Madrid’s Investment ‘Deluge’: More Illusion Than Reality?
For Isabel Díaz Ayuso, President of the Community of Madrid, her six trips to the United States are unequivocally successful. She has defended them fiercely against criticism from the left-wing opposition in the Madrid Assembly. Following her latest three-day visit to New York in early March, Ayuso once again cited her preferred data source: the Ministry of Economy’s Foreign Investment Registry. According to these figures, the Community of Madrid is the top recipient of US funds, capturing 61% of the total in Spain during her seven years in office, with US companies investing €28.3 billion in Madrid. On paper, these figures appear real, suggesting a flood of money almost equivalent to the entire Madrid government’s annual expenditure. They are spectacular numbers, designed to generate positive headlines for Madrid, much like other information in the registry. However, they conceal a significant problem: a large portion of these funds do not actually end up in Madrid. They are a statistical fantasy.
The ‘Headquarters Effect’: Inflating Madrid’s Figures
The primary flaw of the Registry is its systematic overestimation of Madrid’s figures due to what is known as the ‘headquarters effect’. This means that investments distributed across the entire country are recorded in the Community of Madrid, a common choice for companies establishing their legal headquarters, but not necessarily the location of their actual operations.
This phenomenon is evident in some of the major US investments recorded in Madrid during the Ayuso era. Last year’s largest US investment in Spain was Liberty Media’s €3.1 billion acquisition of Dorna Sports, the sports marketing company that owns Moto GP. Dorna’s registered office is on Príncipe de Vergara 183 in Madrid, but many of its employees are based in Barcelona, and it also has an office in Rome. The Jarama circuit bid farewell to the World Championship in 1998; today, few associate Madrid with motorcycling.
In 2023, the €3.4 billion entry of the EIG fund into Repsol’s exploration and production subsidiary was also recorded as a US investment in Madrid. Repsol’s headquarters are at Méndez Álvaro 44 in Madrid, but it conducts exploration in the US, Mexico, Brazil, and Libya. No one would expect to find black gold beneath the capital’s streets.
Another significant acquisition dates back to 2022, when the New York-based elevator manufacturing giant Otis paid €1.753 billion to take full control of its subsidiary, Zardoya (Calle Golfo de Salónica, 73, Madrid). While Zardoya has a major factory in Leganés, it also operates two others in Vigo and San Sebastián. The latter, which is Zardoya’s origin, employs 200 people and manufactures elevator motors for global distribution.
The situation has reached a point where investments concentrated in very specific and distant parts of the Peninsula have been recorded in Madrid. For instance, the 2022 acquisition of a mine in Almonaster la Real, Huelva, for €761 million by an Australian multinational was initially attributed to Madrid. Industry sources indicate that the Registry has since made efforts to correct this flaw, and investments highly concentrated outside Madrid are now correctly allocated. However, the problem persists for investments spread across various locations, as companies are often reluctant to share internal information about their true destinations.
Unquestioned Dominance: Madrid’s Unrealistic Economic Weight
Madrid’s leadership in foreign investment is often reproduced uncritically by many media outlets and rarely challenged by the opposition. The figures Ayuso presents each year (claiming Madrid captures between 50% and 70% of foreign investment) do not align with Madrid’s economic weight in Spain, which is around 20%. Yet, few raise objections.
Another important nuance is that not all investments are clearly beneficial. The most coveted are ‘greenfield’ investments, which involve the construction of new facilities, and ‘brownfield’ investments, which entail improving existing ones. These operations generate jobs and foster business with the local economy. However, this type of investment is a minority, accounting for only 22.7% of US investments in Spain between 2019 and 2025. More common in the Registry are company acquisitions, whose local benefits are not guaranteed (and can sometimes even lead to layoffs).
The Registry does not provide a breakdown of greenfield/brownfield investments by region, but this information is available from another reference source: Orbis Crossborder Investments by Moody’s rating agency. Under this metric, Madrid’s undisputed leadership during the Ayuso period is challenged by other regions. Madrid ranks second in capital invested (€12.09 billion), behind Aragon (€14.405 billion), which stands out for its attractiveness for data center construction. In terms of jobs generated, Madrid is first (35,544), followed by Catalonia (30,116).
Ayuso’s Role: Merit or Marketing?
Even considering the flaws in these metrics, it is worth questioning how much credit Ayuso deserves for foreign investments. In the Assembly, the president has stated: ‘In recent years we have closed at least 15 agreements with companies,’ such as Microsoft, Pfizer, Siemens, Allianz, and UPS, in addition to boosting GSK’s laboratory in Tres Cantos.
The case of Microsoft’s three data centers is particularly striking. The president claimed credit for this in 2023, despite the company having held discussions not only with the Community of Madrid but also with the Spanish Government, which was very active, and with three regional municipalities. It is common for large projects like this to receive impetus from both state and regional administrations.
The Department of Economy has shared a list of 14 such operations where a meeting took place with the president, the Minister of Economy Rocío Albert, or a technician. Those familiar with this field value such contacts but emphasize that investing hundreds or thousands of millions in another country is not a decision a company makes impulsively, persuaded by a leader’s speech. These are moves that typically take years and involve a multitude of factors, such as office prices, the availability of professionals in the destination country, or labor costs.
‘Good Practice’ and the Reality of Global Competition
Despite these caveats, experts acknowledge that Ayuso is a role model in this area. ‘Her trips are a good practice that other communities should copy,’ says a consultant who prefers anonymity to avoid public positioning. ‘In the Anglo-Saxon world, it is common for politicians to travel with their technicians to promote investments, and this is something that has been learned late in Spain.’
Another expert, Juan Millán, CEO of the internationalization consultancy Gedeth Network, praises Madrid’s effective branding. With over 25 years of experience working with administrations in the US, Canada, Australia, and Latin America, Millán has noticed a growing interest in Madrid. ‘The Community has managed to position itself as a safe investment location,’ he affirms.
Madrid’s more discreet work is carried out by Invest in Madrid, a small office led by Luis Socías, with only 11 employees and a budget of €2 million. To support its efforts, the Community last year hired external advisors in four regions (US and Canada, UK, Germany, and Mexico) through a €381,150 tender. The US and Canada lot corresponds to the Spain-US Chamber of Commerce, Inc., which organized Ayuso’s visit to Miami and New York last June, her fourth trip.
During these visits, Ayuso typically meets with potential investors. For example, last June, she booked an office in Manhattan to highlight the region’s advantages to a series of funds and senior executives from companies previously contacted by Invest in Madrid and its advisors, such as BlackRock, Goldman Sachs, Boston Consulting Group, McKinsey, Deloitte, BNP Paribas, EY, and Pfizer. After her speech, Ayuso chatted with interested parties, with her technicians responsible for follow-up. Millán emphasizes that ‘every effort counts. Competition with other global destinations is brutal.’
Unanswered Questions:
- To what extent are the investment figures for Madrid inflated by the ‘headquarters effect’?
- How much of the reported US investment truly translates into direct economic benefits and job creation within the Community of Madrid?
- Are the current reporting mechanisms for foreign investment accurately reflecting the regional distribution of funds?
- What concrete measures will be taken to provide a more transparent and precise picture of foreign investment in Spain?
What’s Next?
This investigation highlights the urgent need for greater transparency and more accurate reporting mechanisms regarding foreign investment. Without a clear understanding of where and how these funds are truly impacting the economy, it is impossible to assess their real value or to formulate effective regional development policies.
If you have further information regarding the discrepancies in foreign investment reporting or the ‘headquarters effect’ in Madrid, please contact us confidentially at: [email protected]. Your identity will be protected, and full anonymity is guaranteed.
Source: Investigative journalism, El País, Foreign Investment Registry of the Ministry of Economy, Orbis Crossborder Investments by Moody’s, anonymous sources, interviews with experts.
