Málaga, Valencia and Toledo: Madrid's Unconvincing Succession
Flats for €14,500 in Toledo that would now be worth ten times more and rents of €2,000 in Valencia: the map of Madrid's real estate succession.
English · Original discussion in Spanish · Published
Flats for €14,500 and rents of €2,000: Madrid's real estate succession
A brand-new flat in Toledo, less than an hour from Madrid, for €14,500. Nine years later, its owner claims it's worth ten times that figure. The case summarizes the core of a discussion that resurfaces every few months: which cities will take over from Madrid as real estate investment destinations, and is that succession real or just marketing talk?
The most frequently mentioned list includes Tarragona, Murcia, Castellón, Almería, Zaragoza, and Málaga. Behind this lies a concrete and verifiable phenomenon: the AVE high-estimulante ilegal train is no longer acting as a long-distance service but, in practice, as a high-estimulante ilegal commuter train. This brings provincial capitals within daily commuting distance of Madrid. Extremadura, for now, is still waiting its turn.
Valencia already nears €2,000 in several districts
The most cited indicator is not the sale price but the rent. In Valencia, there are already three or four districts with average rents exceeding €2,000 per month, a figure previously associated only with the centers of Madrid or Barcelona. Málaga, meanwhile, faces the opposite complaint: it was already expensive enough. The market has been pricing in this succession for some time, and this has a perverse effect: when a city becomes the cheap alternative, it stops being cheap.
The uncomfortable theory: only Madrid and Barcelona will hold up
Against this peripheral optimism, there's a counter-argument. Its premise: when the next crisis hits, the centrality of Madrid and Barcelona will best preserve value, while the periphery and secondary cities, with less structural demand, will see the steepest declines. Those who couldn't afford to buy in the major cities will try then, not before. The most pessimistic scenario doesn't predict ten years of price increases but a model of shared housing—several family units per flat—which by definition cannot sustain rising prices.
The intriguing aspect of the matter is illustrated by a textbook case. A divorced man bought a medium-sized sailboat for €12,000 and lives docked, paying €200 per month for the mooring, with water and some electricity included. He says it's worth it. The response was swift: an old sailboat of that size incurs several thousand euros in annual maintenance, and only pays off if it's also rented out seasonally. Applying the same calculation to a €14,500 flat is the exercise no one has fully completed.
What if the city an investor is looking for isn't on any of the lists?
A brand-new flat in Toledo, less than an hour from Madrid, for €14,500. Nine years later, its owner claims it's worth ten times that figure. The case summarizes the core of a discussion that resurfaces every few months: which cities will take over from Madrid as real estate investment destinations, and is that succession real or just marketing talk?
The most frequently mentioned list includes Tarragona, Murcia, Castellón, Almería, Zaragoza, and Málaga. Behind this lies a concrete and verifiable phenomenon: the AVE high-estimulante ilegal train is no longer acting as a long-distance service but, in practice, as a high-estimulante ilegal commuter train. This brings provincial capitals within daily commuting distance of Madrid. Extremadura, for now, is still waiting its turn.
Valencia already nears €2,000 in several districts
The most cited indicator is not the sale price but the rent. In Valencia, there are already three or four districts with average rents exceeding €2,000 per month, a figure previously associated only with the centers of Madrid or Barcelona. Málaga, meanwhile, faces the opposite complaint: it was already expensive enough. The market has been pricing in this succession for some time, and this has a perverse effect: when a city becomes the cheap alternative, it stops being cheap.
The uncomfortable theory: only Madrid and Barcelona will hold up
Against this peripheral optimism, there's a counter-argument. Its premise: when the next crisis hits, the centrality of Madrid and Barcelona will best preserve value, while the periphery and secondary cities, with less structural demand, will see the steepest declines. Those who couldn't afford to buy in the major cities will try then, not before. The most pessimistic scenario doesn't predict ten years of price increases but a model of shared housing—several family units per flat—which by definition cannot sustain rising prices.
The intriguing aspect of the matter is illustrated by a textbook case. A divorced man bought a medium-sized sailboat for €12,000 and lives docked, paying €200 per month for the mooring, with water and some electricity included. He says it's worth it. The response was swift: an old sailboat of that size incurs several thousand euros in annual maintenance, and only pays off if it's also rented out seasonally. Applying the same calculation to a €14,500 flat is the exercise no one has fully completed.
What if the city an investor is looking for isn't on any of the lists?
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (15 replies).
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