stability. If you are looking at Madrid as an alternative place to live, or as a place to purchase a second home/investment property, this article Madrid vs. Tel Aviv walks you through the pros and cons of each city.
It is also an excellent article to read if you work in the tech industry, or are a tech investor. Tel Aviv is home to one startup for every 160 residents – a higher density than any other city. Israel’s high-tech sector now accounts for 20% of the country’s economic output, according to the Israel Innovation Authority (IIA). The IIA stated that despite the eight-month-old war against Palestinian Islamist group Hamas in Gaza, the tech sector continues to grow – albeit slower than in 2021 and 2022 – and remains Israel’s main growth driver. It accounts for 53% of total exports. Some 600 new startups were created last year while tech firms raised $8 billion in 2023; all tolled, Israel has around 9,200 tech firms with a workforce of 400,000.
Similarities between the two cities
We have many Israeli clients because Madrid and Tel Aviv have a lot in common.
Weather
Tel Aviv and Madrid are both located in the Mediterranean, thus they have similar climates. Madrid is the European city with the most number of sunny days, averaging 300 per year. Tel Aviv also averages 300 sunny days a year. Both have warm summers and cooler winters, although Madrid is at a higher elevation and close to the mountains, so its winters are cold compared to those in Tel Aviv.
Both Israel and Spain are covered with olive trees, avocados, pomegranates and similar vegetation that flourishes in the Mediterranean.
Culture
Spain and Israel have similar cultures. If you takeaway the differences in religion, you can find many commonalities. A big thing, which people from many other cultures have trouble adjusting to, is that lunch and dinner are served relatively late in both Spain and Israel. Both Madrid and Tel Aviv have scintillating night life. Madrid is known for its many bars and clubs, including super-clubs, neighborhood bars, hipster bars and more upscale drinking establishments. Tel Aviv is the same, except it also has beach bars.
Mortgage rates
Our last blog post, European mortgage rates explained, highlighted the fact that Madrid has the second lowest mortgage rate in Europe, at 3.45%. Israel’s mortgage rate is also in the lowest tier, at 3.76%. This is good news for Israelis that want to use Spanish mortgages to assist in financing their property purchases. If you want to learn more about obtaining a Spanish mortgage, we refer you to this article: Spanish mortgages for investors.
Do you want to learn more about investing in Madrid real estate? For years we have worked with Israeli clients, so we understand your wants and needs. We invite you to arrange a FREE CONSULTATION TODAY to learn how we can help you.
Differences between the two cities: Madrid vs. Tel Aviv
Property prices
If you are an Israeli looking for reasons to invest in real estate, look no further than Madrid’s relatively low real estate prices. Although they have trended up in recent years, Madrid real estate prices are still some of the lowest in Europe.
Israeli real estate prices, on the other hand, are some of the priciest in Europe. Prices in Tel Aviv, in particular, are quite expensive. This is even after having fallen 4.6% in Israel as a whole.
The following chart illustrates how much has changed among the top tier cities for real estate investment in Europe. Real estate in London used to be the most expensive in Europe, by far. But Brexit changed all that. Post Brexit the prices have dropped considerably. A lot of this is due to back office processing. Pre-Brexit, The City of London was the financial capital of Europe; virtually all back office processing for financial transactions was performed by London banks. After Brexit thousands of these jobs moved to Paris, along with other jobs that were no longer viable to remain in the UK post-Brexit. The war in Ukraine also hit the London economy. Before the war, London was awash with Russian billionaires and their rubles. After the war, they were expelled along with their cash. As a result of all these events, Paris has overtaken London as having, on average, the most expensive real estate in Europe (not including Monaco which is a very small, often closed market so we don’t include it in our research).
Interesting, real estate in Tel Aviv is the second most expensive in Europe. This is even after the recent price decrease due to the wars in Gaza, Lebanon and now Syria.
Although Madrid real estate has trended up in recent years, it is still some of the least expensive in Europe.
Cost of Living
Another thing to consider when comparing real estate investments in Madrid vs. Tel Aviv is the cost of living in both cities. As you can see in the following chart, Madrid has one of the lowest costs of living among major European cities; only Lisbon is cheaper. Tel Aviv, although not nearly as expensive as London, Zurich or Paris, is significantly more expensive than Madrid.
Stability
Obviously, Madrid is currently much more stable than Tel Aviv. The city is on the other side of Europe from the conflict in the Middle East. It is also a very safe city with a large police presence in the streets. The government is stable. Although there are often difficulties in forming Parliamentary majorities, this actually leads to stability as neither side has a mandate to create big changes.
Can Israelis get a Spanish visa?
With it’s comparable culture, low real estate prices and low cost of living, it’s a pretty easy decision for many Israelis to either move to Madrid, or purchase a second property in the city. The question that is faced by many property investors is if it’s possible to get a Spanish visa. This is particularly relevant since Spain recently shut down its golden visa program. Spanish residency is no longer granted for property purchase.
However, Israelis have a very viable option. A few years ago, Spain established a special visa for those of Sephardic origin. Spain and Portugal both established “law of return” visas for Sephardic Jews. However, Portugal recently amended the requirements to participate in the program. Spain, in contrast, has a fast-track naturalization process for this category of visa. To learn more about this special visa, you can read this PDF from the Spanish Ministry of Interior: BILL GRANTING SPANISH CITIZENSHIP TO SEPHARDIC JEWS Jerusalem(2). This visa is especially attractive for those with Spanish origins. If you are eligible for this visa, you can obtain Spanish citizenship without renouncing your current citizenship and without residing in Spain.
If you are of Sephardic origin but can’t trace your roots precisely to Spain, there is another visa you can get. It requires two years residency in Spain, which you can easily do by first obtaining a Spanish digital nomad visa.
Conclusion
If you are from Tel Aviv, or other places in Israel and are looking to either relocate for purchase a second home/investment property, Madrid is an excellent option. It has comparable weather and laid back atmosphere. There is no beach, but Valencia’s beautiful beach is less than two hours away on Spain’s excellent high speed rail network. The icing on the cake is that both property prices, and the cost of living, are much lower than in Tel Aviv.
Would you like to learn more about the Spanish real estate market? Or life in Spain? Madrid Estate works with a number of Israeli clients. Arrange a FREE CONSULTATION TODAY to learn more. Madrid Estate is a full service real estate firm, so we can walk you through every step of the process.
