The beginning of autumn coincides with the publication of key data for the analysis of the evolution of foreign investment in Madrid, since it is at this time when some of the main reference sources in Spain and globally are updated. What does the latest data tell us?
Madrid concentrated 60% of investment flows received in the first half of the year in Spain
The Investment Registry, following the summer updates of the stock data, offers a preview of the investment flows during the first half of the year, which, although still provisional, can help to identify the first trends of the year.
According to the Registry, Spain received 6.9 billion euros worth of productive investment in the first half of 2021, after two of the worst quarters since 2012. However, these figures must be treated with due caution, since they suffer from a marked calendar effect (notifications in some sectors tend to be concentrated in the last months of the year; Indeed, in the last decade the average of the second semesters was 30% higher than those of the first). Moreover, they are preliminary figures and can be revised upwards later, especially since takeover operations need prior approval nowadays. Likewise, the figures published by the Registry do not seem to include some of the large mergers and acquisitions announced to date, which would also modify the figures upwards significantly.
The data published for Madrid follows this pattern. According to the Investment Registry, Madrid received productive investments worth 4.15 billion, 60% of the national total in the first half of the year, after 2020 in which, in contrast to the declines at a global and European level, the gross productive investment flows received by Madrid increased by 25% to 18.5 billion euros
Especially prominent n the first half of the year are investments from the United States (1.47 billion euros, more than half of that amount in the Telecommunications sector, and other relevant investments in Other sports activities). Thus, the United States continues to bet on Madrid, having been the main investor in the city in the last decade.
Next comes France, with investments worth 669 million (mainly in the energy sector and financial services), and the United Kingdom (495 million, among which investments in Manufacture of beverages and in Energy supply stand out). The ranking of the top 5 investor countries is completed by China (329 million, almost entirely in the energy sector) and the Netherlands (241 million, spread out among a number of different sectors). Another four countries already exceeded 100 million in investment in these first six months of the year.
The Registry has also recently updated its statistics on employment linked to foreign investment with data from 2019. Madrid has led the recovery of employment levels after the financial crisis, the last five years being especially noteworthy (+ 75% since the minimum marked in 2014). Madrid has seen five years of continuous growth in employment, reaching 582,928 jobs. Madrid thus concentrates 34.2% of employment in foreign companies nationwide.
The foreign investment position also increased, to 337,923 million euros (+ 2.0%), 141% of regional GDP in the year. Madrid concentrates 70% of the foreign investment stock in Spain, almost 10 percentage points more than in 2007, well ahead of Catalonia (13%) or the Basque Country.
Figure 1. Evolution of Employment derived from foreign investment in Madrid
Source: Investment Registry, September 2021
Greenfield Projects – Notable recovery in the first half of the year
Private sources such as fDi Markets of the Financial Times, which has been monitoring cross-border greenfield investment operations (new facilities) since 2003, also throw light on the evolution of investment dynamics in Madrid.
According to its latest update, with data from January to August, after a year (2020) in which both the number of projects and the associated investment fell significantly in Madrid due to the pandemic, the recovery in 2021 is clear. In the first eight months of the year, a hundred projects were announced in Madrid, 22% of those announced in Spain, with an associated investment of $ 2,028 million and the creation of 7,381 local jobs.
The city of Madrid has concentrated 85% of the projects received in the Community since 2003, 75% of the investment and 71% of the announced employment. Not surprisingly, Madrid has been the third city to receive more greenfield projects in Europe since 2003 and the twelfth in the world.
Subsidiaries of foreign companies continue to increase their impact on the local economy
According to the National Institute of Statistics’ (INE) recent annual update on foreign affiliates in Spain (with data from 2019), there has been a 9.5% increase in foreign affiliates, to 10,663; a 6.9% increase in employment in subsidiaries and an 8.4% growth in personnel expenses.
Although these companies barely represent 0.47% of the total number of companies in the sectors analyzed by the INE (Industry, Commerce and Non-financial Market Services), their macroeconomic impact on Spain as a whole is considerable: they contribute 28.1% of turnover, 15.3% of employment, 24.2% of personnel costs and 39.5% of exports.
Madrid concentrated 38% of foreign affiliates in Spain, 53% of its employment, 56% of its turnover and 45% of its exports according to the last update which allowed for regional comparisons.
Excellent outlook for the last quarter
The outlook for the last quarter of the year is excellent, a time when many pending operations will be finalised and will appear in the annual update at the end of March 2022.
At MIA-Madrid Investment Attraction we analyze foreign investment dynamics, with a special focus on data and investment trends in Madrid, in order to provide the best service possible to companies who are interested in investing in our city.