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Zetios Properties LLC: Spain's Real Estate Outlook 2024

·2 mins

The analysis conducted by Zetios Properties LLC reveals that the investment in Spanish residential real estate for the year 2023 reached an impressive sum of approximately 15.2 billion euros. This figure parallels the all-time peak of 16.077 billion euros recorded three years prior. Despite a marginal decrease in the volume of home sales transactions in the final quarter of the year compared to the corresponding period in 2022, the analysts forecast an absence of a looming housing crisis that could precipitate financial turmoil.

Spain retains its allure as a prime destination for international investment. The year 2024 is anticipated to see a considerable inflow of investments towards the “build to rent” sector, attributed to its notable profitability, in addition to the luxury and single-family housing markets. The latter experienced a surge in demand during the Covid-19 pandemic, with buyers prioritizing single-family homes with land, a trend that persists.

Foreign investment predominantly targets provinces along the Mediterranean coast, as well as the Canary and Balearic Islands, contributing to over 80% of the purchase and sale transactions involving non-Spanish investors in 2022. These locales also captivate Spaniards interested in acquiring properties either as investment ventures or second homes, and as preferred retirement domiciles.

Data from the National Institute of Statistics (INE) indicates that the province of Alicante saw the highest number of purchases by foreigners, accounting for 19.4% of total transactions. This was followed by Malaga (12.6%), Barcelona (8%), the Autonomous Community of Madrid (7.1%), the Balearic Islands (6.8%), Valencia (5.9%), and Murcia (5.4%).

Among foreign investors, nationals from Great Britain (9.3%), Germany (8%), and France (6.2%) were the most active, with a particular inclination towards properties on the Costa del Sol (Malaga, Marbella) and Costa Brava, the latter also attracting French clients. Notably, 2023 saw an increased engagement from Dutch, Norwegian, Irish, and Danish investors in the Spanish real estate market.

The anticipated contraction in housing demand, propelled by inflationary pressures and escalating mortgage costs, is expected to predominantly impact the volume of sales transactions rather than property prices, especially in provincial capitals and coastal cities. Projections suggest that transaction volumes may not surpass 500,000, a decrease from the 630,000 transactions recorded in 2023. Nevertheless, the investment appeal of Spanish property remains undiminished, underscoring a continued trend of capital allocation into this asset class for the foreseeable future.

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