Why you should invest in Spain

6 min read

If you’re an investor seeking sun, sea, and a relaxing lifestyle, then Spain is the answer. Its diverse landscape of mountainous regions and stunning beaches is a huge pull for visitors. With busy cities, fun coastal towns and huge stretches of untouched countryside, there are plenty of investment opportunities for foreign buyers. So, is Spain the right place for your money? Read on to find out.

6 Reasons to Invest in Spain

Over the years Spain has become one of the leading countries in which foreigners choose to either invest, relocate, or retire. It offers warm temperatures, a relatively low cost of living, an abundance of art and culture and it’s a haven for foodies.

So, what are some of the other reasons Spain should be at the top of your list if you want to invest abroad? We explore them here.

  1. As part of the European Union and Eurozone, Spain is a great place to invest for EU nationals and non, due to factors such as ease of travel and residence options.
  2. Spain is easily accessible and easy to get around. There are numerous airports (international and domestic), a large public transport network and hundreds of car hire companies.
  3. With 3000 hours of sunshine¹ every year, Spain offers a relaxed outdoors lifestyle. No matter the season, you can enjoy mild to hot temperatures all year round.
  4. Tourism is one of the biggest attractions for Spanish investors. With over 100 million visitors registered in 2022², this is a huge plus if you’re thinking about buying a holiday property.
  5. At just over 505,000km², Spain’s landscape is large and diverse. Surrounded by mountains and stunning coastlines with 12,500km² of beautiful islands³ – there’s no wonder foreign investors are attracted to the Spanish shores.
  6. Spain has always been a popular choice for foreign investors, and last year research showed that 1 in 5 properties were owned by a non-national. The largest group of foreign buyers were Brits, followed closely by Germans⁴. So, investing in Spain is a good move if you’re looking for an established community of expats.

The Spanish Property Market

As a foreign buyer, it’s always important to understand the country’s economy and housing market before making any big decisions. Is there potential for your property purchase to increase in value? Is the market stable? Will you be able to find tenants? We answer some of the most important questions here.

The Economy

After a long and drawn-out recession (from 2008 to 2014), Spain has slowly been building its economy up again and – unlike many of its European neighbours – saw higher than expected growth last year⁵. For foreign property investors, a strong economy is a good sign as it indicates stability and security.

Property Prices

Last year, Spain experienced a surge in demand for property and prices rose by 7% on average across the country⁶. In some areas, such as the Balearic Islands and many cities, prices increased by over 10%.

Demand for properties in cities like Barcelona and Madrid remain the highest, which is reflected in the prices. We’ve pulled together the average house prices of properties per m² in various regions of Spain at the end of 2023 below.

Region Average House Price per m² in 2023 in Euros
Catalonia 4,473
Community of Madrid 4,269
Basque Country 3,112
Balearic Islands 2,549
Andalusia 1,972
Region of Valencia 1,939
Murcia 1,410
Extremadura 1,302

Data from Statista.com

In 2024, the outlook for the housing market is good, with a slight dip in prices predicted due to changes in interest rates.

This is a positive sign for overseas property investors looking to make a secure investment in a growing economy.

Mortgages in Spain

Over the past year, interest rates have increased all over Europe making borrowing more expensive in general. In Spain, the average mortgage interest rate stood at 3.39% at the end of 2023⁷, an increase of more than 1.89% from the previous year.

However, with property prices in this part of Western Europe often cheaper than residential buildings in neighbouring countries, foreign investors can still get value for money.

To find out more about the buying process in Spain, you can speak to one of our iad Overseas property consultants* who are well-positioned to help you in your journey.

The property market in Spain

If you’re buying property in Spain, it’s important to think about your long-term goals. Are you planning to retire there? Is it a property you plan to use as a holiday home? Or is it purely to increase your overseas portfolio? Knowing why you’re investing will help you decide what region suits you best.

Rental Market in Spain

At the end of 2023, the average gross rental yield in Spain was 6.09%⁸ and according to market research, this is set to increase in the coming years.

Long term rental market

There has been an increase in demand for Spanish rental property by the local population, many of whom feel they have been priced out of local markets due to foreign investors.

To counteract this, the Government has brought in various rent regulation schemes, so it’s important to seek advice from an expert before buying. Our iad Overseas property consultants* can help you understand the issues you may face when purchasing rental properties in various regions.

Rental yields vary across different regions and cities such as Madrid and Barcelona consistently achieve higher rents than more suburban or rural areas.

Holiday Rentals in Spain

The demand for holiday properties has always been strong in Spain (although this was interrupted by the pandemic). Due to the large numbers of tourists over the summer months and the growth in online booking platforms, investors can look forward to high occupancy rates and a strong ROI depending on where they invest.

Some of the most popular coastal tourist areas in which to invest are the Costa del Sol, Costa Blanca, Mallorca, and the Canary Islands. These beachside areas offer a variety of property types, from luxury homes to sea-view apartments. In addition, there are properties to suit all manner of budgets.

Barcelona is also a magnet for tourists looking to explore the beach side city and take in the sights, sounds and tastes of Spanish life. Property prices are however more expensive than coastal regions. To find out more about where to buy in Barcelona, check out our informative guide here.

Contact iad Overseas to find out where you should be looking to make the most of the high tourist season.

Regions and cities to invest in Spain

More Reasons to Invest in Spain

If the stable economy, sunshine-filled days and promise of tourist cash hasn’t convinced you yet, here are some other reasons you may consider Spain a sound investment:

  • Spain’s Golden Visa Program offers a residence visa to overseas investors who purchase real estate to the minimum value of €500,000 (without a mortgage). This is an extremely attractive opportunity for investors with cash to spare, and who want to travel freely around Europe.
  • Spain offers residents a good quality of life for much less than other European countries. The cost of living is 25.1% lower than the UK and it’s ranked 18 (out of 43) as one of the most affordable European countries by Numbeo.

Does your Future Lie in Spain?

Whatever your reasons for investing in Spain, it might reassure you to know that you are not alone. Research by Caixa Bank found that approximately 90,000 foreigners purchased property in Spain in 2022. Most of whom opted for more expensive properties than those bought by nationals in the same period.

And, at the end of 2021, it was estimated that more than 6 million foreigners lived in Spain on a permanent basis.⁹

A report by InterNations – a leading global expat network – found that Spanish cities were ranked in the top 3 (out of 49 global locations) for ‘The Best Cities for Expats in 2023’. Malaga was rated as the best city in the world for friendliness, Alicante was where expats found the most affordable properties and Valencia stood out for the best healthcare.¹⁰

One thing’s for sure, whether you’re looking to make a cash investment or thinking about your future, Spain is one of the most desirable locations you can consider.

How iad Overseas Can Help You

As Spain has always been a popular place for overseas investors, we have property consultants* located all over the country who can help you find your dream investment property.

We work closely with a network of professionals to help make your investment journey as stress free as possible.

Our iad Overseas property consultants* are also fluent in Spanish and English so they can support you right from your initial enquiries to your final purchase. We look forward to working with you to find your ideal property.

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