MADRID“Twelve years ago, when I arrived, you didn’t see the rich on the streets, but now you do. You see Ferraris and Lamborghinis, luxury shops, bilingual schools. Today Madrid reminds me of Miami, where my family lives. German “. Alberto Pérez is the secretary of the Venezuelan Civil Association, one of the many entities that bring together the diaspora of that country, and knows first hand the impact that Venezuelan capital is having on the state capital, especially in the real estate sector. The epicenter is located in the so-called golden mile, in the district of Salamanca, and also in the Prado area. We find the luxury apartment estate Montalban number 11, the crown jewel of Venezuelan design. For a million euros, invites you to live within a work of art.
The fact is that Madrid is becoming a pole of attraction for people with high purchasing power, and one of the people who know it well and have experienced it first hand is the Austrian and half Venezuelan Johanna Müller, partner of the also Venezuelan Eliza Arcaya. The two own two of the trendy bars in the Salamanca district: Café Murillo and the restaurant The Velazquez 17. “When I arrived twenty years ago, Madrid was a very chaste city, Lucio’s starry eggs, bulls, but it wasn’t cosmopolitan. Now that has changed radically. Madrid is now the city where everything happens.”
When I arrived twenty years ago, Madrid was a very chaste city, with Lucio’s starry eggs, bulls, but it wasn’t cosmopolitan. Now that has changed radically. ”
Johanna Mueller
Müller arrived in Madrid in 2002 to study for an MBA and quickly identified where there were opportunities to make money. “The first business I opened was to rent luxury bags, from brands like Prada or Gucci. It was the time of Sex and the city, and it went very well for me. “She has seen how the arrival of people with money has changed the city:” The places that are now opening in Madrid would have been unviable ten years ago. There was no such thing as a public who spends a very high bill on a restaurant. But now yes. And that creates an inertia. Money calls money. “
More luxury housing
Where also, and above all, they have noticed this inertia is in the real estate sector. “[Madrid] It has become a pole of total attraction that I don’t think has deflated, “said Luís Valdés, residential director of Colliers International, one of the firms that, in conjunction with CB Richard Ellis (CBRE) or Barnes, controls much of it. of luxury housing promotion and premium of the capital. At the moment, it is a profile of enterprise client or patrimonialista “with very high rents” and that comes mainly from some country of Latin America, emphasizing Venezuela and Mexico. From Colliers, for example, they point to 65% of all investors, while the rest, 35%, would be a customer from the state.
Different voices in the sector agree that although at first Madrid was seen as a “gateway to Europe”, the dynamic has changed and many investors end up staying and residing in Spain. The main reasons are mainly cultural, says Valdés, who cites gastronomy or language as an example. “Barcelona is attracting more luxury investment from Europe and northern Europe. The sea is an incentive,” said the Colliers member.
14.000 €
This is the average price per square meter of Galerías Canalejas homes
Then, however, the economic elements are added that for Mikel Marco-Gardoqui, CEO of CBRE Spain, are a “plus”. This is where the tax rules come into play: “In Madrid, the IBI pays much less than they would pay in their home country, where it is usually 2% each year,” says Valdés. But also the difference with cities like London, Paris or Milan. According to the real estate sector, the square meter in the Spanish capital is still much lower than in other cities. What does this mean? A source in the sector places as a “track” the price that reached on average the square meter of housing in the Canalejas shopping center and which were sold under the Four Seasons Private Residence brand: 14,000 euros. Although it is considered the most expensive operation in recent years, another source explains that the minimum budget is 10,000 euros per square meter, while the maximum can reach 20,000 euros. The price of luxury housing has risen 5% in Madrid over the past ten years, according to a report by Colliers.
Does this spiral stop you? For Marco-Gardoqui, there is a “certain tension” between supply and demand. He points out that a few years ago the offer was “enough” for the flow of investors only from the state but with the incorporation of Latin American customers in short supply. “Start with a foot-to-earth, as the French say. That is, they buy something small and if they are comfortable they keep investing. To get out of the way they start with 200 meter apartments, and then end up buying more than 1,000 meter penthouses or buildings. They have a different notion of the surface than ours, “laughs Valdés.” You realize that in Spain there is not so much rich, “he says.
Fiscal appeal
All in all, the question is: can this be achieved only with a policy of low taxes such as those applied by the Community of Madrid for decades? For Gregorio Izquierdo, director general of the Institute of Economic Studies, a think tank linked to the CEOE, the reasons are various. “The big change for Madrid comes with the entry of Spain into the euro. This is when it bears the fruit of the great investment in infrastructure that was made in the 90s and that connected the south with the north.” And then, of course, there are factors like not having a wealth tax. “Madrid is competing with cities around the world to attract capital, and having a wealth tax can already rule you out right away. The only thing Madrid is doing is removing that barrier.”
Johanna Müller confirms that the tax issue is important to attract money: “This is what every country in the world is doing. Portugal did it and it was filled. Capital brings dynamism and generates jobs.” But Izquierdo considers it false that taxes are not paid in Madrid. “Note that more IBI is paid in Madrid than assets throughout Spain. You can tax assets in other ways, for example, with the circulation tax, which provides a lot of resources.”
On the Venezuelan capital, it is noteworthy that in Madrid traditional rich families like the banker Juan Carlos Escotet, the daughters of Carolina Herrera, Víctor Vargas with ex-hierarchs of Chavismo, called bolichicos, such as Alejandro Betancourt, who has now bought the well-known brand of Hawkers sunglasses, or former minister Nervis Villalobos. Some of them have been prosecuted. The fact is that the so-called Golden Visa, the possibility of acquiring the nationality with an investment of half a million euros, has facilitated the arrival of rich people from around the world, especially Venezuelans. The cousin of opposition leader Henrique Capriles, Miguel Ángel Capriles, owns the Gran Roque group, one of the largest investors in real estate in central Madrid in recent years.
Galerías Canalejas, a shopping center with shops, has recently opened in the center of Madrid, in Carrera de San Jerónimo premium and gourmet restaurants, and together with the Four Seasons Hotel, they form a kind of luxury triangle in the heart of the city. Grupo Paraguas is planning something similar to the Metropolis building. The Villa Magna has been reopened, and the old Ritz has become the new Mandarin Oriental Ritz. Johanna Müller believes that the power of Madrid as a city of the rich is entering “a golden age” and is already preparing her next step: to open a hospitality consultancy. “Everyone is in a race to open premises,” he says with a smile.
