House Hunter: 'I want a chic apartment in Madrid'

THE PROBLEM

THE PROBLEM

Andrew Streeter of London writes: "I am a corporate lawyer working in European law and am being seconded to my firm's Madrid office for three years from September. I thought I would let out my Ealing home and rent in Madrid, but I have read reports suggesting the Spanish market remains strong and may continue growing.

"Bearing this in mind, I have decided to sell my London home and buy a new one there. Although I am single, I am in a position to afford a sizeable home and want something that is 'urban Spanish chic' - a large, stylish and probably contemporary property. I know there are many striking apartment and house types in the city.

"I have visited Madrid often but have usually travelled only from the airport to hotels and my office, and then home again. I would appreciate advice on which suburbs of the city are considered the most desireable.

"After three years in my new job, I will have to leave Madrid - company policy forbids me staying longer - but I may wish to have a break from corporate life and will probably travel for the next year.

"Is Madrid a good place to have a property that is able to be let out? And would I be able to ask for anything like the rental income that I would get in London?"

THE ADVICE

Graham Norwood writes: "Madrid's property market is typical of large European capital cities, such as London. Some 85 per cent of all property is owner-occupied, encouraged by government incentives for owners like mortgage interest tax relief and no tax on capital gains.

There are over two million homes in Madrid with about 40,000 new ones built each year. The outskirts are dominated by spacious houses in generally leafy suburbs, although a spread of busy, 24-hour roads has blighted some areas.

Towards the centre most homes are one, two or three-bedroom apartments set in blocks which, unlike the UK, must meet minimum standards for amenities such as lifts, electrical systems, gas connections, central heating, cable TV and telephone services.

Most new homes in the central city are flats created within refurbished buildings; there are still many detached homes and townhouses being built further out.

Madrid houses 13 per cent of Spain's population in just 1.6 per cent of the territory. As a result, the city is dense especially in the centre.

Prices range from €300,000 for a small two-bedroom apartment in a well-regarded suburb 30 minutes walk from the centre, up to €1.5m for a large house; in the most central or fashionable districts, you can more than double those prices.

If you do consider renting while looking, or want to judge rents for your later period as a landlord, typical rent for a one bedroom furnished flat about 15 minutes from central Madrid starts at €600 per month, rising to €1,300 per month for contemporary flats in main Madrid streets.

Respected residential suburbs with a lot of new-build include Lavapies, a quarter of old narrow lanes just south of the central Sol Square. Typical properties are studio or one-bedroom flats in converted old barrios with sale prices and rental values low by Madrid standards.

Chamartin is an area popular with English-speaking expats, located a mile from the central business district and with excellent public transport on the 1 and 9 metro lines. Two, three and four bedroom apartments and larger villas can be found here, some with private gardens. Properties date from the Thirties to the Nineties.

La Moraleja, in which the renowned arthouse film director Pedro Almodovar and the paparazzi-prone David and Victoria Beckham live, is a suburb of wide modern streets in the north of the city lined with large, fenced villas dating back to the Sixties.

If you want to escape from Madrid, where both the temperature and the property market can be super-hot at times, try Pozuelo de Alarcon, Majadahonda and Las Rozas.

These are three small new towns north-west of the city, consisting mainly of new apartment complexes and villas, many with "green zones" - well-maintained public open spaces.

THE SOLUTION

Property one: A mid-sized villa in a gated estate close to the city centre.

Price: €605,000.

Agent's details: This three-bedroom, two-bathroom property is in a gated estate located close to Chamartin. This property has underfloor and solar panel heating, high-security doors, a garage and on-street car parking.

Agent: www.idealista.com, 0034 807 28 8882.

Property two: An ultra-modern house, 20 minutes from central Madrid.

Price: €910,000.

Agent's details: There are three bedrooms, three bathrooms and one reception room. This is one of 10 townhouses being finished this summer, each on a 260sqm plot with individual swimming pools, two-car garages, hydro-massage tubs and wood and marble-based interiors.

Agent: Knight Frank Spain, 0034 91 431 3131.

Property three: Three-bedroom apartment in Laverpies.

Price: €730,000

Agent's details: This apartment, in a converted older building, has two bathrooms and a weekday concierge service as well as reserved parking. The block also has private security.

Agent: www.idealista.com, 0034 807 28 8882

FACT FILE: SPAIN

House prices in Spain rose 19 per cent in 2004, but in Madrid the increase was 22 per cent.

Even for second-hand properties, prices are compared by cost per square metre. Across the country the average is €1,458 per sqm but in Madrid it soars to €3,061.

The price of new-build homes has risen 16 per cent in the year to August, with an average of €1,726 per sqm; again, Madrid is twice the price, especially for apartments.

The market was much the same in 2003, when prices rose by 18 per cent across Spain. In 2002 prices rose 16 per cent and in 2001 by 11 per cent, making this an extraordinarily long bull market for property.

The Central Bank predicts that price falls in Spain may be imminent, but there is no sign of them yet.

If you would like House Hunter's help in finding a property in the UK or overseas, write to: The Independent, 191 Marsh Wall, London E14 9RS, 020-7005-2000 or e-mail: househunter@independent.co.uk