Sky's the limit for the well-off in Spain 09/06/2008 00:00 Spain’s economy may be slowing down, but wealthy buyers remain unaffected by problems affecting housing market. "I bought it on a whim - the house is spectacular," declares Paloma López after spending EUR 4.8 million on a 422-square metre duplex close to the Puerta de Alcalá square in central Madrid. She says she plans to rent it out.

"Two people have already come to see it and they like it so much they want to buy it from me," López chimes.

With Spain's economy slowing, unemployment rising and house prices falling, now may seem like an odd time to be buying real estate. But while home sales have plunged in the middle and bottom of the market, they remain buoyant at the top.

Apartments priced at EUR 1 million and up are still selling as the wealthy and the ultra-wealthy continue spending, apparently unaffected by the problems facing those with shallower pockets.

"The supply still falls far short of demand," says José Luis Marcos, CEO of consultancy Roan.

Such high-end properties, which in Madrid sell for EUR 12,000 per square metre and up, form around 2 percent of Spain's real estate market. But individual sales move millions in one go and buyers do not have to grovel to their banks for a loan.

"Buyers with a considerably higher income have absolutely no difficulties in obtaining financing," notes José Manuel Fernández, a consultant at Grupo i.

Most are businesspeople over the age of 45, who either own their own companies or receive fat salaries from multinational firms. And, because of their financial leverage and the small size of the high-end market, they can afford to be picky.

Vast apartments and duplexes in restored buildings in the city centre, airy lofts in converted industrial and commercial properties in the financial and shopping districts, and new designer apartments in exclusive buildings make up most of the properties on offer around the capital.

All have been built or refurbished to the highest standards, often by renowned architects. And, unlike humbler abodes, real estate developers have few problems shifting them without lowering prices.

"At the top of the market prices don't change," says a representative of Mergara, a developer.

Loft Spain, a real estate group dedicated to loft renovations, has recently completed 12 apartments in the central Alcántara street in a lot formally occupied by an automobile garage.

The lofts all have 4.8 metre high ceilings, range in size from 149 square metres to 253 square metres and are priced at between EUR 793,000 and EUR 1.28 million. One month after they went on the market, seven had been sold.

The rich have other new developments to look forward to, including a yet-to-be-started renovation of a building in Velázquez street built in the 1920s where apartments will sell for - 13,700 a square metre, and another on the Paseo de Recoletos, which will offer one- to four-bedroom homes for between EUR 687,000 and EUR 2.73 million.

Even if the slowdown in the broader real estate sector continues, as it is expected to, developers are confident that they will always find buyers for the high-end apartments on offer.

Part of the reason is location and exclusivity. "You only have one chance to buy an apartment on La Plaza de la Independencia in Madrid," notes one consultant.

However, there are signs, though only very slight, that even the superrich are thinking a little harder these days before signing over a chunk of their wealth for a piece of real estate.

"They are taking more time deciding to buy," notes Grupo i's Fernández. Grupo Mall, another developer, is still trying to sell one of Madrid's most expensive apartments: a 700-square-metre loft-duplex priced at EUR 6 million, which has been on the market for two years.    text by El Pais / Sandra Lopez Leton / Expatica
photos by Flickr contributors tnarik, maveric2003 and art_es_anna