Madrid is starting to race ahead in this new stage in terms of economic growth, which cities like London and Paris had in the past, where real estate investments and specific streets break all known records of revaluation in recent years.
According to the iTB study carried out by the real estate consultancy TrueBroker, we are facing the displacement, concentration of consumption and the value of real estate investments to some cities and streets in Europe, becoming the growth of sales and profitability of investments for those who own said properties, a record in the last 50 years in the West.
In the “Study of the occupancy of prime stores in streets and shopping centres in Europe” by TrueBroker, in more than 60 large cities in the last 9 months, Madrid is very close to Zurich (Switzerland) in November 2022, and surpasses cities like London, Paris and Milan, and capitals like Lisbon and Berlin.
Thus, there is a change in the prominence that cities like London, Paris or Milan have occupied in the last decades, by cities like Madrid.
It also shows an uneven behaviour between cities. Some had an occupancy of 95.8% and 92%, such as Zurich and Madrid, others such as Marseille (the second most populous city in France), in April 2023 it had only 84% occupancy in its prime locations in the urban area. Therefore, there is an unequal distribution between cities, not only the case of the UK which, in the 10 cities covered by the report between August and November 2022 by TrueBroker, had only one average occupancy, in the more than 8,000 prime stores studied, 83.85%. One 88% and another 59% occupancy of prime commercial premises. France from 94% to 84%, and Germany from 94% to 80%. Spain between 98% and 74%. Only in the 7 cities included in the table, from a sample of 11,755 prime commercial premises, between the urban centre and shopping centres.
High affectation of the cities that are references of international tourism, which will not tend to recover their previous level. As in the case of Edinburgh, which with 13MM visitors (26 times its population), had a prime occupancy rate of only 80.75%.
Therefore, the recovery of consumption, the value of cities, their real estate investments and of any kind throughout the West, is uneven between cities, highlighting some in positive growth, compared to others that fail to recover, and others however, such as Madrid, which will be a record in growth in the West in the last 50 years. It is what we have named the NEW ZETa Category.
One of those ZETa streets in Madrid, which the iTB measured in the last 8 years, increased its consumption by 259%, multiplying the value of its investors and businesses by 3.6 times.
We are already facing a DIFFERENT Madrid, which in 2022 had 11% less consumption than Madrid had in 2019 and still has work to do. In the total of these three years, the city has sold 24% less than it would have sold if there had been no pandemic.
While the two prime shopping areas, both in the total of the 3 years, have sold 8% (Local Downtown Area) and 24% (Barrio de Salamanca), less than they would have done in 2019. The Local Downtown Area in 2022 had a positive rebound in consumption of 22% compared to 2019 (before the pandemic), and the Barrio de Salamanca still gave 2.5% less in the total for the year, close to a tie. As we see in the detail of Fuencarral and Serrano streets, this recovery, although it remains positive, is slowing down.
For the CEO of TrueBroker “What we have seen in retail since 2008 is a symptom of the profound changes in Western models, which will continue to follow the same behaviour. In absolute terms, we have plenty of m 2 and this effect will be transferred to other industries, not only real estate, but also to investments in general. The solutions and innovations that are created in retail will be an opportunity for improvement, making them scalable to the rest, creating a great business opportunity, from the learning that we do in retail”.
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