The projects are adding to the buzz that’s made the Spanish capital a key destination for hoteliers — thanks to a boom in tourism, a sizzling-hot restaurant scene and an influx of well-heeled Latin Americans.

The home of the Real Madrid stadium and the Prado museum is now ranked the second most-attractive city in Europe for hotel investments behind London, overtaking Paris in the “2024 European Hotel Investor Intentions Survey” conducted by CBRE, the provider of global commercial real estate services. About €601 million ($645 million) were invested in hotels in Madrid last year, with that number likely to be surpassed this year.

“The city’s hospitality sector continues to thrive and is showing no signs of slowing down,” said Trevor Horwell, chief executive officer of Nobu Hospitality, whose luxury hotel is set to open in 2026.

In just the last few years, Madrid has gone through a transformation as wealthy Latin Americans descended upon the city and bought high-end houses — investing more than €1.2 billion between 2021 and 2023, according to estimates from property consulting firm Colliers. That has sent real estate prices soaring and brought a swanky lifestyle to the city.

New restaurants and high-end luxury stores have sprouted at a breathtaking pace. With 26 restaurants carrying Michelin stars — including Chef Dabiz Munoz’s three-starred DiverXo — Madrid ranks third in Europe in terms of the most number of establishments with that distinction.

The city has also become the third most popular destination for musicals, behind London and New York, according to the regional government, with The Book for Mormon and Aladdin among the new openings last year. Madrid is also becoming a magnet for international events like Formula 1, with the city hosting its first race in 2026.

The five-year renovation of football club Real Madrid’s enclosure — called the Santiago Bernabéu Stadium — has refurbished a venue that can host gigantic international concerts and sports events. Taylor Swift was the first major singer to perform there at the end of May, with two consecutive concerts drawing over 100,000 people. Swift’s visit injected about €20 million into the city’s hospitality sector, according to Hosteleria Madrid, the sector’s association.

During her visit, Swift stayed at the Villa Magna hotel, with scores of her fans camped outside for a glimpse of the star. The hotel’s Royal Anglada House — with two rooms, a private terrace, kitchen and dining room — goes for €25,000 a night.

Once passed over by visitors touring Western Europe’s great cities, Madrid is now seeing its visitor numbers soar. The city received over 10.6 million tourists last year, with the number of foreign visitors rising about 23% from 2022. It was ranked the third most attractive city for tourism after Paris and Dubai, according to Euromonitor International.

The coastal areas of Spain have long been among the world’s top tourist destinations, drawing hotel investments. Now, money is also pouring money into the capital — located in the central plains.

Madrid, which has 38 luxury hotels, expects about 10 more to open this year, according to the local government. In all, 158 new hotels opened in the city in the last two years compared with just 39 in the Paris region — even as the French capital prepares for the Summer Olympics this year.

“Madrid is now attracting both the luxury and the super luxury segment of hotels and that is what’s interesting as those investors bring top investments to the city,” said Jorge Ruiz, head of hotels for Iberia at CBRE. The consulting firm’s report says “the city’s hotel dynamics are proving increasingly attractive to global capital, with particular interest from Latin America.”

The Nobu and a new Marriott are among several high-end hotels expected to open in Madrid in the medium term. They come on the heels of the arrival in 2020 of a Four Seasons — where a two-bedroom suite goes for about €10,400 per night — and the 2021 reopening of the Rosewood Villa Magna and the Ritz hotels.

Helping the trend is the greater administrative flexibility on turning landmark buildings into hotels and the explosion of high-end shops and restaurants, Ruiz said. The city is also catching up with other European cities that have traditionally attracted wealthy visitors — Paris has more than 100 five-star hotel compared with just 38 in Madrid.

“Madrid still has a long way to go; we don’t foresee a limit or oversupply in the medium term in terms of hotels,” said Laura Hernando, managing director of the hotels department at consulting firm Colliers International Spain.