Madrid’s moment
To be recognised as one of the world’s finest cities, Madrid has had to become more Madrid.
Autumn is for Madrid.
While the Mediterranean coast deploys torrential tantrums to wring summer out of its system, Madrid jolts into life like the resume button on a treadmill that’s been paused on speed 20.
The well-heeled Madrileños with topped-up tans waltz back into the city, beautiful faces reflecting the fluorescent lights of the Gran Via night. These are the weeks when the pre-lunch vermut can be enjoyed out on the terraza. The sunshine again enjoyed, not escaped. These are the days when Madrid reassumes its status as one of the best cities in the world to live — for those with the wallets and autonomy to enjoy its best and escape its worst.
Madrid on a whim
For me, Madrid became home in 2016 on a blind punt. I knew nothing about the city beyond its Galáctico footballers and the March 2004 commuter train bombings that killed 192 people.
“Like many Europeans, we barely knew Madrid,” wrote Financial Times journalist Simon Kuper about the school year spent in the Spanish capital with his family. “The city is out on a limb on the edge of western Europe, and tends to make a bad first impression because of the ugly avenues that you barrel through coming in from the airport.”
A member of the last Lonely Planet guide generation, I kept hearing the same line: “Why would you go to Madrid when you could go to Barcelona?” I think I chose plucky old Madrid precisely because it wasn’t Barcelona. Maybe it was because hometown Tralee — the capital of County Kerry in the southwest corner of Ireland — is overlooked by tourists and cultural events in favour of Killarney, its more picturesque neighbour.
But on weekend breaks in the Catalan capital in the early 2010s, three people I knew (on separate visits) were mugged. One at knife-point. I took these assaults as a sign, a kind of Barcelona deter-a-friend program.
During my five years in Madrid, I saw, savoured, and suffered it all. There was the crippling claustrophobia during Covid-19, a historic snow storm, and frequent periods of political delirium. But there was also the immense freedom of having so much packed into a compact city. The feeling of being in the right place at the right time. The Madrid sky. There was some hate and lots of love, but never meh. Never indifference.
During a visit in September, I found the Madrid of 2024 to be the same, but different. More Madrid. Some cities cautiously tip-toed their way out of Covid-19, dipping their toes in the waters of the post-pandemic world. Paris and Barcelona used it as a moment to reimagine greener public spaces and more people-friendly streets. Madrid, the land-locked shark, just kept moving.
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After a comparatively short lockdown, Madrid was soon open to the world. The excess number of deaths in the region, a time when the capital’s ice rink was converted into a morgue, was part of the price of doing business.
The regional government lifted restrictions like the latch of a bullpen to release a beast that was ready to clear everything in its path. As a city and region, Madrid was on the up prior to 2020. But in the post-pandemic world, Madrid has become more everything:
- More people: The population of the Madrid region has grown from 6.7 million in December 2019 to just over 7 million in December 2023. In 2022, the city recorded a net gain of 11,947 people aged between 16–34. In Barcelona, the number was 2,821.
- More investors: The Madrid region attracted €15.3 billion in foreign investment(FDI) during 2023, an increase of €1.6 billion compared to 2019.
- More spectacles: During the first half of 2024, the renovated Estadio Santiago Bernabéu hosted two nights of Taylor Swift’s Eras Tour, the Argentine rapper Duki (no idea who he is), and the epic wins of Real Madrid as it confirmed its position as the greatest football dynasty of the last 50 years after a sixth Champions League title in a decade. In July, 80,000 Madridistas packed into the stadium to welcome new star signing Kylian Mbappé. But there’s more to come: Madrid will host Spain’s first NFL game next year before it snatches the Spanish Grand Prix from Barcelona in 2026.
- More noise: “It’s ten o’clock on a Saturday night and our sound level meter reads 86 decibels (dB), ten times the permitted level,” wrote Jacobo Garcia in El Paíswhen reporting on the reality of those living in the vicinity of the Santiago Bernabéu. A 2021 study ranked Madrid as the fourth loudest city in Europe after Paris, London, and Rome.
- More fine dining: The number of Michelin Star restaurants (27) in the region has increased by some 65% since 2016.
- More gentrification: Brunch boom has flooded historic neighbourhoods like Lavapiés, Malasaña, and La Latina with expensive bakeries and speciality coffeeshops with vintage bicycles mounted on walls. Between Q1 2023-Q1 2024, the number of places available in tourist apartments in Madrid increased by 30%, a city already saturated with short-term rental properties that cater to those coming for a good time, not a long time. The squeeze on housing supply and increasing demand have cause rents and property prices to skyrocket.
- More heat: Madrid is getting hotter for longer. In 2023, the region registered 409 more heat-related deaths, its rate per 100,000 inhabitants (194) way ahead of Galicia in second place (120). Summer 2024 closed with 459 heat-related deaths in the region. “So hot that the air shimmers and the grass bleaches white and the blinds stay down all day, so hot that August comes on not like a month but like an affliction,” wrote Joan Didion about Sacramento — she could just have easily been writing about Madrid.
The highest capital city in Europe (Andorra aside), Madrid has emerged from a dizzying and uncertain five years more certain of itself than ever. Business leaders often look to portfolio diversification to combat uncertainty — at the roulette table, Madrid has gone all in on Madrid.
More Madrid
Madrid is a branding disaster.
It has no globally-recognised postcard landmarks, no grand rivers or canals or bridges to leave love locks. There are no dreamy whitewashed towns of the Mediterranean coast. No, Madrid has had to sell something intangible. It’s had to double down, become more Madrid.
“Madrid has often paradoxically combined enormous pride with a lack of self-esteem — it has held its secrets close to its chest,” said Luke Stegemann, author of Madrid: A New Biography. “One of the great cities of the world, and the most important metropolis in southern Europe, Madrid has been a neglected and under-valued European capital.”
Madrid has an underrated revisitability, its lack of iconic attractions a blessing. It’s a city that rewards return visitors with layers that can only be revealed with time. Barrios with majestic balconies, a multitude of markets to sample some of the best fresh food on the planet. And besides, how many times are you going to stand in line to take a photograph in front of a church that has been wrapped in scaffolding for 140 years?
Many in Catalonia, like regional president Salvador Illa, have lamented what has been called “a lost decade” following the tumultuous procés where separatist politicians set out to make Catalonia independent. This period has coincided the great digital discovery of Madrid. The found decade. Social media has helped lift the lid on a city that has to keep moving to thrive, an ebullience and exuberance that is much easier to convey and sell through real-time Instagram stories than stuck-in-time travel guides.
“The shiny algorithms of social media have turned a loving face to Madrid, more confident than ever in its status as one of the world’s great cities,” said Stegemann. “A full moon favours the photographers who gather to celebrate this remarkable new vision of Madrid for social media: a soaring capital, reinventing itself and embracing digital futures while still framed by ancient mountains and the eternal sky.”
Social media was one of the reasons why Madrid became a party-goer hotspot during the spring of 2021. “There’s no formal marketing campaign,” wrote Silvia Ayuso in El Pais, “but word of mouth, WhatsApp or Instagram seems just as effective: Madrid has become an open secret in France, the most desired destination for our northern neighbours who have been living in a cultural and gastronomic desert for months with the total closure of bars, restaurants, cinemas, theatres and museums. Given this situation, the fact that bars are still open in Madrid and that people can stay in the street until 11:00 p.m. sounds like glory.”
The message online was clear: Madrid is open for business. And if anyone was going to appreciate the idea of liberté, it was the French. Perception is the currency of the attention economy, and, in 2024, there is an irrefutable feeling that if you’re not in Madrid, you’re missing out.
A magnet for momentum
Under regional president Isabel Diaz Ayuso the idea of freedom propelled Madrid out of the pandemic with a momentum that hasn’t halted since. There’s an ingenious ambiguity to the term libertad. Like Will Ferrell said in Blades of Glory, “No one knows what it means, but it’s provocative.” Both vague and versatile, libertad means both nothing and everything, linguistic putty that can be shaped as necessary in this hysterical social media age.
A member of Partido Popular, Spain’s Conservative Party that has ruled the region since 1995, Ayuso never misses an opportunity to needle regional opponents. In February, she suggested that Catalonia’s drought situation was linked to the closure of bullrings in the region. And just this week, she claimed that ETA (disbanded in 2018) “is stronger than ever.”
In Madrid, this clickbait guff is standard stuff, but it shouldn’t deflect from the fact that the city and wider region is booming.
Here’s what The Economist has had to say:
“Now Madrid is having a moment. Tourists are flocking, as well as would-be residents. They include Americans fleeing toxic politics, northern Europeans seeking an easy-living big city, and, most of all, Latin Americans. Some come to work in construction, care or hospitality. Others are rich Venezuelans and Mexicans fleeing confiscatory populism. The foreign population has grown by 20% since 2016, much of that Latino, making Madrid a growing rival to Miami as the ‘capital of Latin America.’
“Not long ago Madrid was Vienna-like in its ossification,” wrote Janan Ganesh in the Financial Times. “It might now be Europe’s most vaunted city after London and Paris, and the world’s best that isn’t on or near a coast. The boom there stems from what? Regional tax incentives, to a degree, but also an openness to those modernisms — architectural, gastronomic — that first tend to stir in littoral Spain.”
When a friend from Granada moved to Madrid 15 years ago, he found a city that was much more of a concrete jungle that it is today. Smoking was still commonplace in bars and restaurants (it wasn’t outlawed until 2011). “Madrid felt like an open and welcoming city back then,” he told me, “but it feels even more so now.” While it’s often a cliche used by politicians in the capital, he believes there’s truth to the idea of people having an identity of, say, being a madrileño from Andalusia or a madrileño from Asturias.
In Catalonia, meanwhile, identity is glued to the Catalan language. No one could seriously claim to be a Catalan from Cantabria without being able to speak Catalan. And then there’s the difference in mindset when it comes to socialising: “The Catalans have no interest in playing the guitar, staying up late, drinking and making friends quickly in bars,” said Colm Tóibín, author of Homage to Barcelona, in an interview with Second Captains. “They associate those things with Madrid.”
As if those were bad things.
“Madrid is Spain within Spain,” Ayuso once said ambiguously while channeling her inner Mariano Rajoy. “Madrid belongs to no one because it’s for everyone.” About 60% of immigrants arriving in Madrid now come from Latin America. In El País, Sandra López earmarked some of the reasons why Madrid is able to attract around 70% of all foreign investment coming into the country, making it the gateway to Europe: “personal and legal security, favorable taxation and political and economic stability. Also, quality of life, leisure, gastronomic and cultural offer, climate and direct flights from Madrid to Mexico City, Caracas or Lima, as well as to the USA and the rest of Europe.”
In the current affairs magazine Tinta Libre, Jorge Dioni explained the influence of the 2008 financial crash on the Spain and Madrid we see today:
“Spain was a country full of great opportunities for people with money. Housing prices hadn’t stopped falling since 2011 and the restructuring of the financial system had put real estate portfolios on the market at rock bottom prices. Opportunistic funds had bought and started to resell to the wealthy. In addition, investments of more than half a million euros were offered gift visas. Spain, and Madrid in particular, was the perfect place: same language, legal security, strong currency, social and political stability, very low crime, financial structure, good communications, and a more favorable tax framework than the other communities.”
Madrid was also primed to take advantage of the fallout from the Catalan procés: “In the weeks after the referendum, at least twenty five hundred local companies moved their legal headquarters (though almost never the physical ones) elsewhere in Spain. Even Catalonia’s giant CaixaBank moved,” wrote Simon Super in The Barcelona Complex. “The turmoil in Catalonia made Madrid look like a safe haven.” In a later Financial Times piece Kuper wrote that, “The country’s economic geography has rearranged itself. Madrid has become a boomtown, the London of Spain.”
Over the past decade, Madrid has also caught up with Barcelona in the creation and development of tech start-ups. In 2023, it accumulated an investment of €694 millionin start-ups, compared to €582 million in Barcelona.
With the political uncertainty in Catalonia, Madrid may have been a safe haven for businesses, but it’s also become an unrepentant tax haven.
“Madrid’s tax policy is a model of rebates that the rest of the regions in Spain can’t even dream of,” wrote Manel Perez in La Vanguardia. “As a result, everyone who can, escapes to Madrid to pay less taxes. It’s a snowball effect, a vicious circle. The communities that lose taxpayers must raise taxes on those who remain, thus stimulating more fiscal emigration.” The same newspaper reported that, between 2016–2019, more than 360 very high income earners from Catalonia moved to Madrid attracted by economic and tax advantages.
In an opinion piece about Ayuso’s latest proposed legislation, known widely as the ley Mbappé, so called because it coincided with the arrival of the French footballer, La Vanguardia said, “Isabel Díaz Ayuso’s ambition to reinforce the Madrid region’s position as a centre of attraction for large fortunes and high-level professionals knows no bounds.”
The proposed 20% deduction on the tramo autonómico del IRPF, the regional element of personal income tax, would apply to foreigners who come to the Madrid region and invest.
In Madrid, a person earning more than €300,000 euros a year would be taxed as follows:
- 24.5% national tax.
- 20.5% regional tax (the Madrid top rate — already the lowest in the country).
The new deduction for high-earners who stay in the region for at least six years would almost entirely offset regional tax liability, leaving the likes of Mbappé to only pay 24.5% IRPF.
“Once again, Ayuso is taking advantage of the capital’s advantageous economic conditions to carry out fiscal dumping to the detriment of the rest of the autonomous communities who do not have sufficient financial capacity to establish such aggressive tax reductions,” concluded La Vanguardia. “This is yet another example of the governmental aid that Real Madrid has historically received,” said a Sport piece, the Catalan daily newspaper managing to squeeze references to Manchester City, PSG and Franco into the opening paragraph. FC Barcelona players pay 50% IRPF. “That’s called playing by other rules.”
In Spain, it’s impossible not to deem the success of one these cities and their football teams as a failure of the other. FC Barcelona haven’t won the Champions League since 2015. Real Madrid have won five since then. These teams, it feels like, embody the zeitgeist. “The city is manifestly dirty and neglected, in need of a shock plan to restore its lustre,” wrote Miquel Molina on Barcelona in La Vanguardia. “Just like FC Barcelona itself, the club that in recent years had enriched the city’s brand and which is now in an unmistakable decline.”
As of January 2024, 35 of the 100 richest people in Spain lived in Madrid. “Madrid is the region with the lowest tax on income greater than €60,000,” wrote José Moisés Martín in Tinta Libra. Citing an example from a much higher end of the fiscal scale, he points out that a person with an annual income of €600,000 in Madrid would pay €48,000 less in tax than their counterpart in the Valencia region. “The advantageous income tax position applies to virtually all income brackets,” wrote Martín before also pointing out that Madrid has highly subsidised inheritance and wealth taxes.
With a dramatic fluctuation in income, wealth, and inheritance tax rates between regions in Spain, it pays to shop around. With its charitable treatment of those who need it least, it’s no surprise that the mega-rich have signed up for a loyalty card in Madrid.
Picking up the bill
When you leave more than €4 billion on the table in tax breaks for the wealthy each year, someone has to pick up the bill…
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