Blueprint for Development: Housing in Madrid

A discussion with Diego Sánchez de la Cruz on The Rasheed Griffith Show

Listen on Spotify or Apple Podcasts

Show notes

While Barcelona scapegoats tourism for its housing shortage, Madrid is setting the standard for development with initiatives to improve its housing stock. The “capital of capitalism” is once again employing sound liberal governance techniques to position itself as a premier city in Europe. Diego Sanchez de la Cruz returns to the show to discuss policies being enacted to expand living options for the fastest-growing city in Spain.

By abolishing oppressive rent controls, improving mortgage accessibility, and unlocking new zoning for construction, Madrid is acknowledging the challenges that come with being the city of choice for many new residents and nomads, seeking new opportunities that also strengthen the city’s workforce and future-proof it for growth.
Spain’s dynamic political landscape provides fascinating insight into juxtaposed methods of administration and poignant lessons for Latin America and the Caribbean.

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Full Transcript

This transcript was automatically generated by AI and lightly edited by our team. We don’t catch every error, so if you spot one, send us a message/email via shem@cpsi.org.

Rasheed: Hi, Diego. Once again, thank you so much for joining me on the podcast.

Diego: Thank you very much for having me. I'm very happy to be here with you again. We got some good reviews the last time we got together. So thanks to everyone who dropped those by and yeah, excited to have this conversation.

Rasheed: And we will be talking about housing policy in Spain. And housing policy in general, as all of us know, is a very hotly debated topic across Europe, North America, and essentially everywhere in the world now, and it'll be interesting to see or learn about how Spain is doing good at housing policy and also where it's failing at housing policy. And we can see some of the comparatives between some other countries as well. And just to dive right into it, we were discussing earlier, some of the remnants of the Franco regime that have permeated still in the housing policy or general policy in Spain to this day.

And one of the things you mentioned was the idea of the ownership culture but also rent control. So could we start there? What was the impact the Franco regime had on housing policy in Spain?

Diego: It was pretty deep because it transformed how housing was structured in most of our larger cities, right?

Spain today is one of the developed countries with the highest degree of home ownership. We're talking of rates that are at around 80%, right? Which means that four out of five people in Spain are not really that concerned with rent prices because they actually own their home. They may be concerned with, interest rate hikes if they're paying a mortgage, but they're not concerned with rent prices.

And I'm about to refer to Franco, but this is important because sometimes people that come to Spain they wonder how is it that people do not take to the streets, or that the high rent prices do not become more of an issue. Part of the issue is, or the reason why this is not As big a deal as it could be, although it is indeed a hot topic of conversation, is because at the end of the day, if four out of five households are in an ownership status, then it's only around 10 percent of people that are actually renting their homes.

That kind of explains why, although it is indeed a hot topic in Spain these days, it's not as big as some would initially think. So especially those that come from abroad and see that there are some things that are broken in the system. So going back to Franco, like you, as you mentioned this home ownership society that Spain is was essentially built under the Franco regime, which did two things.

On the one hand it encouraged the development of of housing and the accessibility to housing. So that facilitated home ownership period, that is pretty straightforward. On the other hand, on the rent side of the housing market de facto rent controls were placed because a system called 'Renta Antigua', which we could translate as 'old rent', was designed.

Under this scheme, most people who were renting not just residential but also commercial real estate were guaranteed that the price they paid would essentially stay fixed as long as they lived. So if you were 35 years old and you were signing a rental contract, you could expect to pay the same price until your eventual death at perhaps 75, or 85 years of age.

So this equates to rent control and not just rent control, but but the rent freeze that was left in place for a very long time. So long that decades after Franco's death, a lot of people were still paying these artificially low prices. You would find some ridiculous cases in which two neighbors in the same apartment building were paying prices that, that were just astronomically different one from another.

So I'm thinking that maybe someone was paying a thousand euros a month for the rent and then their neighbor was paying 50 euros because the neighbor was someone who's still very old that had signed this contract under the Franco regime and therefore benefited from that through the years. Now of course this made the investments in home to rent projects almost disappeared.

Why would you invest in housing for rent if you're going to get essentially no profit out of it? So that was a big reason why most of home developments in Spain since the mid 20th century all the way up till very recently, were focused on the sell side of the real estate, not on the rent side of real estate.

And that's definitely shaped the way in which Spaniards think of home ownership. They prefer it to rent and they consider it to be more affordable because in fact, in many cases it is because for that very small rent market, the prices are high because there's a lot of competition for very limited units.

Rasheed: So there's one assumption I just realized I made where I assume people understand clearly what the Franco regime is, but that's not a very good assumption. Before we continue, could you give some more details when you say Franco regime, what exactly are you referring to?

Diego: We could go into a rabbit hole here, but that's not the main purpose of the podcast.

But essentially it was an authoritarian regime led by a military man called Francisco Franco that followed up the Spanish Civil War from 1936 and 1939. So essentially after his troops prevailed on the so called national side prevailed over a more of the Republican side, which was more on the left wing side of the spectrum.

This this regime was in place from 1939 all the way until Franco's death in 1975, which then kickstarted a process of transition and Spain has been a democracy since then. Your point is very well made. And although Franco was in power from 1939 to 1975, these changes in the real estate market, which became apparent in the 1950s, still permeate the way in which housing is structured in Spain.

Rasheed: So rent control, we had discussed before, is an autonomous community level policy. So even today there are still some autonomous communities that have rent control. Is that correct?

Diego: Yes. And in fact, it has been reintroduced lately because there had been no rent control policies in Spain for the last several decades.

But following the COVID pandemic, our national government, which is a coalition of a socialist party and a communist party, PSOE and SUMAR, and it's led by Prime Minister Pedro Sánchez, decided to just essentially introduce several price controls in many areas of the economy which may be surprising to some of our international audience, but maybe not to all of them, because indeed there's been a significant power grab in some areas of the economy.

And then some areas of regulation have clearly overreached their normal powers and authority in the last several years with a pandemic as the starting point for these interventions, right? So for housing it began first with the mandate to not extend any rental contracts throughout the year 2020 and 2021.

Rasheed: To don't terminate.

Diego: Yeah, essentially. And then the rent control was enacted as well. In addition to these, Spain has quite the problem with squatters, people that just break into your home and stay in it by force and essentially kick you out of your own home. There's approximately 100, 000 housing units that are affected by this.

And although there is more than 20 million households in Spain, and you could say that number is not that big, it definitely sends a very weak signal in terms of adequate safeguards for private property rights. So that's also playing a factor in creating a lot of uncertainty in the real estate market for investors and for players in it overall. It should be noted, by the way, that 95 percent of Spain's housing stock is owned by individuals. Big companies owning real estate, big firms developing real estate for rent, whatever, that's not very common in Spain, because like I said, you get 100 units, 95 of them are just owned by mom and pop.

They're just individuals who own real estate. So for many of them, rents are like part of their income or they have that unit. That's something that you need to take into account as well. Rent control prices were therefore introduced and they have been picked up by some regions.

The clearest example is Catalonia sometimes. Which did enact these rent controls, but has not been able to get the resources it wanted out of them. Because rent controls at the end of the day are the old idea that never goes out. But it just doesn't work. So if you want me to, I can elaborate a little bit.

Essentially what they've seen is an increase in prices and a significant fall in housing supply. The falling housing supply, everyone can understand, right? If you're going to freeze rents and I cannot set the market price for it, why should I just put my real estate asset in that part of the market?

So some people have just put it out of the market for now. Some people have put it on sale instead of for rent, et cetera. But the beat of the prices, sometimes people do not understand, right? Some people wonder how is it that prices increase if there is a rent control in place. Is it a black market thing?

There are some black market dynamics there. Some people are charging you and it's not even illegal. What they're doing is they're charging you an extra fee for maybe your garage, whereas before they wouldn't. So the rent that they cannot introduce formally in the price, they introduce it with these side deals that for instance, may do with your garage for your car.

But most of the problem is not there. The increase comes from the fact that, okay, you're telling me that I cannot modify the price on this rent for the next three years, right? So what I'll do is I'll just, whenever the contracts that are existing run out, I'll just bump up the initial cost of rent. And then I'll just leave it frozen as the law asks me to do.

So for example, I'm renting this apartment for a thousand euros. The contract is up, three years have run past and I have not been able to bring it up, but now that this rent control has been phased out and I have the opportunity to do a new contract, I'll bump the pay up by 10 percent and then yes, I'll have to stick with that 10 percent rise for the next three years.

So instead of a gradual increase. You just automatically bring it up with new contracts that are being signed. So it's been a disaster for Catalonia because that's one of the regions where people want to live in Spain. And it doesn't affect most regions. Some regions may enact it, but if there's not a lot of demand anyway, it doesn't have a lot of real-world consequences. But for markets like Catalonia, which do have demand, that's a problem and a big mistake by the regional and local authorities.

Rasheed: Why does Spain have such a big issue with squatters? Because this is a thing that I think people find very surprising where literally if someone goes into your house, it's legally very difficult to get them out. Why is that?

Diego: They became a pet for the far left and the far left had a big surge in Spain throughout the financial crisis of the 2010s. Spain was one of the European countries that was hit the hardest by the real estate bubble that burst and that will be part of our conversation today. And that led to an economic crisis and then there was also a debt crisis ongoing in the eurozone and Spain was very poorly positioned there as well. So the far left was able to capitalize on that and increase its support level significantly.

It had been residual for a long time but right now, as I said, there is a communist party in a coalition government in place. Spain is the only country in the EU which has a communist party in government. So that's quite telling. And these squatters, which in Spain we call them "okupas", but with a K which signifies a more like anti system type way of, typing the word.

These okupas, these squatters, became a pet project for them. They became the symbol of oppression. An example of how the system and the market economy were excluding individuals to the point that they just had to break into other people's homes. Of course, that twisted narrative is full of holes.

Most of them are people who work or belong in mafias and just pass along these squatting activities from one building to another. So they're organized. Only a very small number, around 20 percent of them are vulnerable. And what's more important, even if they're vulnerable, that doesn't give you the right to just enter someone else's property and just start living in it as if it were yours.

Now, Spain has enough state capacity to get rid of any squatter's case in 24, or 48 hours time, right? Because it's quite easy to just double-check who owns a property. There's a perfectly well-functioning register for that. And that just takes you a couple of hours. And if anyone that is in a home is not able to show that they actually do own any sort of contract that allows them to be there, then the police forces could just with authority from a judge, put an end to the situation.

And that has been proposed in parliament. But so far the resistance has come from the far-left group that is in government. The socialist party did not want to alienate their partners and may have sided with the center and right wing forces on this. So they tiptoe on this issue. And so far it's remained in place.

If you follow the legal conduit, you take around a year and a half to get these people out of your home. But as I said, there is no state capacity issue. You could just change the law, change the protocol and you could get this done in 24, 48 hours tops. But if there's no political willingness, that will remain an issue.

Some people have even resorted to extra legal or paralegal ways of dealing with this, which is essentially, there is a law that allows you, if you're the owner of any real estate asset to install security control at the door, right? So essentially that's the permit or the law that allows you, for example, if you have a nightclub to have a bouncer at the door. Or if you own a, you're a football club and you have security guards at the door, that's essentially the permit, it's a normal law. So some people are using it to hire security companies, put a security guard on their door, and essentially make sure that whenever the squatters come out, which at some point they do because they, come in and out of the property, they will not be allowed entry once back in.

So it's it's a gray area with a law and it's enough to get these people out. But the owners that have to go to these methods, they have to pay 5, 000 euros to get the service done. So that's an issue. And then there's also some companies that are offering homeowners to take care of the rent and take care of any potential issues with security in exchange for 10, 15%.

So essentially they have those security services. You don't have to go through any issues and you get guaranteed that you'll get paid 85, 90 cents on the dollar of your rent and they deal with whichever issues may come up during your contract. So that's some of the ways in which people are dealing with this.

But if you. If you put up a Spanish TV station any morning and you watch the typical news show, you will find a lot of very sad examples of this going on.

Rasheed: Yes, I can confirm that.

Diego: You've seen it, definitely.

Rasheed: Spain has this system where the autonomous communities do have decent variation in political views and policies and ideas.

How different is the view towards housing policy across Spain?

Diego: The most remarkable contrast right now is the one that exists between Catalonia and Madrid. Because in Catalonia, which is of course the region where Barcelona is located, the forces currently in power are a combination of a left-wing government that is essentially formed by the Socialist Party, the same to which Prime Minister Pedro Sánchez belongs, and a series of separatist parties that have mostly moved to the left on economic policy in the last several years.

Now I make a small comment here about this like traditionally separatist forces in Catalonia were more skewed to the center-right, but this has shifted through the years, and both the ones that used to sit on the center-right of the spectrum have moved more to the left, and the ones that were on the left have become more powerful within Catalonia the separatist movement. So this results in a quite dysfunctional parliament in Catalonia, in which you have a Maoist party, for as crazy as it may sound, called CUP, and you also have far-left groups such as ERC that form part of the coalition in parliament that supports the government by the socialists, right?

They are enacting this sort of policy. Another example of what's been going on in Catalonia is that they wanted to force any development of new housing by private builders to automatically and by law include at least one-quarter of the new housing units to be given for cheap rent subsidized by these homeowners.

So think about how crazy that is. You're building a residential building project, right? And you want to have 10 housing units in it. So that means that automatically, at least two or three of them, I think it was a 25 percent reserve, so between two and five and three of them would automatically have to be given out to renters and rented at an artificially low price.

So essentially that froze a lot of construction projects, because if you are not able to control, roughly one-third of your own housing project why start it anyway? So that's been a big issue for them. Madrid, on the other hand, and we've discussed this previously in the podcast has a laissez-faire movement in power and has had it for at least 25 years now. It's run by the popular party which is the party with the highest number of votes nationally, although it's not currently in government. But it should be noted that the popular party of Spain is a broader coalition where not necessarily everyone is on board with free-market ideas.

Most of them roughly are in a moderate way, but the Madrid Popular Party is quite radical in its support for free markets. And it has definitely taken the other route in the past few years. And although the planning system is essentially broken and needs fixing, what Madrid is starting to do is to change its land laws and to also unlock a lot of housing projects and developments that are currently in the pipeline.

And we've finally gotten some construction works started in areas in which they had been, essentially stopped and put into a drawer. Still the political conversation is relevant because for instance, although the region of Madrid is run by the Popular Party, which is like I said, here originally a very pro-market friendly movement.

The city of Madrid was in the hands of a communist party between 2015 and 2019. It's been run by the Popular Party for most of the last 35 years, but it was in the hands of a communist party between 2015 and 2019. During that period 160, 000 housing units that were being developed by the private sector were essentially stopped because of Concerns of this communist party, that they just simply did not like the idea, you know of private companies developing housing Just something about that made them really, uneasy and they just did not believe that.

Rasheed: Can you go into that a bit more?

This is Podemos you're talking about. Could you try to explain if you can why they were so against the idea of new housing projects?

Diego: At the end of the day there are approach has always been that the city should remain as is. So there are very conservative in the way they think about cities.

They don't believe that buildings should be taller because they think that goes into the aesthetics of the city and they do not strike a balance between aesthetic concern, which is legitimate on the one hand, but of course the needs of the population. On the other hand, they are also very concerned when private initiatives take over and when the city follows a trajectory that is not centrally planned if you wish, but rather following the demand that is carried out by private developers. So there was also that inherent feeling that if this is coming from a bank that is developing this big housing project for 10, 000 people in the north of Spain, of Madrid, sorry, it feels like it's the market taking over the state and it's the private enterprise doing things that should be done by the public sector.

And then we want more green areas in these developments. So we will not authorize it unless there are more green areas and less housing. So it's just a degrowth feeling behind it. And it unfortunately did prevail for these four years. And it did stall progress on significant big urban transformation initiatives that were all privately led and were essentially put into a drawer and stopped.

But mind you, the housing system in itself, it's so bureaucratic that even if you're on board with these changes, it does take you a lot of time to enact them and to just allow housing to be developed privately. You have the worst of both worlds. You have a slow, urban planning system and a political majority that just doesn't want any new housing done anyway.

So we had it rough for these four years. And then the pandemic came. So 2020 was a lost year for construction. So it's been picking up since 2021.

Rasheed: Why is the planning system in Madrid also, and just Spain in more general terms, so bureaucratic?

Diego: The planning law was essentially a carbon copy for all regions. And it had this approach that you sometimes see with innovation in which you need a permit to innovate. So that's why so many people have argued for permission-less innovation. In this case, any new housing needs to go through the permit cycle which is very bureaucratic and that has several flaws.

On the one hand, if you're looking to do a big overhaul of how a particular district looks, say I want to completely redo a series of buildings in a particular quarter. That requires a whole transformation of the whole way in which the urban planning for that district is done.

So then you get put into a queue with all the other projects that may be. And then that will eventually get done every five or ten years whenever the big projects are taken care of. So that de facto means that if you want to go large and there is this area in which say there is this former factory that is abandoned or this former shopping mall that no one goes to anyway, these days, or just an empty piece of land where I want to develop something. If it's a matter of size, which does matter for actually bringing a lot of new housing into the city you get put into these big queues. So that's an issue. The permit cycle in itself is hurt by two things. On the one hand, it's slow. It's very bureaucratic, so it takes one year or two years to, to get it done.

And on the other hand, because there is a lot of buildings in Spain that just because they're like more than 50 or 60 years old, they get a special recognition and they get some sort of protection. And they get considered or labeled as really special buildings where any change should be supervised by architects that are named by the government. Then you need additional permits. And to top it all, not only do you have this lowness of the regular permits, but then the added layer of these special permits that affect many buildings, especially those in the center areas of the city, which are subject to this special protection.

You add another third layer of complexity because you go from one queue to another. You cannot just put the file in, register the project, and get it processed at the same time on the one hand and the other hand, no. The regular permit, you need that first, and then you go into another queue and you queue for the special permit.

And then it can get even more crazy if there are some added complexities. So if, for example, God forbid the project is close to a river because then there is another body that may want to give you a permit. God forbid there are any ancient ruins, like one mile close to your home, because then you may need to bring archaeologists into the project. So the whole thing is very bureaucratic. There are a lot of things here and controls that make sense from the perspective of guaranteeing some areas, but the problem is that there it's so many of them, they're so slow to be enacted and you go from one to another. So when you combine these things, that system is clearly broken. This was essentially the case for all of Spain. And no one had actually thought of getting rid of this. In fact, the land laws were changed every, 10, or 20 years since our democracy was born in different regions but no real improvements were made.

Only Madrid has started that conversation recently. And some other regions have followed suit, like Andalucía, which probably many of our listeners know for its beautiful cities like Sevilla, Córdoba, and Granada. Andalucía has also been doing some deregulation in that area. The idea in the end is that if we keep the existing system in place, for 40 of our provinces, it really doesn't matter because they're not so populated.

Spain is not a very highly populated country in terms of the population density of its cities. But of course, Spain has some really big cities and some really important economic powerhouses like Madrid, Barcelona, Zaragoza, Malaga, and Valencia, and of course, for those areas, this planning system is broken and it's a problem if you want to develop new housing.

Rasheed: So we're going to come back to some of these smaller points on the planning system and how especially Madrid is getting over it, but I want to go back a bit. You mentioned there's a very high rate of home ownership in Spain, but especially in the last few years, there's been constant discussion, particularly by young people, about the inability to rent houses, of course, and you see one big manifestation of that recently was in Barcelona with the anti-tourist protest, for example. Where one of the very oft-stated grievances is that tourists are making it too expensive for us to live in our own city and so on.

Of course, their response is that we need to actually limit tourism and not that we need to actually build more houses. But that kind of wraps into this one big idea, one big political feeling. When do you think it became such a larger conversation, even when we read newspapers, El País, and El Mundo, almost every edition near to the front page is a housing price chart in Spain.

When do you think this became a big salient point? Was this related to the 2008 financial crisis?

Diego: To go back a bit, when Spain entered the Eurozone suddenly interest rates were significant lower for Spaniards and this was the result of being pulled into the same economic area as Germany or France.

Immediately the markets reacted to this as if, okay now Spain is under the same currency as Germany. That de facto makes it a country in which credit can be given out more loosely because of their risk profile, the factor goes down just because of Eurozone membership, and not all of that reduction was sustainable, as we found out later when the credit crunch claim came and a lot of malinvestment had been done in the real estate industry. This led to a banking crisis. We used to have 50 savings banks and 10, 15 large private banks. And these days only 10, 15 of these savings banks remain. Most of them were like de facto public institutions, so it was more of a failure on the state side.

So after that, the big shock was essentially the fact that after such a huge bubble had burst the housing sector collapsed and had no activity for the last 15 years. And that correction maybe made sense, five years after the real estate bust, but not since then, because the Spanish economy has grown for the last 10 years.

It grew more before the pandemic with a previous government under Mariano Rajoy, then after the pandemic under the current PM Pedro Sanchez. However Spain has recovered from that crisis and has done so for 10 years. But housing development never did. So there was no new supply of homes, although the demand for it had slowly begun to recuperate.

On the other hand, there is a lot of people that have moved to Spain in the last several years, mostly last three years or so. Let me give you one number that is astonishing. 90% of the new members of the active population in Spain, many of them are employed of course, 90 percent of the people that have joined Spain's working population in the last few years are of foreign origin.

That's an amazing number. Many of them come from Latin American countries that have been ravaged by socialism. And of course, you see a lot of Venezuelan accents in Madrid as a result of that. Then there's many people that have essentially taken advantage of the opportunities that come with remote work; expats, and digital nomads who just want to, be located in Spain for a while.

And then also, although our public universities are not very known outside of Spain and therefore cannot really bring in that many students, there are some elite private universities in Madrid that have been able to seduce a lot of international crowds. Some of the most known are Esade.

And that has also brought up a lot of foreign population. Also, there is an overarching movement of people living in villages and moving to cities. That's a century trend now. And that has accelerated a bit also in the last few years. So you get a combination of, a lot of expat growth that has not been met with additional supply in housing units.

Also, people move from villages to cities and all of these, obviously compound. And then the thing with the tourists, I should start by saying that tourism is like oil for Spain. Only that it doesn't have as many environmental concerns as oil does. We make more than 10% of our GDP through tourism.

We're ranked as one of the countries with the highest tourist competitiveness by the World Economic Forum. And when you check the stats, we are regularly one of the countries with the highest number of tourist visitors in the world.

Rasheed: Yeah I believe last year, Spain had more tourists than the entire USA.

Diego: That's been that's been the case a few times in the past several years. I don’t think it’s necessarily a bad thing, but some people are tying this into housing through the discussion about Airbnb and other platforms and how they impact the supply of housing.

So I've looked at the numbers, and quite frankly the narrative could be seductive and it's mostly pushed out there by far left, but okay, it makes sense to pay attention to what they're saying because they did bring people to the streets and that has become a topic of conversation.

But the numbers show that the number of apartments that are controlled by these platforms that rent just for tourist visitors and therefore the homes that are not available for rent for normal residents of the city, make up a very small stock of housing across Spain.

And even in the main cities where this is being discussed like Madrid or Barcelona, they make up less than 5 percent of the housing stock of the most populated areas where the tourists want to go. Think about it the way I see it this is a substitute for hotels.

We can accommodate these demands thanks to these apartments. And if they are 5 percent of the market, it means that still 95 percent of it is in the hands of regular homeowners or companies that own, but it's mostly regular mom-and-pop ownership. And so I don't see it translated or permeating into the housing prices.

Some research has been done on the matter on and it all comes out to the same conclusion. We are dealing with increased demand and we're not generating enough supply of homes and that's the end of it. I think we waste some time discussing these topics and fair enough they should be discussed, but then little of the focus gets put into the broader, more overarching issue of how housing planning has created a general problem that is perhaps not so sexy to explain.

We're doing this in a podcast that maybe will not appeal to a general audience and a huge audience that maybe doesn't want to, get lost in a discussion about pyramids and bureaucracy. But at the end of the day, that is what is making cities just become frozen and not be able to grow and to adapt.

Rasheed: So let's talk about some of the ways that Madrid is now trying to adapt to the planning reform under the Ayuso government. One thing that you have mentioned to me before was the recent change in land use for military land. It took 30 years or so to get re-classified for private development.

So that's one good example I think to get into the new changes.

Diego: Yeah. I think that project in itself is a very good example of what's been wrong with housing policy for a long time. Because say you are in the center of Madrid, Gran Vía, Plaza España, you get in a car and you just drive down south.

We've got an amazing underground series of tunnels that connect via a series of highways to different points of the city very easily. This has helped us reduce CO2 emissions and traffic and mobility and has cut down traffic jams immensely. But the interesting thing is, once you come out of these tunnels if you're driving down south there's really nothing.

There are empty fields to the left and to the right. Then, after you're done doing this 5, 10 minute drive, you start to see buildings popping up again. And it's no longer the city of Madrid. It's the city right next to Madrid. So why is there all of that land? Is it for natural conservation purposes?

No, it's actually land that is owned by the Ministry of Defense, the Department of Defense. These lands were used to host small homes for military people. These military bases essentially are abandoned and have been so for three decades now, so essentially no one lives there, but these lands are still there.

So the idea is to turn this into new quarters of the city, new areas of the city where housing can be developed and not just housing, commercial real estate, parks and schools and hospitals and whatever uses you want.

So this project had been, on the table since at least three decades ago, but it only dealt with obstacles. On the one hand, the public sector wanted to do it.

So private investors who routinely would come up and offer to develop it would lead with this, interventionist attitude that just prioritizes public development of homes, period. I guess that politically it's more attractive to say that we build these homes and we're just giving them out for subsidized prices, either for rent or for sale.

Just let the market do its work in this area. So that was part of the mentality there for sure. The problem was also that some of the land belonged to the Department of Defense but some of it was then later transferred to a company within the Ministry of Defense. So then you needed two different authorizations and then the permits had to be given out by the local and the regional government.

So then whenever you had maybe a conservative majority locally, then you'd have a socialist majority nationally and then when everyone seemed to be on board, someone in this department would not agree with a company within the department. Then the prices had to be set in order to first transfer all the lots of land into one particular entity so that then they could be bought by another entity. And then the role of the private sector was crowded out the whole time. So who is going to put up the investment? So all of these became an issue and quite frankly housing wasn't a big topic until a few years ago. So as a combination of both factors, you ended up with these.

Why did buildings suddenly pop up? Why do buildings suddenly pop up when you're driving down the highway through the South? Because now suddenly you're in a different city, a different municipality. There, there are no restrictions on this part. But because of this land being owned by the Department of Defense, you get into all of this craziness of having to deal with three different administrations with their own permit cycles and whatever.

So now it's been finally unlocked and it's going to lead to 10, 000 new units. This is called Operation Campamento because that's the the area in which it's being developed. There is an old prison in the south of Madrid as well. That took a lot of space and that has been abandoned for a long time because no longer is this the outskirts of the city.

Now it's part of the center south area of Madrid. It also took a long time to transform that, but it will finally lead to around a thousand new housing units. I just learned as we're recording today that another area in which there's some abandoned factories that is close to a hospital and to the university campus, will also get transformed and develop 2000 new housing units. On the north of the city, you also have a railway station that connects the high-speed train that Spain is very famous for with different areas of the country, but because the railway of the station essentially splits that part of the city in two no housing could be developed there, although it's quite a centric location. So another project has been authorized there that will essentially bring this underground and allow for the development of roughly 15, 000 housing units, plus some skyscrapers for commercial use, a new hospital, a new university, et cetera. So when you add all of these at the local level in the city of Madrid and at the regional level of Madrid, and when you talk about the region and the city of Madrid, they overlap because it's essentially the city and its surroundings.

It all sums up to 260, 000 new homes that are being developed right now and have been authorized. So that's a big number. It's 260, 000 new housing units that have been authorized. Some of these developments are in essentially empty lots of land that are right near some really famous areas of the country, of the city. For example, the stadium where Atletico Madrid plays, it's a very famous soccer team here. It's not as good as my Real Madrid, but let's not get into that, okay? But in that area, there's also going to be like 15, 000 housing developments being done close to the stadium.

And then in the southeast, a hundred thousand new housing units will be produced. So Madrid has been very effective in turning this around. But because of so much bureaucracy, they first needed to change their law. So now their law allows you to convert a factory into a project for housing, convert offices into housing, or housing into offices if you wish to do it like that. It reduces waiting times for the permits. It even causes you to be able to process different permits at the same time. So a lot of these improvements have been made and also these long waits for the big projects have been cut short so that whenever the project is at least a few hundred units, then you can get fast-tracked into approval. So it's remarkable that Madrid is doing this because it should facilitate containment of the rising prices for rent and for home ownership.

And we should see the results in, 5, 10 years from now, because that's the time that housing takes. So essentially five years from now the result should be apparent.

Rasheed: And all of this was done under the Ayuso government, currently?

Diego: Yes.

Rasheed: Why is it that Ayuso is so adamant about pushing for housing?

Diego: We've talked about her in our previous podcast and for anyone that did not listen and I strongly suggest you do, she's a pro-free market governor in Madrid, a relatively young politician who led Madrid very well through the pandemic and made Madrid one of the most open cities in these times in which most authorities to just shut everything down.

Played with adaptation strategies and did very well. And I just noticed that a lot of things are going well in Madrid Madrid is, generating, two-thirds of foreign investment that comes into Madrid. Madrid has long for long surpassed Catalonia in output and GDP per capita, even though we have 1 million fewer inhabitants than Catalonia does.

People no longer take Barcelona as the premium destination when they come to Madrid. They come to Spain. They come to Madrid, not to Barcelona, which also signals that shift in perceptions, and Madrid as a whole with low taxes and low regulation has become a success story.

My book about Madrid will be available in English hopefully in 2025. So a lot more depth about these reforms will be available for the English-speaking audience in a few months. But with housing, it was just a natural coalition for her to take on because if your voters, younger voters are concerned about this, and if you are of the opinion that Madrid should be an open hub that welcomes talent with open arms, then you cannot make housing become a problem that derails all of that progress.

Let me just reinstate two facts. Four out of ten citizens and five out of ten workers in Madrid were not born in Madrid. So 40 percent of the population and 50 percent of the workforce come from either other regions in Madrid or other countries. So that shows you why we need to take housing seriously, because of course these people need homes to live and if these homes take up so much of their income, then part of the beauty of higher salaries and lower tax cuts gets lost in the way. I must also say that Madrid has always had a great public transportation system. Also, some people need to, shift their mentalities sometimes. Yes, it's true. Prices are too high in some cases because of this lack of supply. The city has been dealing with this, but the city has also created a very large network of bus and metro transportation.

And plus we have these underground highways that really connect different extremes of the city very quickly. So that should also be taken into the equation. And it's true that should limit the degree to which some people are willing to offer one or another price for their apartment. Of course, fair enough.

We all like, the center of the city and what's but there are some policies in place that do mitigate that.

Rasheed: I think that some of the government of the Madrid municipality is also left-wing, correct?

Diego: Not right now, but the municipality was indeed for four years.

Rasheed: But not right now.

Diego: No, not right now. That was actually only four years of the last 35. But it was very negative for housing because, indeed 160, 000 units could have been developed and were not developed because of all of these concerns. They would not stop the project.

They would just start cherry-picking every single aspect around it.

Rasheed: So right now, Madrid at the mayoral level is PP, at the city level is PP, and the community level is also PP.

Diego: Yeah we have two levels, so it's region and city, and both are in the hands of PP, as you just said, which is the Popular Party.

But like I said before, the Popular Party in Europe is one thing, popular party in Spain is another thing. In Madrid, the Popular Party is clearly a free market party and has a clearly a free market agenda in place in other areas of Spain and in other countries in Europe, that doesn't necessarily have to be the case. But sometimes people joke about this, they should be renamed the libertarian party in Madrid, but just in Madrid. The rest of the country is starting to take note of the good results that Madrid is enjoying and they have followed up on some of these reforms, namely Andalucía, like I said.

But yeah, that's the power mix right now. It's PP at the region and the city and then nationally a socialist and communist government in place in Spain right now.

Rasheed: So this might be a weird side party politics question, but in Spain, let's say if you're in PP, in Popular Party. The Popular Party of one region need not coordinate with the popular part of another region, right?

Diego: They try to speak with one voice, and very often they do. But Madrid had this very disruptive governor back in the day, two decades ago, Esperanza Aguirre. She was a leader who truly believed that Spain had become a country in which it was very difficult to do business, and very difficult to invest.

The taxes were too high and regulation was too complex. And she was sometimes compared to Margaret Thatcher cause she was she had a British education. She admired Thatcher. And I think the comparison was well put together because it made sense. Because she was, in fact, like the Iron Lady of Madrid.

She did enact all of these reforms, and the Ayuso government right now has essentially picked up where she left and she was in power for a decade. And after some years in which different governors had more or less kept the system in place the Ayuso government has doubled down. And become even more radical in passing with these reforms.

So that's why although you get more or less the PP speaking with a single voice and doing more or less the same things across Spain you have the PP in Madrid staying away from consensus and just doing things their way. At the same time, what happens in Madrid ends up happening in other regions because it does have good results, and other regions take notice.

So sometimes we joke that PP in Madrid is PP in Spain with a 10-year advantage, right? Or to put it another way, PP in Spain is PP Madrid with a 10-year delay. So for instance, when Aguirre got rid of the wealth tax that was considered to be a very radical idea at this point, Sweden still had it in place.

Right now no country in Europe has it, but Spain and all the regions in the PP with a PP government, we're getting ready to get rid of it when the national government decides to take over authority for the wealth tax and force them into keeping it.

Same with the inheritance tax, which was abolished in Madrid. And then the other regions ended up following suit or the same with deregulation. As we're talking, even in housing other regions slowly picking up on what Madrid was doing 10, or 15 years ago already.

Rasheed: Okay. So there is a very exciting project in Madrid called New Madrid in English.

How did that come about, because this is, when people hear about it, they get very excited, but people don't really hear about it that much outside of Madrid. What's the background to that? And I think that's a really good encapsulation of the forward-looking ness of the current Ayuso government.

Diego: We touched upon it briefly before, and you'll recall I mentioned how in the northern area of Madrid the railway, that leaves the city and has great high-speed train connection with other areas of the country physically does split the north of the city in half.

Because of the railway, it's there. So you build on top of the railway or you cannot just move from one side to the city so easily. There are some bridges to go across it or whatever, but of course, it does split the city in half in the northern area. So three decades ago around the Chamartin station where this happens, the conversation began to take place among neighbors who just did not want to see the train split their districts in two and some banking institutions and some real estate institutions decided to come up with a proposal that included on the financial side of it, the funding and on the real estate of things, the know-how and the willingness to just press ahead with this project. And the project began to be discussed in the mid-nineties although it had originally been proposed in the late eighties, but then it dealt with the same situation as we discussed with the military land that was owned in the south of Spain.

You had land that belonged to the train station. You had land that belonged to the transportation department. You had private land that was not being developed because it had no permits to be developed anyway. Then you have different levels that had to be in agreement, the regional and the local government.

Once all of that had been cleared, before the pandemic, this urban transformation project was given the green light. It's been in the pipeline there for three decades, and it finally has been unlocked just to put it in transformation. It is often described as Europe's largest urban transformation project because it encompasses 20 billion in overall investment.

It will bring the railways underground. Beyond doing that, it will develop a central business district in the area with different skyscrapers. It will allow for a series of new university campuses and a new elite hospital to be built in the area. And it will allow for new housing that is around 15, 000 new units.

But potentially there could be some more developed because a lot of space has been allotted to green areas which is something that politicians love to do here. And sometimes quite frankly, it does come at the expense of more density. And sometimes I do think we should be, creating even more density and less green areas in these new developments.

But anyway, the overall net is a huge positive and a huge win for Madrid. So much so that now they're thinking of doing the same in the South of Madrid. And just like they will have the new Madrid of the North, they want to have the new Madrid of the South, essentially in Atocha.

It's the train station of the south, the one where the high-speed trains leave for the southern areas of the country. The city is also split in half. So there are some projects ongoing now to bring that under the surface, bring the railway under the surface, and start developing those lands for residential use.

So that could soon be another exciting project for the development of housing in Madrid.

Rasheed: There is a policy. I'm not sure how old it is. I think it's very recent. It could probably be a useful policy. You could correct me. Where they offer a program for mortgages, for young people, I think it's under 35, which may have increased it to 40, up to a 100 percent mortgage in Madrid, as in only for Madrid residents after two years or so, you qualify for it.

Why was this done? And do you think this was a useful policy to enact? It can be critiqued as some sudden demand, and not really pushing the idea of just more and more supply.

Diego: The one thing they're doing with that is called Plan VIVE. It's doing two things right. On the one hand, they have partnered with private developers to put out what I believe will be 25,000 housing units that will be available for rent.

The prices for these rents will be lower than the market price, but this has been agreed to by the promoters, and the builders have agreed to it. So that's an interesting scheme they have done. And as for the mortgage deal, which is also part of that scheme the thinking behind that and this was also promoted by Vox, which is the alt-right party in Spain and did play a role in the parliamentary debates around housing policy back in the day in Madrid, back a few years ago, when all of this was designed.

The idea here was that, okay youngsters have an issue when putting up the upfront payments that mortgages require. They can clearly pay the monthly rent, but they cannot make the initial payment so easily. Essentially this has come down to a program in which the regional government will allow you for collateral, somewhat act as collateral, and just give faith to the bank that you are able to pay the mortgage payments every month.

And this was a lot, this will be done in order to facilitate access to younger segments of the population. Now there's some good and bad in that policy if you ask me. But at the end of the day, the scale is still limited. So we will see what the outcomes of these projects are, but in the larger scheme of things, it's what really is transforming the market right now, which is just a lot more supply in order to meet a lot more demand like Madrid has now.

The other nuances like this deal with the mortgages. We'll see how it turns out before we see that whenever the public sector entered the mortgage credit markets it did create a mess. I do not have to remind US listeners of what happened with Fannie Mae and Freddie Mac. But here in Spain, as I said, we used to have 50 de facto public lending and savings banks.

And because they went so deep into giving cheap credit to families throughout the real estate bubble, most of them went bust. We have a dozen of these entities left and we used to have half a hundred. We'll see what happens with that.

But I'm initially not too much of a fan of that. And there's been a lot of research in the U. S. about how a lot of the real estate bubble had to deal with restrictions on land and restrictions in planning. And you can almost pinpoint where the bubble was bigger, and to what degree there were home restrictions in there.

There's been some amazing research being done there recently. And then you also have all the research by authors like Calomiris on how, when you put the public sector into lending out mortgages, you often end up with a lot of bad credit. So I'm just hoping that these programs stay in simply helping with the collaterals and facilitating maybe that early start but then stay out of anything else.

Rasheed: In general, I'm not against the idea. Panama has a pretty high level of homeownership rates, even for younger people, but one of the strategies they have in Panama, of course, is they have actually a very good supply, maybe too much supply as some would say in Panama these days. However, the private builders would offer loans to the buyers for the bank collateral for the mortgage.

So you end up paying essentially two loans at the same time. You pay the private lender for the collateral loan and then you pay the bank mortgage also. But what happens is the private lender makes the choice themselves if they want to lend you the money to buy their house back from the bank. It's all a big coordinated system.

So in that way, the young people can get the collateral easier and they can also get a very good rate of mortgage because obviously, Panama has very good mortgage rates, because of dollarization and good banking. So that's a policy I don't really see anywhere else in the world.

Diego: That's what I was going to tell you. Sounds pretty unique. And it sounds interesting. I think that it should be worth a look here in Spain. Look, there's this book that came out recently by Daniel Waldenström that is called "Richer and More Equal". It's a history of wealth in mostly Western countries and Spain is one of the ones that are highlighted in the research it does point out the fact that regardless of what authors like Thomas Piketty had originally thought and even written when you take a careful look at how wealth is distributed in Western countries, we stand today with the lowest levels of wealth inequality that our societies have seen historically and not only is that inequality lower, but the levels of wealth have exploded and homeownership is a key element there.

Homeownership and pension savings are the two conduits to wealth for most regular people. Of course, 1 percent will always have more sophisticated ways of accumulating and creating their wealth. But for most people, homes are not just where they live, but also a wealth asset in itself. So what you bring up is interesting, not just because it can facilitate asset access, but because it's the type of access that we need more of because we create a wealthier society when we do that.

One of the big problems for the youth in Spain is that with a poor-performing labor market, a very socialist economy, as we've had for the last several years, and issues in accessing an asset like housing, which is pivotal to someone's life, we have created a lack of opportunity for Spain's youth.

And therefore I'll be researching that. You'll have to you'll have to record a podcast on the Panamanian scheme because it really sounds useful for cases like Spain and many other countries.

Rasheed: When you are thinking about good examples of housing policy and other places that you think Madrid or Spain in general should adopt, where do you look?

Diego: I'm going to start looking at Panama now, but beyond that, I've been looking I've found a lot of discussion of what's wrong with housing policy, Sweden and its rent-controlled prices with waiting times of 20 years to get into the subsidized public apartments list in Stockholm.

That just sounds crazy to me. A shallow economy is so big as it is in the rental market in Sweden. Being Sweden, one of the countries with the lowest shadow economies, in Europe. That also shows you how these schemes do not work. Berlin, with all of the damage they have done to their system, has a completely different ownership structure than Spain does because there are a lot of companies that own real estate there and rent it.

Here, like I said, it's mostly mom and pops, right? There's no, and sometimes I say, look at how Zara has been very successful in fashion. Sometimes I wish we had Zara for housing, just cheap effective, good housing for everyone. But like that would require a lot of transformation in our market. But Berlin does.

Berlin does have a lot of private companies that have hundreds or thousands of units, but they've been essentially targeted by far-left groups that have enacted all sorts of restrictions on the housing market and the prices and the stock. The prices have gone up and the stock has gone down in terms of supply there.

So that's been a mess. And I don't think Paris is an example to look at very fondly because of the poor results they have had. You go to the UK and everyone is complaining these days about how NIMBYs make it impossible to build. So that's an issue as well. And in the U.S., you start to see some territories within the country, some states that are getting it right. And I think it's important to focus on those because they do provide good case studies. As for me, I've looked into three case studies lately that have caught my eye for one or another reason. Japan, for instance, is a country that dealt with a huge real estate bubble and had to deal with a lot of debt restructuring, and the housing industry had to adjust to that essentially.

And it was a tough process. But in the last several years, Japan's property prices, and rent prices have been, moderately moving with the economy and not rising so much as we've seen in other areas of the world. Vienna in Austria is sometimes quoted as an example, but they have built a very big public housing stock. And I do not know if you can just get there overnight like some people would want to. And I don't think it necessarily has to be through the state. You can get a lot of new housing units done by the market, and it should probably be done so that we reflect the proper prices and dynamics in a market economy.

So I'm not really sold on that model. But for instance, you have New Zealand where cities like Auckland have essentially loosened up on the bureaucracy and loosened up on the planning and they've enjoyed a much better performance in terms of the rent prices and and also sale prices for properties.

And what's even more interesting these days is the huge boom in supply and the huge drop in prices. For rental apartments in Argentina because everyone is starting to, pay attention to what Javier Milei is doing over there. The results have been fantastic for this particular regulation, Javier Milei has a minister for deregulation, he's called Federico Sturzenegger.

He's getting rid of literally hundreds and hundreds of dated regulations or obstructive regulations and just, the type of norms that need to go, cause they are making it impossible to grow the Argentinian economy. And a very simple one to get rid of was rent control.

Almost immediately overnight, you saw this drop in prices that has been of around 20 percent in the Buenos Aires market and this huge increase in the housing supply. It also has other side effects that are positive. For instance, Some of these apartments were sold in the black market before.

So you bring down the shadow economy and you create a more transparent real economy in the official economy, which also leads to maybe tax revenues that can be put to use further lowering the tax burden that Argentinians deal with. That has kickstarted a very positive cycle and it's a very good example of someone that is being very radical with his reforms and so far has been getting some good results in areas like this one.

Rasheed: So looking forward, what do you think should be improved in terms of the housing policy in Madrid in the next few years?

Diego: Madrid's economic policy was, very radical in pushing forward with liberalization and openness because there was the right people came together at the right place and the right time.

And there was a huge movement that pushed forward with these reforms and they have been successful. The problem when you have success in policy is that you may often fall into what is sometimes described as reform fatigue and statecraft is the art of, being able to continuously improve the way in which you conduct policy.

And I would argue that right now complacency could be an issue. We've logged 260, 000 new housing units. Because Madrid is a successful model, more people will keep on coming to Madrid, so the supply will still need to be growing at a very fast rate. In fact, what we've done up until this point is essentially deal with the deficit that was created artificially by the communist mayor between 2015 and 2019, and also by the deficit that was dealt with as a consequence of not having acted on this before.

So I think we're just catching up. We think that we've won this battle. We're only starting to rectify it. People will, in fact, need at least five years, more or less to see the results of these projects and see all of this floating of new apartments into the market. That's why you need to keep on looking for new ways to facilitate and deregulate the housing industry.

When I look at the land laws, they have not been changed. They have been modified. They have been amended. I dream of essentially a land law for Madrid that at the end of the day is one sentence long that says if this land is not protected then you may build in it according to the existing codes of building in the country. Some lands are protected for good reason. Our mountains have such high natural value that the environmental value of these lands is fantastic. We have some ski resorts in there and those are carefully regulated. But there's a lot of empty land with no environmental value whatsoever, where conscious, properly done efficient building should be done in order to provide us with more housing.

I'm not advocating for, destroying the forests that we have in the center of the city, like the Parque del Retiro or the Casa Campo, that would be a monstrosity of course. But there are many areas empty, lots of land where new buildings should be done and could be done. I say we get rid of a lot of the zoning laws, a lot of the density laws, a lot of the height laws for the buildings.

Most of this is completely outdated. And at the end of the day the overall philosophy, of course, we're never going to narrow it down to one sentence, but the overall philosophy needs to be, if this is not a protected area, then go ahead and build. If you need to start the permit cycle and wait for 10 years, it's going to be a nightmare.

Also, the permit cycle, if it's to stay in place, needs to be reformed. There needs to be a system by which permits can be addressed in proper time. In some cities in the South of Spain, like Marbella, which is famous for its lavish lifestyle, no other people live there in the summer. Marbella has subcontracted the management of the permit to the engineering and construction associations.

So that when the file comes to the public servant that is supposed to give the green light, it's basically been dealt with by private bodies that essentially do the building and know which laws they have to comply with. So of course the green light will still be given by the public sector. But the file they have is so prepared and has been quote-unquote cooked by the experts that essentially they all get passed and there's no back and forth in the file.

So that's something that could be looked into. Also, another thing that I think is important is that you should never do one queue after another queue. You should be able to queue in all different queues in case you're asked to get different permits without having to go from one queue to another. This just artificially multiplies the amount of waiting time that you deal with.

If you do this, I think good times are ahead. If not, I think what we've been doing so far is what I would describe as getting things right, but in an emergency mode and policy shouldn't be done in an emergency mode, or not just in an emergency mode. The emergencies have now been dealt with. Now let's get good, proper 21st-century-looking planning and land regulation in place, which in many cases just, means no regulation or very simple regulation.

Because for example, just changing a few sentences in some articles has changed everything. Like for example we were able to get a few changes in the part of the law that deals with the uses of land. So that, okay, the land may be, for example, allowed for a factory. But if I just want to turn the factory into a residential unit, or if I want to turn the residential unit into a hotel, or I just want to take the hotel into a hospital, I don't need authorization for that. I will need to comply with the existing regulations for that sort of construction and that sort of operation. But I don't need authorization for that. So if that was done with a few amendments. Think of what we could do with a 21st-century land law and construction law in Spain.

There's been some movement. There are some drafts in, in a few drawers right now that I'm aware of but you need the political will to just put them on the table and pass it forward. And by the way, the builders are dying to get this done.

The engineers are hoping they can get this, and the architects are like really on board. So the whole sector is really behind this sort of reform. We just need to, keep on advancing them.

Rasheed: But what is the slowdown then? If the government is PP at both levels and the president of the community is essentially for this idea, why isn't there much more acceleration in building?

Diego: Because there has been an acceleration in building through this unlocking of these projects, but now they are dealing with this more complex process in which they, internally, the party needs to change the way in which they think about housing.

And it's not just about, okay, let's unlock that big project and that big project. They've picked the low-hanging fruit. Now they need to go higher up the tree and it gets more complicated. That gets more complex. It's more challenging if you think that, okay, we've allowed this to happen. It's not the same as to start thinking, okay, we shouldn't be asking things to be allowed by us.

We should just allow them to happen and only veto what is really not supposed to be done in a city. So making that change in mindset is complex because you're talking about ex-ante and ex-post controls, and that is a change that is still being made at the political level. And I'm hoping they can get there because these conversations are taking place.

These ideas are floating around. There's a draft ready to go in some of the drawers of the key politicians for this to take place. But sometimes the reform is a combination of reform fatigue and complacency that could be an issue too. And it shouldn't because right now it’s the only real threat to Madrid's success.

Like I said if you cancel out some of the benefits of deregulation on tax cuts. With very high housing prices, then you're undercutting your own ability to keep on growing. So I'm just hoping they, they get it right. And I'm quite optimistic they will because today I just got this news that I just brought up how this new project will be done in an old factory land. This last week the old prison was announced to be about to be transformed into, I think, 400 new units.

That's the sort of approach we need, a never-ending cycle of looking to build more and better housing.

Rasheed: Okay, I don't have any more questions. Is there anything you would like to have said?

Diego: I wish I had known more about the Panamanian example, that you brought up, definitely, because it's really attractive.

On, on the other hand, I just think that for anyone that is considering Madrid as a case study, or considering Madrid as a destination, I think they should also take into account that one of the big selling propositions of the city is that it's very lively. Yeah, it has a lot of people.

Business here is done more efficiently than in all of Spain. But then there's also a cultural side to it, a social side to it that I think is very appealing to a lot of people. Madrid is a very open city. People are open-minded. That's why half of the population wasn't even born here. They came here.

I myself, am from the Northwest of Spain, from Santiago Compostela. And I changed my life. Like many people did. Come here and be a part of it. So I'm just think that it's interesting to talk about how housing is a foreign that has stopped some of that growth. I think it's promising to see that some of these obstacles have been removed, but I just want to say that even though some of them remain in place, there are plenty of good things going on in Madrid now so much so that in spite of this, how High housing prices, the economy keeps growing and the policies keep getting better in many areas.

And that's why people are coming. So I'm just hoping that a podcast like this can get people's attention. But not just outside, but inside here, let's keep on circulating these ideas because I want these improvements that we've made to be just the tip of the iceberg and hopefully, five years from now, recording our podcast about housing in Madrid and say, look, it was 260, 000 new units by then. By now it's maybe twice, three, four times that figure because that's what we need. We're going to need more housing to accommodate for more people because they're moving to Madrid. That's definitely, that's happening. That's the safest projection ever.

Madrid will continue growing. People will continue coming. So let's accommodate for that growth.

Rasheed: Diego, I agree and I think I make this point all the time that Madrid is definitely the best city in Europe to live in right now. And also it's one of the few places in Europe where I can say I'm optimistic.

Thank you, Diego, for coming on the podcast, it's been a very fun conversation.

Diego: Thank you. My pleasure.

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