Touristic Rentals in the Madrid Region

The Regulations on Touristic Rentals of the Madrid Government have been published in the Official Bulletin of the Madrid Region.

The regime was finally approved as described in our previous reports. Therefore, individual property owners (residents and not residents alike) will be legally entitled to rent their properties short term with little administrative requirements, subject only to (i) registration of the property at the Special Register created by the Madrid region to such effects; and (ii) declaring the activity for tax purposes. The registration would be subject to a few simple requirements such as the owner filing with the Madrid Government a “Responsible Statement” witnessing that the property meets the requirements in the regulations (subject, of course, to subsequent inspection) and providing a layout of the property, certified by an architect or other qualified professional and legalized by the Madrid Professional Bar.

This is definitively a clear cut possibility for investors to put their real estate investments to work and make a profit without need to enter into long term rentals.

The target properties must meet the requirements that would make them appealing to foreigners visiting the Capital. That is, they must (i) be centrally located, (ii) be within walking distance from the city main attractions, (iii) have easy access for seniors and handicapped people and (iv) have other positive factors that normally make touristic dwellings attractive to tourists around the world such as quietness, Internet access, featuring an elevator and, in general, offering a warm and homely environment. But the current favorable prices make it easier to secure prime properties in center city at a reasonable cost. However, if the trend continues prices may raise in the short term and a prompt action may be advisable.
In 2012 Madrid received 4,5 Million foreign tourists and about 9 million Spanish resident tourists, with a relatively low average stay length and looking for reasonable prices, that is, precisely the main advantage of touristic apartments: staying few nights at rates lower than hotel rates.  Last May 2014 Spain as a whole received 4.5 million tourists, a material increase over the same month of 2013. Available figures indicate that an increasing percentage of travelers choose apartments as their first priority for lodging.

British, French, Swiss, Russian and Israeli investors are allegedly prospecting the regional market looking to invest between 3 and 15 million Euros in centrally located buildings that are either empty or capable of being emptied in the short term while allowing for full refurbishments. Real estate sources indicate that the present sales prices per square meter range from a minimum of 2.000-2.500 €/m2 to a maximum of 3.500-4.000 €/m2, plus the costs of refurbishment and necessary furnishings and supplies, which would add between 1.000 and 1.500 €/m2 to the cost, bearing in mind the location and necessary upgrading of the building concerned.

It is definitively the right time to start thinking about investment opportunities and the ways to develop a business in this attractive sector.