Property investing in Spain

Spain continues to be an attractive destination for real estate investors, retirees, and expatriates looking for a stable and rewarding property market.

Let’s explore the latest trends in the Spanish property market and why now is a better time than ever for investing in Spain.

Current trends in investing in Spain real estate

The Spanish real estate market is projected to experience moderate growth in the upcoming years.

Housing prices are expected to rise by approximately 5% nationally, with some estimates ranging between 5% and 8%.

Urban areas such as Madrid, Barcelona, Alicante, and Valencia will likely see higher price increases due to strong demand, limited supply, and continued interest from international buyers.

The Costa Blanca and Orihuela Costa, in particular, stand out as preferred destinations for international buyers, thanks to excellent flight connections and modest travel times.

Additionally, Spain’s rental market remains attractive, with average gross rental yields standing at 6.17% as of Q1 2024.

In major cities like Madrid and Barcelona, rental yields for flats range from around 4% to 6%, depending on the property size and location.

Is it worth investing in property in Spain?

The answer largely depends on your investment goals.

CBRE forecasts that real estate investment in Spain will grow by 15% in 2025, reaching a total volume of 16 billion euros.

This increase is driven by the return of international capital, lower financing costs, and the attractiveness of the euro against the dollar.

Strong demand from both domestic and international buyers continues, particularly in areas with high rental potential and sought-after tourist areas.

Can foreigners buy property in Spain?

As of January 2025, the Spanish government has proposed significant changes to foreign property investment, particularly targeting non-EU, non-resident buyers.

Prime Minister Pedro Sánchez announced plans to impose a 100% tax on real estate purchases by this group, aiming to address Spain’s housing crisis.

This move affects a segment that comprises less than 5% of the Spanish housing market.

New restrictions on foreign property investment

The proposed tax is part of Spain’s strategy to protect the housing market from foreign speculation.

This unprecedented measure is designed to prioritise homes for residents and combat the country’s housing crisis.

Key legal steps for foreign buyers

Despite these changes, foreigners can still purchase property in Spain.

Here’s what you need to know:

• Obtain an NIE (Número de Identificación de Extranjero): This is essential for investing in Spain and any significant financial transaction in the country, including property purchases.
• Open a Spanish bank account: Necessary for managing payments related to the property purchase and ongoing expenses.
• Practice due diligence with professional legal assistance: Spain encourages investment by foreigners, both resident and non-resident. However, thorough research and guidance are crucial given the new regulations.
• Sign a private purchase contract: Unlike in many countries, it’s common in Spain to pay the down payment directly to the seller. Ensure proper due diligence to minimise risks.
• Finalise the sale with a notary: The Spanish property market offers diverse options and relatively lower prices compared to other European countries, making it attractive despite new regulations.

Golden Visa Program: what has changed?

The Golden Visa program, which previously offered residency to non-EU investors purchasing property worth at least €500,000, has been discontinued as of late 2024.

While existing holders retain their rights, new applicants must explore alternative pathways to residency.

Alternative residency options

For those seeking residency in Spain, alternatives to the Golden Visa include:

• Spanish Retirement Visa
• Non-Lucrative Visa (NLV)
• Entrepreneur Visa

These options provide pathways for non-EU citizens to establish residency in Spain without the need for significant property investment.

Why investing in Spain is a good idea

Spain’s real estate market continues to offer compelling opportunities for investors in 2025.

Robust economic growth

Spain’s economy is projected to grow by 2.3% in 2025, outpacing many eurozone counterparts.

This growth rate is notably high and well above the 1.3% expected for the eurozone as a whole.

Thriving tourism sector

Spain’s tourism industry continues to break records.

In 2024, international tourist spending reached an unprecedented €126 billion, with nearly 94 million visitors.

The tourism sector is expected to grow further in 2025, driving demand for holiday rentals and boosting property investment opportunities, especially in popular coastal areas.

Competitive property prices

Spain remains an attractive destination for second homes, particularly in areas such as Alicante, Costa Blanca, and the islands.

Strong rental market

The rental market, especially in coastal areas like Costa Blanca and Orihuela Costa, remains dynamic.

Property owners offering well-located, seasonal tourist rentals are likely to see high occupancy rates and competitive yields during 2025.

Favourable financing conditions

Mortgage rates are expected to decline to around 2.1% in 2025, making financing more accessible for both domestic and international buyers.

Urban revitalisation

Cities like Madrid and Barcelona are experiencing a resurgence in popularity.

Investing in Spain real estate in 2025 offers a unique combination of economic stability, tourism-driven demand, and competitive pricing.

Whether you’re looking for a holiday home, a rental property, or a long-term investment, Spain’s diverse market provides ample opportunities for growth and returns.

How we can help you invest in Spain’s real estate market

At Delaguía y Luzón, we specialise in providing comprehensive legal services to assist you throughout your investment journey in Spain.

Our expert team offers:

• Legal advice on property purchases and taxes
• Assistance with mortgage financing
• Guidance on rental laws and regulations
• Support with investor visa processes

We ensure that your investment process is smooth, secure, and legally compliant, taking into account the latest market trends and regulatory changes.