Spain continues to lead in Europe as a top investment opportunity

Spain's luxury real estate market has established itself as one of the most attractive destinations for international investment. This is supported by the excellent forecasts of the International Monetary Fund (IMF), which has forecast a 2.3% growth for the Spanish economy in 2025, a higher growth percentage than the rest of the Eurozone. As part of this growth, the prime sector (>2.5M) is experiencing a remarkable boom that is continuing to grow year on year.

Limited supply in the face of growing demand

During the first half of 2024, supply in the luxury segment grew by 7%, while overall real estate supply in Spain fell by 12%. However, supply shortages remain a key challenge. Demand for new construction grew by 24% in this period, but construction fell by 53% year-on-year, which is holding back market growth.

Key factors driving international demand

International buyers continue to choose Spain for its quality of life: an exceptional climate, first-class gastronomy, culture and world class education, security and a competitive cost of living by European and indeed American standards. The price per square metre also remains more attractive than other prime destinations worldwide.

Investment growth is reflected in a 5% increase in house prices during the first half of 2024, a trend that continued throughout the year. Over the last five years, Spain has recorded an average price growth of 7.9%, outperforming Portugal (+7.8%), Italy (+2.9%) and England (+1.9%).

A positive year for investment

The economic outlook for 2025 favours growth in prime real estate. The reduction in interest rates by the European Central Bank (ECB) has intensified demand, although a large part of transactions in this segment are carried out without the need for financing. In addition, the strong dollar and solid macroeconomic indicators reinforce Spain's attractiveness to international investors.

Despite the recent elimination of the Golden Visa, its impact on the real estate market has been relatively minimal. International buyers coming from across Europe, as well as the United States and South America, continue to bet on Spain, motivated by the country's lifestyle and positive economic outlook.

Key trend: Branded Residences

Branded Residences fuse luxury, exclusivity and five-star hotel services with the privacy of an independent residence and the concept is gaining momentum in Spain. These developments tend to command a price 30% higher than non-branded residences, depending on the location. The largest concentration of these projects is on the Costa del Sol, with new projects also in Madrid and Mallorca, among others. Major projects include St Regis Casares and Mandarin Oriental Residences Barcelona.

Madrid and Marbella stand out as the epicentres of this segment. Madrid, in particular, is consolidating as a strategic market with great growth potential, attracting Latin American investors, who account for 14% of international purchases, second only to buyers from the EU.

Conclusion: a very optimistic outlook for the prime real estate market

2025 presents extremely positive prospects for the luxury real estate segment in Spain. As investment from both within and outside the country continues to grow, the lack of supply will put pressure on the growth of the sector. New developments are becoming more sophisticated and there is an increasing pipeleine of Branded Residences across the country, leading to more diverse offerings.