Real estate prices in Madrid in 2026: record levels across Spain
Madrid, together with Barcelona, is emerging as one of the most expensive markets in Spain. Between the upgrading of certain neighborhoods, pressure from demand and rising costs, prices have reached unprecedented levels. 😮
This increase does not only affect the hypercenter: it is spreading to peri-central neighborhoods and to municipalities in the first and second rings, which completely changes the way a purchase project should be approached.
In the specific segment of second homes and international buyers, levels are even higher: the average property searched for in Madrid on the specialist website Green Acres is around €923,000 for 141 m², or nearly €6,546/m², confirming the pressure on well-located quality properties.
Average price around €6,021/m², increase of 12 to 38% depending on the area
In 2026, the average price in the Spanish capital is around €6,021/m², all types of properties combined. But this average hides a very contrasting reality from one neighborhood to another.
We are seeing:
- central and historic areas with an increase of up to 30 to 38% over five years;
- established residential neighborhoods that have risen by around 15 to 25%;
- areas undergoing urban regeneration or located further out with still limited increases, around 12 to 18%, but with interesting catch-up potential.
In concrete terms, this means that:
- a well-located family apartment in a good neighborhood can easily exceed €8,000 to €10,000/m²;
- some more popular areas remain below €4,000/m², but with strong upward momentum;
- new neighborhoods with good transport links (metro, bus, motorway access) are seeing their prices rise as services and shops arrive.
For a buyer, the key is therefore to think
by micro-neighborhood and by property type, rather than focusing on Madrid’s overall average.
Very high price brackets (over €25,000/m²) in the ultra-luxury segment
If you are targeting the very top end of the market, be prepared for price levels rarely seen elsewhere in Spain. In certain ultra-luxury segments, prices now exceed €25,000/m².
These levels are found in:
- penthouses with panoramic terraces on the most prestigious avenues;
- fully renovated buildings with premium services (concierge, 24/7 security, wellness areas);
- very low-density new developments including gardens, swimming pools and exceptional amenities.
These properties are aimed at:
- wealthy international clients;
- certain high-end expatriate profiles with premium packages;
- investors looking for a rare heritage asset rather than a high rental yield.
For the “typical” buyer, this surge nevertheless has an indirect impact:
it pushes up the value of surrounding properties and reinforces gentrification trends in several central neighborhoods.
Who is buying in Madrid? The growing weight of foreign buyers
Behind these price levels, the structure of demand plays a key role. Madrilenians remain the majority, but foreign buyers now carry significant weight in certain segments, particularly in central neighborhoods and high-end properties.
According to Green Acres data, the United States tops the list of foreign enquiries for the Madrid region, with nearly 18% of searches. Next come the French (12%), followed by the United Kingdom, Hong Kong and Italy, each with around 7%.
This diversity of profiles partly explains the coexistence of several markets in the same city: a “local” Madrid, highly sensitive to Spanish household incomes, and a very international Madrid, more closely linked to high global incomes, expatriate packages and long-term wealth strategies.
Sources of pressure and purchase trade-offs
High prices in Madrid are not just a question of fashion or speculation. They also reflect very concrete physical and economic constraints that have a direct impact on the final cost of housing. 🧱
Understanding these factors makes it easier to position yourself as a buyer and make informed trade-offs: accepting a slightly greater distance from the center, targeting renovation rather than new-build, or favoring certain property sizes.
Land shortage, material costs, labor scarcity: direct impacts on the final price
Madrid is a dense metropolis, where land available for new projects is scarce, especially in already well-served and sought-after areas. This shortage of building land creates a scarcity effect that mechanically pushes up prices.
On top of this come:
- the increase in the cost of materials (concrete, steel, wood, technical equipment) in recent years;
- the scarcity of qualified labor in construction, which drives up the cost of building and renovation;
- increasing regulatory requirements in terms of insulation, energy performance and safety.
In practice, this means that:
- the price of new-build properties increasingly includes a significant share of fixed, incompressible costs;
- major renovation projects are becoming difficult to make profitable if the acquisition price is already high;
- developers and private individuals alike must arbitrate between quality, size, location and overall budget.
For a purchase project in Madrid, it is therefore essential to:
- have any renovation project seriously costed before signing;
- check the technical quality of the building (insulation, installations, façade) to avoid unpleasant surprises;
- include a margin in your financing plan for potential additional renovation costs.
Moderate rental yields (around 4.2 to 5.5%) versus high entry prices
With high acquisition prices, rental yields in Madrid remain relatively moderate, particularly in the most central neighborhoods.
In 2026, we generally see:
- gross yields of around 4.2 to 5.5%, depending on the neighborhood and the type of property;
- levels closer to 4% in the hypercenter for highly sought-after properties;
- yields that can exceed 5.5% in certain up-and-coming areas, slightly further out, or for properties requiring work.
From these figures, you must of course deduct:
- the applicable taxes in Spain and possibly in your country of residence;
- co-ownership charges, which are sometimes high in older buildings or those with services;
- property management fees if you outsource the entire relationship with the tenant.
As a result, many buyers realize that Madrid is a market:
- that is more wealth-accumulation oriented than yield-driven, especially in prime neighborhoods;
- where a successful strategy often relies on a long-term vision (10 years and more);
- where the ability to buy well (negotiation, choice of neighborhood, value-add potential) makes the difference.
If your priority is short-term net yield, you will probably need to:
- look beyond the hypercenter;
- accept properties that need optimization (layout, renovation, subdivision, furnishing);
- or combine Madrid with other Spanish markets that offer higher yields but are less liquid.
Investment outlook 2026–2030
Despite high prices, the Spanish capital continues to attract capital. Prospects up to 2030 remain positive, but with a more selective market and higher requirements in terms of quality, sustainability and location. 🌱
For an investor or owner-occupier, the 2026–2030 period could be marked by sharper performance gaps between well-positioned properties… and the others.
International and institutional demand: Madrid, the second favorite European market
On the European stage, Madrid now ranks as the second favorite market for many international and institutional investors.
Several factors explain this enthusiasm:
- a dynamic local economy driven by services, finance and technology;
- a strong image as a pleasant, sunny city with good connections to the rest of Europe;
- a relatively stable legal and tax framework compared with other destinations.
Consequences for individual buyers:
- constant pressure on the best assets (location, building quality, energy performance);
- a deep rental market, particularly for well-located and well-managed properties;
- relative liquidity on resale for quality assets, even in the event of a slowdown.
This strong presence of institutional investors also helps professionalize the market, with greater transparency, more studies and more data, which can help private buyers find their way.
Priority to renovation, high-end new-build and green densification
For the 2026–2030 period, three major trends are shaping investment opportunities in Madrid:
- the growing importance of energy and functional renovation of the older housing stock;
- the development of high-end new-build, rare and expensive, but highly sought after;
- green densification projects integrating public spaces, transport and nature in the city.
For a buyer, this can translate into several possible strategies:
- target a well-located older property in need of renovation, with strong value-add potential after works;
- select a quality new-build development with good energy performance, even if the entry ticket is higher;
- identify neighborhoods set to benefit from urban improvements (new metro lines, parks, amenities) and bet on future price growth.
The notion of sustainability is becoming central: poorly insulated properties, with poor transport links or ill-suited to new uses (remote work, outdoor space, energy performance) risk depreciating in relative terms.
Conversely, homes that are:
- well rated in terms of energy performance;
- equipped with balconies, terraces or access to green space;
- located close to public transport and services;
are very likely to remain in demand and to better withstand economic ups and downs.
In a demanding market like Madrid, support from local professionals who can decipher the micro-trends in each neighborhood becomes a real asset in securing your project. 🤝
