When apartments in a luxury building on Calle Padilla in Madrid’s chic Salamanca district were put on the market a few months ago, more than half of them were snapped up by wealthy Mexicans.

The project, with 25 units each priced at as much as 3 million euro (S$4.3 million), is being bankrolled primarily by Mexican investors and stands as a symbol of the increasingly visible presence of the Latin American nation’s citizens in the Spanish capital.

Since 2020, Mexicans have spent more than 700 million euros in Spanish real estate and construction, according to government foreign direct investment data. Like other well-heeled Latin Americans, they are investing in the city, buying second or third homes and parking their savings.  

“Madrid has become the new Miami,” said Jose Manuel Ortega, a former investment banker who now advises foreigners on Spanish real estate and private banking. 

Left-leaning governments in major Latin American nations have sent capital fleeing, with the region’s five largest economies seeing about US$137 billion take flight in 2022, 41 per cent higher than in 2021 and the most since 2010, according to preliminary data from the Institute of International Finance. While a lot of that has landed in Miami, linguistic and cultural affinities have brought some of it to Spain. 

The flood of funds is changing the face of Madrid: driving property prices soaring and creating a sizzling hot high-end dining scene.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

Luxury property prices jumped 6 per cent last year, more than in most large European capitals, according to consultancy Knight Frank. They hit a record for a second consecutive month in April, real estate website Idealista shows.

New restaurants are sprouting across Madrid’s fancy Salamanca neighbourhood at a breathtaking pace, and are almost always full. Table reservations start as early as 8 pm – unheard of in a city where kitchens rarely came alive before 9 pm, and where lunch is served mostly between 2 pm and 3:30 pm. Locals are having to come to grips with other changes, like time allotments at tables, common perhaps in New York, but unusual in a country where long, lazy post-meal conversations are a cultural staple. The Spanish even have a word for it: “sobremesa” – which translates as “over the table.”

The new arrivals have brought “a change in lunch and dinner times in Spain, with many locals finishing lunch barely an hour before foreigners are ready for dinner,” said Gonzalo Torres, a Madrid-based food critic.

Salamanca’s wide, leafy 19th-century boulevards are lined with upscale restaurants, including the Michelin-starred Ramon Freixa Madrid and  La Tasqueria. The area has luxury boutiques to make the global rich feel at home.

A cottage industry of services has also emerged to cater to the needs of the affluent. Over the past two years, Banco Bilbao Vizcaya Argentaria, Spain’s second-largest lender, has opened two offices in Madrid for ultra-rich individuals. BBVA happens to own the largest bank in Mexico, where Spanish rival Banco Santander also has a large presence.

Brazilian chef Sandro Silva has opened several restaurants in Madrid, creating a culture of pricier dining that’s now widespread in the city’s upscale neighbourhoods. The French group Robuchon, with its record Michelin stars, 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 business executive Borja Escalada, have reinforced the luxury push. Also, Spanish business schools, such as IE and Iese, have become popular options for the children of wealthy Latin Americans families.

Mexicans made up the second-largest cohort among non-Europeans at IE this year.  “Madrid has become a clear destination for Latin Americans, a trend that has accelerated since the Covid pandemic in 2020,” said Victor Matarranz, head of wealth management at Banco Santander. “First, they come almost as tourists to look around, then they develop an appetite for real estate.” Now, they’re looking for business opportunities, he said.

Earlier waves brought wealthy exiles fleeing political turmoil at home – like Venezuelans escaping Huge Chavez’s policies around 2010. The rise now in Mexican investments, and to a lesser degree from other countries such as Peru, coincides with a shift to the left in governments across much of Latin America, from Andres Lopez Obrador in Mexico to Gabriel Boric in Chile and Gustavo Petro in Colombia.

Many rich Mexicans are on the prowl for investing opportunities, said Ximena Caraza, director of Casa de Mexico, a cultural and economic center that helps the country’s investors do business in Spain.

“Lots of Mexicans are coming to see what business they can do here,” she said.

Rich Mexicans keep a low profile, but occasionally they can’t avoid making a splash. Mexican businessman Manuel Gonzalez bought a coveted palazzo in central Madrid and this year refurbished it into one of the city’s most luxurious restaurants, called Abya. 

Carlos Slim, Latin America’s wealthiest person, owns significant stakes in publicly-listed Spanish real estate firms, Metrovacesa and Realia. Carlos Fernandez Gonzalez, who made a fortune in the Mexican beer industry, is the second-largest shareholder in one of the biggest Spanish commercial real estate operators, Inmobiliaria Colonial, and has resided in Spain for several years. “Clients started coming, seeing Madrid and then saying, ‘we could own a house here,’” said Humphrey White, who runs Knight Frank in Spain, adding that the city’s low crime is an added lure for the wealthy, who can walk around without security staff.

Mexicans, Argentinians, Peruvians and Colombians are among those looking for properties, real estate agents say. The investors benefit from a so-called golden visa program, which expedites residency permits for foreigners who spend at least 500,000 euros on real estate, as long as it is debt-free. Spain hasn’t joined the clamp-down on golden visas seen in several other European nations. 

Many of the investors aren’t just buying homes for themselves. They also work on real estate projects – in Salamanca, but also increasingly in other fancy neighbourhoods, like Chamberi.

“The local real estate scene was all very quite, and it is now changing with the Mexicans,” said Javier Kindelan Williams, head of  valuation and advisory for continental Europe at CBRE, a consulting and research firm. 

The city is starting to compete with the likes of Paris and Berlin for luxury, but with prices that “are a bargain,” he said. A million dollars can buy 106 square metres in the Spanish capital, compared with 43 in Paris and 70 in Berlin, according to Knight Frank. 

The demand is shaking up high-end real estate. GBS, a boutique Spanish financial advisory, is having to vacate the premises it has occupied in Salamanca for about three decades because the landlord wants to convert the offices into luxury apartments. The firm has itself partnered with Mexican investor Nicolas Carrancedo’s group BeGrand on developing Salamanca’s Calle Padilla project.

The new arrivals are energising Madrid’s economy. But they are also changing a way of life in the capital, one that was characterised by a workday that started at 10 am, lunch at 3:00 pm, siestas and late dinners. 

“It used to be a city where things closed for hours in the afternoon,” said Casa de Mexico’s Caraza. “That’s not the case anymore.” BLOOMBERG