By Rodrigo Orihuela and Macarena Munoz
A few months ago, when apartments in a luxury building on Padilla Street in Madrid’s upscale Salamanca neighborhood went on sale, more than half of them were bought by wealthy Mexicans.
The project, with 25 homes costing up to US$3.25 million each, is financed mainly by Mexican investors and symbolizes the increasing presence of Latin Americans in the Spanish capital.
Since 2020, Mexicans have spent more than €700 million on real estate and construction in Spain, according to government data on foreign direct investment.
Like other wealthy Latin Americans, they invest in the city, buying second or third homes and anchoring their savings.
“Madrid is the new Miami,” said Jose Manuel Ortega, a former investment banker who advises foreigners on real estate and private banking in Spain.
Leftist governments in major Latin American nations have triggered capital flight, with the region’s five largest economies seeing some US$137 billion outflows in 2022, up 41% from 2021 and the most since 2010, according to preliminary Institute of International Finance data.
Although much of that has landed in Miami, linguistic and cultural affinities have attracted a portion to Spain.
The flood of money is changing the face of Madrid: it has boosted housing prices and created an upscale dining scene.
According to consultancy Knight Frank, luxury home prices rose 6% last year, more than in most major European capitals.
In April, they hit a record high for the second month in a row, according to real estate portal Idealista.
In Madrid’s upscale Salamanca neighborhood, new restaurants are springing up at a dizzying pace and are almost always full.
Table reservations start at 8 pm, unheard of in a city where kitchens rarely come to life before 9 pm and where lunch is served mostly between 2 and 3:30 pm.
Madrileños have to adapt to other changes, such as the assignment of set times for table use, common perhaps in New York but unusual in a country where long after-dinner conversations are a cultural staple.
The Spanish even have a word for it: “sobremesa”.
The newcomers have brought “a change in lunch and dinner shifts with many Spaniards finishing their meals just an hour before foreigners are ready to dine,” says Madrid-based food critic Gonzalo Torres.
Salamanca’s wide, leafy 19th-century boulevards are lined with upscale restaurants, such as the Michelin-starred Ramon Freixa Madrid and La Tasqueria.
The area has high-end boutiques to make the wealthy from all over the world feel at home.
A niche service industry has also emerged to cater to the needs of the wealthy.
Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest lender, has opened two offices in Madrid for very wealthy individuals in the past two years. BBVA owns the largest bank in Mexico, where its Spanish rival, Santander SA, also has a large presence.
Brazilian chef Sandro Silva has opened several restaurants in Madrid, creating a more expensive dining culture that has spread to the city’s upscale neighborhoods.
With its record number of Michelin stars, the French group Robuchon opened a restaurant in Madrid late last year.
The arrival of a Four Seasons hotel and the reopening of the Villa Magna, owned by RLH Properties, a Mexican firm founded by businessman Borja Escalada, have reinforced the luxury push.
In addition, Spanish business schools, such as IE and Iese, have become popular choices for the children of wealthy Latin American families.
Mexicans made up the second-largest cohort among non-Europeans at IE this year.
“Madrid has become a new destination for Latin Americans; it’s a trend that accelerated with the covid pandemic in 2020,” says Victor Matarranz, head of wealth management at Banco Santander.
“First, they come almost as tourists and see what’s there; then they develop an appetite for real estate.”
“Now, they are looking for business opportunities,” he added.
Previous waves brought wealthy exiles fleeing political turmoil at home, such as Venezuelans escaping Hugo Chavez’s policies around 2010.
The current surge in Mexican investment, and to a lesser extent from other countries such as Peru, coincides with a shift to the left in the governments of much of Latin America, from Andrés Manuel López Obrador in Mexico to Gabriel Boric in Chile and Gustavo Petro in Colombia.
Many wealthy Mexicans are looking for investment opportunities, said Ximena Caraza, director of Casa de Mexico, a cultural and economic center that helps the country’s investors do business in Spain.
“A lot of Mexicans are coming to see what business they can do here,” she says.
Wealthy Mexicans keep a low profile, but they can’t help but stand out from time to time.
Mexican businessman Manuel Gonzalez bought a coveted downtown Madrid property and this year remodeled it into Abya, one of the city’s most luxurious restaurants.
Carlos Slim, the richest person in Latin America, owns significant stakes in publicly traded Spanish real estate companies Metrovacesa SA and Realia SA.
Carlos Fernandez Gonzalez, who made his fortune in the Mexican beer industry, is the second largest shareholder in Spain’s largest commercial real estate operator, Inmobiliaria Colonial, and has lived in Spain for several years.
“Clients started coming in, seeing Madrid and then saying, ‘I could have a house here,'” explains Humphrey White, who heads Knight Frank in Spain, adding that the city’s low crime rate is an added attraction for the wealthy, who can walk around without security personnel.
Mexicans, Argentines, Peruvians and Colombians are among those looking for property, according to real estate agents.
Investors benefit from the golden visa program, which expedites residence permits for foreigners who spend at least €500,000 on real estate, provided they have no debts.
Spain has not joined the crackdown on gold visas being applied in other European countries.
Many of the investors are not just buying homes for themselves.
They also work on real estate projects in Salamanca, but increasingly in other upscale neighborhoods, such as Chamberí.
“The real estate sector was very stagnant, and it is changing now with the Mexicans,” says Javier Kindelan Williams, head of valuation and advisory for continental Europe at CBRE, a consulting and research firm.
The city is already beginning to compete in luxury with cities like Paris and Berlin, but with prices that “are a bargain,” he said.
According to Knight Frank, US$1 million can buy 106 square meters in the Spanish capital, compared with 43 in Paris and 70 in Berlin.
Demand is shaking up the high-end real estate sector.
GBS, a Spanish financial advisory boutique, has had to vacate its Salamanca premises for three decades because the owner wants to convert the offices into luxury apartments.
The firm has partnered with Mexican investor Nicolás Carrancedo’s BeGrand group to develop the project on Calle Padilla in Salamanca.
More expensive dining is now the norm in Madrid’s luxury neighborhoods (Photo internet reproduction)
Newcomers are energizing Madrid’s economy.
But they are also changing the way of life in the capital, which used to be characterized by a workday that started at 10 am, lunch at 3 pm, and naps and dinners that stretched into the night.
“Before, the city would close for several hours during the day,” says Casa de Mexico’s Caraza.
“That doesn’t happen anymore.”
With information from Bloomberg
Spain news, English news Spain, Latin Americans in Madrid
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