The Spanish real estate sector begins to show signs of recovery, mainly thanks to foreign investments. According to various sources, these foreign investments will reactivate the real estate sector in the years to come.
The momentum with which foreign investments are contributing to the Spanish real estate market adds up to the generous amount of 1,116 million Euros in the first quarter of 2013 (Bank of Spain). This figure is significant in the context of a market that has experienced six years of economic crisis.
This means that for every Euro of Spanish origin, there are 18.8 Euros of foreign origin invested into the real estate market (Source: pisos.com).
More and more estate-planning professional offices (family offices) and large and institutional investors are those who succumb to the attractive investment market that Spain currently presents. They devise their investment strategy for five to seven years, and they opt for all types of real estate — from offices as their primary objective to hotels, retail venues, shopping centres, and residential buildings. Private individuals primarily show interest in residential property. These individuals seek to invest to live for some time in Spain or to rent the property. During the first quarter, foreign nationals made 17% of the total residential acquisitions, with luxury homes located in distinctive areas of large cities as their targets.
As for the most coveted investment areas, Madrid has become the main headquarters of international groups followed by Barcelona and exclusive coastal areas like Sotogrande (Cádiz). The main Spanish cities gain points compared to other traditional European cities such as London or Paris which are less interesting now due to their low — often less than 4% — profitability.
Some media sources claim that this upward trend of foreign investments will consolidate in the years to come.
The consulting firm, Knight Frank, basing its forecast on meetings held with 184 international funds, estimates that foreign investments in the Spanish real estate sector will reach 14,000 million Euros in 2014.
The arguments in support of investment in Spain refer to signs of improvement in the Spanish economy, the stabilization of the Euro Zone, and the decline of real estate prices that are now comparable with the prices registered in 2007.
María Valencia
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