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The Complete Guide to Investing in Spanish Property

Created09.01.2024, 10.00
Updated23.01.2024, 16.04

Spain’s global recognition extends to the investment world, beyond its reputation as the most favored travel destination. The sun-kissed landscapes of the Spanish Costas, welcoming attitude, and vibrant culture create the perfect backdrop for a thriving property investment in Spain.

Spain is one of the most sought-after travel destinations in Europe. It consistently ranks among the top 3 of the most favored global tourist hotspots, attracting millions of visitors every year. It is considered a paradisiac gateway, not only for seasonal trips but also for lucrative real estate ventures.

Why Invest in Spain’s Real Estate Market?

beachFrom diverse market appeal to high-profit potential, Spain has a lot to offer to property investors other than 300 days of sunshine and a charming expatriate lifestyle.

Spain has one of the most upright economic climates in Europe. According to the statistics by the IMF, Spain ranks 4th front loading country with a share of 8.37% of the EU economy. With low interest rates and a growing GDP, the country provides a favorable backdrop for real estate appreciation. The country’s purchasing power along with a consistent financial climate creates a perfect environment to make use of savings via investments. The Spanish government's commitment to economic reforms further enhances the overall investment climate.

Plus, Spain's real estate market caters to a diverse range of investors. Whether you seek a holiday home, a rental property, or a long-term investment, Spain has something for everyone. There are bustling city apartments right in the middle of a metropolitan settlement. There are commercial properties, perfectly located in a prime spot with a high walk-in rate which is perfect for businesses. Or you can choose from serene coastal villas and charming rural retreats. The options are as varied as the landscapes themselves.

Spain consistently ranks in the top 3 most-demanded tourist destinations in the world, attracting millions of visitors per year. The country’s tourism sector has a huge contribution to the national GDP, with an average share of 11.8%. This high demand creates a lucrative profit potential via short-term rentals. Buying an investment property in Spain for sale with rental potential allows you to tap into the lucrative tourist market. Especially popular coastal regions such as Costa del Sol, or Costa Blanca offer excellent opportunities for vacation rentals, providing a steady income stream.

Beyond financial gains, investing in Spanish property offers a unique lifestyle proposition. Along with rich culture and wonderful climate, the tasty cuisine and a laidback lifestyle make Spain an attractive destination to enhance the quality of life.

Other than making profits, buying real estate in Spain brings remarkable benefits within. Spain offers attractive residency options via investor immigration programs like Golden Visa. This makes buying real estate as an investment an enticing prospect for those looking to relocate or spend extended periods in the country. The Golden Visa in Spain program provides a pathway to residency through property investment, allowing investors and their families to enjoy the benefits of European living.

Is Investing in a Spanish Property a Good Idea?

penSure it is. Does Spain’s property market paint a promising picture in terms of ROI? When we look at the recent years’ investment activity indexes, the answer is yes, and here’s why.

When we look at the economic status of Spain, it is clear as a day that the country has shown remarkable economic growth since 2019. According to the IMF’s World Economic Outlook report, in 2022, Spain has peaked among the EU countries with 5.8% GDP growth. It was above the world output which was an average of 3.5%. Even though the growth percentage has dialed down to 2.5% in 2023, it still left countries like the United States, France, and the United Kingdom behind.

And why the national economic development is that important? While considering investing in real estate abroad, it is essential to weigh the sustainability of the investment along with and stability of the market. A strong economy creates a risk-free environment for leading businesses, especially for the real estate sector.

Surely with the impact on the expansion of the national economy, the value of your invested properties will also show safe and sustainable growth over time. According to the Ministerio de Fomento, Spain’s housing market witnessed a 14.2% increase in real estate prices over the past 5 years. Rather than epic changes that last for a short period, steady growth in property prices in Spain is more secure in the long haul.

How to Make Profits From Your Property Investment in Spain?

Here are three ways of making the most out of your investment. The first one is collecting profits from short-term holiday rentals. The second is by renting your property to corporate tenants and signing long-term rental contracts for a regular income. The last one is value increase over time.

As Europe’s leading tourist destination, Spain welcomes millions of tourists each year and this creates a high demand for holiday rentals. Spain’s tourism sector is thriving for accommodation options, and holiday rentals bring a considerable amount of income every year.

Plus, the country is not only a seasonal vacation spot. It is also a four-season destination, especially for North European tourists. This makes Spain a year-long hotspot to rent your holiday home and gain rental income. As for renting your new property to holidaymakers, location plays an important role in demand. Spain’s coastal regions are the best places to invest in real estate in Spain. For example, a holiday home in Costa Blanca or a golf property in Costa del Sol are highly recommended.

Long-term rentals are other options for property owners to collect regular income from their investments. By purchasing a commercial property in a prime spot with high customer traffic, investors can find trusted corporate tenants to secure their income. In this case, cosmopolitan cities in the tourist spots stand out more than others. Commercial shops in Málaga, Alicante, or Murcia are highly preferred by investors to rent out their properties.

As mentioned above, properties in Spain showcase a steady growth in real estate values. This sustainable elevation in property prices gives investors a chance to buy real estate at its lowest possible sales amount and sell it later at higher prices.

In this case, off-plan and under-construction properties stand out as more advantageous options for investors. The housing prices will increase at every stage of the construction process. The values will reach their peak when the construction wraps up. So it would be most advantageous to invest in an off-plan property, benefit from early pricing, and sell it later when the property value reaches the highest possible market value.

Things to Consider While Investing in a Spanish Real Estate

flagTiming, the right location, property type, and collaborating with trusted specialists are the main things that directly affect your investment’s future. There are also certain tricks you can use to step up your investment game to make the best out of it. Here are all you need to look out for your next best investments in Spain:

• Determine your goals and investment purpose. First things first, your purpose will directly effect every other detail of your real estate venture. Depending on your purpose, things like desired location, property type, and investment strategy will change. To accomplish your complete goals from your investment, you need to define your purpose as the first step.

• Follow a well-thought-out investment strategy. To reach full success on your investment and make it sustainable, your investment plan must be thoroughly thought out. It is always best to consult a specialized real estate professional. They will have all the answers and be fully familiar with the local market to point out the best investment options available.

• Legal aspects are another important factor that should be considered. For example, if you are buying land to construct a building, and then sell it out, the land needs to have certain permissions. It needs to have enough zoning space and a construction permit. If it doesn’t meet your requirements, it wouldn’t be a smart investment move go for. To handle the legal aspects like desired property’s background, or title deed conveyance, cooperating with a real estate advisor will be more advantageous.

• You should be aware of additional purchasing costs in Spain associated with the investment. Buying a property for investment requires certain steps that include paperwork and legal transactions. You might want to consider all taxes and expenses, just for not to come across any unwanted surprises while determining your budget.

• Know your financing options. Let’s say you have €500.000 in your bank account. You wish to buy €550.000 property that exceeds your budget. This doesn’t mean you have to look for other properties, you might have other options to finance your investment. Foreigners can easily apply for a mortgage in Spain. Other than that, some construction companies offer flexible financing to investors for brand-new properties. You can pre-pay the amount with what you have, and turn the rest of the amount into monthly installments.

• Discover the opportunities that come with a property investment. Spain offers an investor residency program known as the Golden Visa. It is the perfect program to make an investment in Spain for residency. It requires a minimum of € 500,000 worth of property purchase that may be spread over more than one property. It gives investors and their families the chance to become a resident in Spain. They can also work, study, and travel visa-free in the Schengen zone.

• Act promptly. Don’t wait too long to decide whether you want to buy a property or not. Timing is a significant factor in catching the most exclusive opportunities at the right time. Especially for limited-time offers, the properties can be sold out within the same day. It is always good to benefit from advantageous purchase prices beforehand. While working with a professional real estate agency, you can get informed about the most lucrative deals on the market at an early stage.

Reach Us Today!

If you want to learn more about property purchasing in Spain, take a look at our blog pages to get tips and advice on your real estate journey. You can always visit one of our worldwide offices or contact us to explore the most profitable investment options and get a consultation. Elevate your investment game and make your mark in the Spanish real estate landscape today!



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