Madrid is emerging as the most important destination in Spain for foreign investment in the IT and software sectors because of the comparatively low salaries of workers in the sector and its large talent pool.

The city attracted more FDI last year than any other region in the country: €8.7bn, almost half the total destined to Spain and an increase of 0.6% compared with 2013, according to the country’s Ministry for Economy and Competitiveness. Catalonia was the second most attractive region with €2.96bn in FDI or 16.8% of the country total.

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Madrid – which has a total population of 6.4 million people – is home to 16 universities with about 300,000 students (15% of which are from overseas), making it an attractive location for hi-tech companies that require an educated workforce. Salaries in the IT sector in Spain are also half those in the UK, for example, according to experts who spoke at an event organised by Invest in Madrid, the city’s inward investment agency, in London on June 18.

“Madrid is a great city for a gaming business because it’s so multicultural,” said Jaime Gine, vice-president of international development services at Electronics Arts, a California-headquartered video games developer, which, in 2008, selected Madrid as the base for its European studio. “We looked at 28 locations before deciding on Madrid; our employees come from more than 25 countries and we wanted a cosmopolitan city for them to live and work in. Furthermore, our cost base dropped by more than 25% after we centralised to Madrid.”

On June 18, Google opened its 'campus Madrid', a 2500-square-metre building with two co-working spaces in the city’s Rio district. Most of the space is open to the general public for use as long as they register in advance. “The centre will bring together start-up entrepreneurs,” said Sarah Drinkwater, head of Google’s 'campus London', which was closely involved in developing the campus in Madrid. “It has an incredible buzz and already has 2500 free members.”

The Spanish economy seems to be finally on the mend following the global financial crisis: it is expected to grow by 2.8% this year (Madrid is forecast to expand slightly faster) and unemployment nationally has dropped from a peak of 26.9% in 2013 to 23.8% today (17.8% in Madrid). Spain’s IT sector is made up of 29,000 firms, employs 395,000 people directly, and creates €88bn in annual revenues.