“JUST TO BE something, I’ll be a madrileño.” Not a stirring sentiment, and yet the line is part of the official hymn of Madrid, which has often “just been something”. King Felipe II made the middling town his new capital in 1561 in part simply because it was dead central and lacked competing powerful institutions; amazingly in such a Catholic country, Madrid did not even get its own completed cathedral until 1993. But later, as Spain’s empire declined, so did the profile of Madrid.

Now Madrid is having a moment. Tourists are flocking, but also would-be residents. They include Americans fleeing toxic politics, northern Europeans seeking an easy-living big city, and most of all Latin Americans. Some come to work in construction, care or hospitality. Others are rich Venezuelans and Mexicans fleeing confiscatory populism. The foreign population has grown by 20% since 2016, much of that Latino, making Madrid a growing rival to Miami as the “capital of Latin America”. The Madrid region is richer than the Rome one, and not much less wealthy than Berlin.

The city’s and region’s governments, both run by the conservative People’s Party, have welcomed the influx. Last year the region announced a plan to let people who invest in Madrid—including in property—offset 20% of the cost from their taxes, for example. Isabel Díaz Ayuso, the pugnacious regional president, gleefully contrasts Madrid’s low-tax, light-regulation approach with a supposedly overbearing national government. But that Socialist-led national government has done its bit for Madrid too. It has so far kept a “golden visa”—giving residency to those who invest €500,000 ($537,000)—while passing a “digital-nomad” law to attract knowledge workers.

José Luis Martínez-Almeida, Madrid’s mayor, says a turning point came with the pandemic, when Ms Ayuso battled the prime minister, Pedro Sánchez, to keep businesses open. Covid-19 took a terrible toll, but Madrid emerged with a reputation for openness. “Before, it was the best-kept secret. Now it is the place to be,” says Mr Almeida, uttering the final phrase in English.

The attractions include culture low and high. For a long time the Prado museum’s stuffy, traditional presentation of a brilliant collection was not enough to attract foreigners away from the coasts. Now it anchors a trio of stylish museums (with the Reina Sofia and the Thyssen-Bornemisza) that welcome over 7m visitors a year. But the museum of the Bernabeu stadium, home to the Real Madrid football club, attracts over a million a year too, and the city has just nabbed the Spanish Formula 1 Grand Prix race from Barcelona. The number of musicals in the city has doubled to 14-15 since the pandemic. Cheap tapas are being joined by an increasingly sophisticated gastronomy, often drawing on Spanish regions far from Madrid.

Madrid’s weight in Spain is growing too. In 1980 the region accounted for 15% of Spanish GDP. In 2022 that was 19%, expanding even faster than Madrid’s share of Spain’s population. In 2018-22 the region attracted about 71% of foreign investment in Spain, with the next-highest region, Catalonia, at 11%. The signal that “you are welcome” is powerful for investors, says Nuria Vilanova of CEAPI, a group that promotes links with Latin America. And though Spanish universities are middling, its business schools are an exception. Madrid has campuses of three that feature high in global rankings.

The price of success

The biggest problem facing Madrid is where it can put people. The region, with 7m inhabitants, is expected to add another million in the next decade. But the city lacks housing, the reason growth has gone to suburbs and dormitory towns. The newest housing developments are soulless, unwalkable places. Since a peak in 2006, new building permits have fallen by 69% in Madrid according to Neinor, a property developer. Permissions remain onerous.

Hence the hopes for Madrid Nuevo Norte, a new district around the Chamartín train station. Where five skyscrapers currently stand a host of new ones are planned by 2050, creating a new business hub. But the developers hope to avoid the fate of projects that lack shops, residents and green space. Around a third of the planned 10,500 apartments are to be publicly protected affordable housing, and ground floors in many buildings are to be for small retail. But some, including Rita Maestre, the co-chair of Más Madrid, the left-wing opposition in the city, worry that the project may exacerbate the city’s divisions between a rich north and far poorer south.

Can the city keep its cool while changing so quickly? Growth and internationalisation inevitably leave some grumbling about the good old days. But Ian Gibson, an Irish Hispanist author who has lived in Madrid since the 1970s, says “Don’t worry—it’s never changed,” despite the worries over the years. “It has become itself more fully.”