Global Foreign Direct Investment (FDI) was marked in 2022 by economic instability, uncertainty in financial markets, and the war in Europe. Indeed, a year which was meant to bring the post-pandemic recovery and the reopening of international markets, was instead characterized by geopolitical instability, high rates of inflation and high interest rates, on the one hand, and war, trade and technological leadership tensions on the other, all of which had a negative impact on cross-border investment decisions.
Pending the final year-end data for 2022 on UNCTAD’s global cross-border flows (FDI) which will be released in June, the data provided by this entity at the beginning of the year indicated that the aforementioned negative economic outlook had had a negative effect on the financing of international projects (Project finance) and cross-border mergers and acquisitions (M&A). which, in global terms, fell by 6%. Greenfield investments, on the other hand, performed better, thanks to the increased activity of the first part of the year and the impact of a small number of megaprojects in the renewable and semiconductor sectors.
Spain, once again, seems to have escaped this negative global trend. Thus, according to data published by the Foreign Investment Registry (RIE), in 2022 Spain attracted 34.2 billion euros of gross foreign investment, 14% more than 2021, a year in which flows remained stable despite the pandemic.
According to these data, in 2022 Madrid received 17.2 billion euros of foreign investment, and was, once again, the region that attracted the most flows in Spain, with 50.4% of the total. However, the volume of flows fell by 6% compared to the average of the last decade, and were 22% lower than the singularly high volumes registered in 2021, when large acquisition operations were concentrated in the last part of the year. There were no investments above 2 billion in Madrid in 2022.
The good results of 2021, almost 22 billion euros in flows, were due, to a large extent, to the impact of the acquisition operations (Vinci acquisition of Cobra, IFM’s increased stake in Naturgy), which represented 50% of total flows, compared to 27% of the expansions -investments made by companies already present in Madrid- and 23% of the new contributions (greenfield, brownfield). In 2022, on the other hand, expansions and reinvestments gained prominence, thanks mainly to British and American reinvestments. In 2022, 55% of investments were expansion operations, 29% acquisitions and 17% greenfield/brownfield investments.
In 2022, notable investments from the United States were recorded (4.6 billion, with significant investments in the Machinery manufacturing and Telecommunications sectors), the United Kingdom (4 billion, of which 2 billion were investments in La Liga, 494 million in Energy production and another 487 in Wholesale trade), and France (2.3 billion, notably, investments in Telecommunications). Six other countries (Germany, the Netherlands, Austria, Canada, Australia and Italy) invested over 500 million in the Madrid region last year.
Some acquisition operations previously assigned to Madrid (since it was the headquarters of the companies involved), in sectors such as Telecommunications, Manufacture of tiles or Extractive Industries, have been reassigned to the regions where the company’s assets were located in the last update, as part of the regular process for reviewing Registry operations.
Regarding greenfield investment, which generates greater growth and employment, there was a significant increase in 2022 in terms of the number of projects, associated investment and jobs generated. The fDi Markets database of the Financial Times, which registers the cross-border projects of new productive investment announced, shows that after the post-pandemic recovery of 2021, the number of projects announced in Madrid in 2022 amounted to 162, 17% more than the previous year, with an associated investment of 2.9 billion dollars (second highest figure of the series, 51% more than in 2021) and the generation of 12,370 jobs (second best record in the series, 35% more than in 2021).
The increase in investment activity in the city has been notable in recent years, despite the pandemic: between 2019 and 2022, Madrid city received 146 projects per year, with an average annual investment of more than 2.2 billion dollars and the generation of almost 10,000 jobs per year.
The city of Madrid has concentrated 84% of the projects received in the Community since 2003, 71% of investment and 73% of employment. Madrid has been the third European city that receives the most greenfield projects since this source collects data (2003), the twelfth in the world. In 2022 it was the ninth most popular destination in the world.
Madrid has also led the recovery of employment levels linked to foreign investment in Spain, although the pandemic has slowed the progression of recent years. At the end of 2020, the last year for which the Registry offers data on this indicator, there were 512,915 workers in foreign investment related jobs in the Community of Madrid, 1.1% less than the previous year. These FDI-related jobs represented 16.7% of total employment in the region that year, the highest intensity of employment linked to FDI in the Spanish regions. Madrid concentrates 30.2% of employment in foreign companies at the national level.
According to the latest update, the foreign investment position, increased to 346.6 billion euros (+1.6%), 160% of regional GDP in the year. Madrid concentrates 68% of the FDI stock in Spain, almost 10 percentage points more than in 2007, well ahead of Catalonia (13%) or the Basque Country (3.9%). It also concentrates 21% of fixed tangible assets, surpassing Catalonia in this indicator for the first time in the historical series in 2020.
In 2022, the city of Madrid was home to 9,943 foreign capital companies (companies controlled by a foreign Global Ultimate Owner, or with direct shareholders controlling 10% of the company or more), according to data from SABI (D&B). These account for almost 80% of the foreign-funded companies based in the region.
Investors from 97 different countries have invested in Madrid, although the top 10 investors account for 73% of flows. Among them, the United States, the United Kingdom, France, Luxembourg and the Netherlands stand out.
The Services sector concentrates the largest number of these companies in the capital (79%), followed by Industry (13%), Construction (8%) and Primary Sector (0.5%).