Guide
Refurbishing an Investment Property in Madrid: What It Yields, What It Retains and the Difference
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There are two types of reform in an investment property in Madrid. The one that minimizes the initial cost to go on the market as soon as possible. And the one that thinks about who is going to live or work there and for how long.
They are not the same renovation. And the difference between the two is not only in the budget, but in the decisions that are made: what materials are chosen, how the space is distributed, what level of finish is sought in each area. These decisions determine whether the asset attracts the tenant who pays well and stays, or the one who comes because it is the cheapest available and leaves as soon as he can.
The rental market in Madrid in 2026
Madrid is the most competitive rental market in Spain. Demand outstrips supply in almost every district, which can give the impression that any property rents itself. This is partly true: a property in poor condition in Malasaña or Chamberí will rent. The problem is to whom and at what price.
The quality tenant, the one who has economic stability, takes care of the space and renews the lease, does not choose out of necessity. They choose because of what the space offers. And he has options. If your property is not up to what he is looking for, he doesn't tell you: he simply chooses another one.
A well planned renovation in Madrid can justify a rent between 20% and 40% higher than the same property without intervention, depending on the area and the type of property. This difference is normally recovered in the first year of higher rent.
What rents in the short term and what retains in the long term
They don't always match. There are design decisions that make a property look good in the listing photos and rent quickly, but create problems with the first year of use. And there are decisions that require a slightly larger investment but produce a tenant that renews and an asset that needs no intervention between leases.
Low-cost laminate floors photograph well and are inexpensive to install. But with a year of normal use, especially in walkways, they deteriorate visibly. The next tenant sees it, negotiates down, and the property starts needing intervention every time the lease changes.
A functional kitchen with medium-high-end appliances and a resistant material countertop has a higher initial cost, but it does not generate incidents, the tenant takes care of it because he perceives it as valuable, and it does not need to be replaced in five years.
The difference between the two strategies is not just in the cost of the renovation. It is in the total cost of the asset over five years: refurbishment, incidents, tenant turnover, time on market between leases, and rent differential.
The areas of the property where the investment has the highest return on investment
It is not necessary to renovate everything at the same level. There are areas where the impact on tenant perception is high and areas where a basic intervention is sufficient.
The kitchen and the main bathroom are the two areas that most influence the rental decision. They are also the ones that deteriorate the most with use. A concentrated investment in these two areas, with resistant materials and a consistent design, produces the highest return per euro invested.
Lighting is the second highest impact lever for the lowest cost. A well-lit space, with well-placed light points and appropriate color temperature, is perceived as more cared for and larger. It is a relatively inexpensive intervention that changes the perception of the space completely.
The finishes of the common areas, if it is a shared building, are outside the control of the individual owner. But inside the property, the entrance and living room are the first areas the tenant sees. A good first impression makes the rest of the space better perceived.
Airbnb and short-stay rentals: a different design criterion
A property intended for tourist or short term rental needs a different design than a long term residential rental property. Wear and tear is greater and faster. Materials need to be stronger, easier to clean, and more neutral in terms of taste to appeal to the widest possible range of guests.
It also changes the logic of the layout. A well-functioning short-stay apartment is one where the guest understands how to move around without instructions, where everything is where it is expected to be, and where there are no design elements that require explanation. Functionality takes precedence over originality.
If you want to understand how design impacts the value of a commercial or investment asset prior to selling or leasing it, the article on how interior design increases the value of a commercial asset provides a useful framework for thinking about intervention.
How Eolos works on refurbishment projects for investment in Madrid
The starting point is the purpose of the asset: whether it is for long-term residential rental, for tourist rental, or for sale. Each objective has a different investment logic and produces different design decisions.
Eolos is managed by COAM registered architects with more than 20 years of experience in projects in Spain, Sweden and Greece. If you have a property in Madrid that you want to refurbish for investment and you want to know what makes sense to do and what not, tell us the situation. The form is below.