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What will happen in Spain’s real estate market? Will prices go up or down? Is Barcelona still a hotspot for foreign investors? How is Spain’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Spain, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Rental yields in Andalusia will rise as tourism recovers and demand for vacation rentals grows
Andalusia's tourism has bounced back impressively, with international visitors exceeding pre-pandemic numbers.
In 2023, the region welcomed 12.2 million international tourists, surpassing the 2019 figure of 12.02 million. This trend held steady into 2024, showing a robust recovery in tourism. With more visitors flocking to the area, the demand for vacation rentals has surged, making it a hot spot for property investors.
Occupancy rates for vacation rentals have climbed significantly. In August 2022, the rate hit 71%, and by November 2023, it was at 44%, a clear improvement from previous years. This indicates that tourists are increasingly choosing vacation rentals, especially during peak travel times, which is great news for potential property buyers.
The Average Daily Rate (ADR) for short-term rentals in Andalusia has been on the rise, reaching 190€ in August 2023. This upward trend in ADR highlights the strong demand for short-term rentals, particularly in the bustling summer months when tourism peaks. For those considering buying property, this is a promising sign of potential rental income.
With tourism rebounding and more travelers opting for vacation rentals, rental yields in Andalusia are expected to rise. This makes it an attractive opportunity for those looking to invest in the property market. The region's appeal as a vacation destination is only growing, further boosting the demand for rental properties.
As tourism continues to thrive, the demand for vacation rentals is set to increase, offering lucrative prospects for property investors. With the right property, you could tap into this growing market and enjoy substantial returns.
Sources: Andalucia.com, PriceLabs, Hostify
We believe this video illustrates the strong rental yields in Andalusia, particularly in Benalmádena, as tourism rebounds and demand for vacation rentals grows.
2) Coastal property values will face pressure as climate change and sea-level rise become bigger concerns
In 2023 and 2024, climate change concerns have surged, especially for coastal properties.
Rising sea levels, expected to exceed 10cm by 2050 in Europe, are a major worry. This increase makes coastal areas more prone to flooding and other issues. For instance, the Valencia region faced severe flooding in October 2024, causing at least 95 deaths and significant damage. This disaster was linked to ocean warming in the Tropical Atlantic, underscoring the immediate threats of climate change to coastal communities.
Real estate markets are already feeling the heat. In places like the Mar Menor, property values have plummeted by 45% compared to areas not affected by these risks over six years. This drop is largely due to the heightened risk of natural disasters, which also prompts insurance companies to hike premiums for coastal properties.
Buyers are becoming more cautious, aware that coastal properties face increased scrutiny and potential devaluation. The fear of future flooding and damage is real, and it's affecting decisions. Insurance companies are reacting by raising premiums, making it more expensive to own property in these vulnerable areas.
In the real estate world, climate change is reshaping the landscape. Coastal properties, once seen as prime investments, are now under a cloud of uncertainty. The potential for devaluation is causing a shift in buyer interest, with many looking inland for safer investments.
As the climate continues to change, the real estate market must adapt. Coastal properties will need to address these challenges head-on, whether through improved infrastructure or other measures, to maintain their value and appeal.
Sources: Climate Central, World Economic Forum, CaixaBank Research
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Spain. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
3) Fewer British buyers will invest in Spanish real estate because of Brexit uncertainties
British buyers are pulling back from the Spanish property market in recent years.
In early 2023, there was a 15% drop in home sales involving British buyers compared to the previous year. Even though there was some improvement by 2024, the numbers still lag behind pre-pandemic levels. This trend is a clear sign of changing dynamics in the market.
The fluctuating British Pound against the Euro is a major factor. Despite the Pound hitting a 3 ½ year high in 2024, its volatility since Brexit has made it tough for British buyers to plan their investments. This uncertainty in exchange rates directly impacts their purchasing power.
Post-Brexit, buying property abroad has become more complicated and costly for Brits. They now face increased bureaucratic hurdles and new regulations, which can be overwhelming. This added complexity is discouraging many potential buyers.
Moreover, there are reports of British expatriates selling their Spanish properties due to Brexit-related uncertainties. This paints a picture of a challenging investment environment for those considering entering the market.
Sources: Spanish Property Insight, Key Currency, EasyFX
4) Demand for rentals in university cities like Salamanca and Granada will grow as more international students arrive
Spain is seeing a record number of international students, with 241,777 arriving in the 2022/2023 academic year.
These students are flocking to university cities like Salamanca and Granada, creating a booming demand for rental properties. Each year, about 300,000 students are on the hunt for places to stay, and the average rent for a room is around 275 euros. This is cheaper than in Madrid, but it still shows how much demand is growing.
There's a shortage of affordable student housing in Spain, and it's pushing rental prices up by 2.3% every quarter and 9% each year. University towns are feeling this crunch the most, as the influx of international students keeps driving demand higher.
Government efforts to attract more international students, like offering better work rights, are also playing a role in this trend. This means that the demand for student housing is likely to keep rising.
For anyone looking to invest in property, these university cities are hotspots. The steady stream of students ensures a consistent demand for rentals, making it a potentially lucrative market.
Sources: Studies in Spain, ENAE Business School, Prodirekt Group
5) Property values in Seville's historic areas will rise unexpectedly as interest in cultural heritage grows
Seville's historic neighborhoods are seeing a surprising rise in property values due to a growing interest in cultural heritage.
Over the past few years, property prices in these areas have climbed from €2,048/m² in 2020 to €2,354/m² in 2024. This jump is especially noticeable in the historic center, where homes are prized for their cultural significance. Seville has become a major cultural hotspot, ranking as the third most visited urban tourism spot in Spain. In 2019, over 2.9 million visitors stayed in hotels and tourist accommodations, showing a 10% average growth.
This tourism boom has a significant economic impact, with tourism activity representing 20% of the city’s GDP in 2022. Such figures highlight the city's appeal and the growing interest in its cultural offerings. The city has also seen increased investment in infrastructure and amenities in its historic areas. For instance, a €50 million hotel investment in 2021 reflects Seville's growing appeal.
Additionally, surveys indicate a rising interest in properties with historical value, as buyers seek culturally rich locations. This trend is evident in Seville's historic neighborhoods, where international buyers are increasingly drawn to the unique blend of traditional charm and modern amenities. The allure of Seville's historic areas is not just about the past; it's about a vibrant present and future.
Investors are keen on these areas, not just for their beauty but for their potential returns. The combination of cultural richness and modern conveniences makes these neighborhoods a prime target for property investment. As Seville continues to grow as a cultural destination, the demand for properties in these historic areas is expected to rise further.
Sources: Spain Easy, Seville Smart Tourism Capital, Market Snapshot - Seville
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6) Rental yields in the Balearic Islands will drop as stricter short-term rental rules are enforced
The Balearic Islands are seeing stricter rules on short-term rentals, which are shaking up the property market.
In 2023 and 2024, Mallorca saw an 8% drop in short-term rental bookings and a 12% decline in listings due to these new regulations. The authorities are cracking down with fines, especially on properties with multiple short-term rental units, making it tougher for owners to keep up.
Locals in Mallorca have been vocal about their concerns over mass tourism, which they say is driving up housing costs. This has led to protests and a dip in tourist demand for short-term rentals, creating a tricky situation for property owners who are now dealing with legal headaches and fines.
The Spanish government isn't making it any easier with stricter licensing and zoning rules. This has scared off some investors, who are now rethinking their strategies. Real estate experts are seeing a shift, with less interest in short-term rentals, which could mean lower rental yields in the Balearic Islands.
We've seen this play out in places like Barcelona, where similar regulations have already led to decreased rental yields. The Balearic Islands might be heading down the same path.
Sources: Skift, Think Spain, Home Run Mallorca
7) Investment will shift towards long-term rentals due to stricter short-term rental regulations
In Spain, stricter regulations on short-term rentals are reshaping the property investment landscape.
These new rules, especially in 2023 and 2024, require property owners to register their rentals and comply with complex guidelines. This has made short-term rentals less appealing, as investors now seek more stable and less risky opportunities. The hefty fines for non-compliance, which can reach up to €600,000, are a major deterrent, pushing investors towards long-term rentals.
Barcelona, a popular tourist destination, has taken even tougher steps by not renewing tourist licenses for short-term rentals. This move has further reduced the attractiveness of short-term rental investments. Investors are now eyeing long-term rentals, which offer a more stable income and are less vulnerable to sudden regulatory changes.
Long-term rentals are in high demand, driven by families and individuals looking for stable housing. This demand is particularly strong in urban areas where housing is scarce. The shift towards long-term rentals is not just a trend but a strategic move by investors to adapt to the changing regulatory environment.
In cities like Barcelona, the supply of long-term rentals is declining, making these properties even more valuable. Investors are capitalizing on this demand, seeing it as a safer bet compared to the volatile short-term rental market. This shift is expected to continue as regulations tighten further.
Sources: InSpain.news, Property Wealth Insider, Spanish Property Insight, Think Spain
In this video, the implications of stricter short-term rental regulations in Spain are discussed, pushing investors to explore long-term rental options.
8) More budget-friendly homes will be available in cities due to government efforts to promote affordable housing
The Spanish government is making big moves to boost affordable housing in urban areas.
They've rolled out a plan to build 43,000 affordable rental homes, backed by a hefty €6 billion in loans and guarantees. This isn't just a one-off; it's part of a larger push to expand the stock of affordable public housing across Spain. The idea is to make city living more accessible for everyone, not just those with deep pockets.
Public-private partnerships are also playing a key role in this effort. By teaming up with financial institutions like the Official Credit Institute (ICO), the government is tapping into both public and private resources to get these homes built. This collaboration is crucial because it brings in the expertise and funding needed to make these projects a reality.
Developers are being given a nudge too. The government is offering incentives to include affordable units in new projects, especially in places like Madrid and Cantabria. By updating the maximum sale price of subsidized housing, they're making it more attractive for developers to jump on board. This approach aims to increase the supply of budget-friendly homes by making it financially viable for developers.
These initiatives are part of a broader strategy to ensure that more people can afford to live in urban areas. The government is not just focusing on building new homes but also on creating an environment where affordable housing can thrive. This means working closely with developers and financial institutions to make sure that the supply of affordable homes keeps growing.
With these efforts, the Spanish government is showing a strong commitment to making urban living more inclusive. By leveraging public-private partnerships and offering incentives to developers, they're paving the way for a future where affordable housing is more readily available in cities across the country.
Sources: La Moncloa, Council of Ministers, CaixaBank Research
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Spain versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
9) Demand for senior-friendly housing in Spain will grow as the population ages
In Spain, people are living longer than ever, with life expectancy now at 82.5 years.
This longevity means there's a growing need for homes that cater to older adults. About 20.3% of Spain's population is now aged 65 or over, and this number is only going up. As more people enter this age group, the demand for senior-friendly housing is set to rise.
The Spanish government is on it, with initiatives like the "Plan de Acción para la Envejecimiento Activo." This plan highlights the need for age-friendly environments, focusing on accessible housing and infrastructure to support the aging population.
Interestingly, many older Spaniards want to stay put in their own homes as they age. Surveys from the Spanish Association of Gerontology and Geriatrics reveal this preference, pointing to a need for homes that are both accessible and community-oriented.
For potential property buyers, this trend means there's a growing market for homes that are designed with seniors in mind. Whether it's wider doorways, step-free access, or proximity to essential services, these features are becoming increasingly important.
Sources: National Institute of Statistics (INE), Spanish Government's Action Plan for Active Aging, Spanish Association of Gerontology and Geriatrics (AEVG)
10) Smart home technology will become a major selling point for new residential properties in Spain
Smart home technology is a hot trend in Spain's real estate market.
In recent years, the smart home market in Spain has been on a rapid rise. Back in 2023, it was valued at USD 3.26 billion, and it's projected to soar to USD 12.86 billion by 2030. This growth reflects a strong consumer interest in smart home solutions, which are becoming increasingly popular.
Buyers are driving this trend, with surveys showing that 75% of potential home buyers are willing to pay extra for smart homes. Many are actively seeking properties equipped with these technologies, drawn by the promise of convenience, time savings, and enhanced security features.
Energy efficiency is another big draw for smart home technology. Devices like smart thermostats and lighting systems can help cut down on energy use, which is a major selling point for Spanish consumers eager to reduce their utility bills. On average, smart home automation can lead to 30% savings on energy consumption.
In Spain, the appeal of smart homes is not just about gadgets; it's about lifestyle improvements. Homeowners appreciate the ability to control their environment with ease, whether it's adjusting the temperature or managing security systems remotely. This convenience is becoming a must-have feature in new residential developments.
As the market continues to grow, developers are increasingly incorporating smart technology into their projects, recognizing that smart homes are a key selling point for attracting modern buyers. This trend is reshaping the landscape of residential real estate in Spain.
Sources: NextMSC, Exploding Topics, Telefónica
This video showcases a Spanish prefab home company (Keu) incorporating advanced smart features, including LED lighting control, automated blinds, and smartphone-controlled systems, demonstrating how smart technology is becoming a crucial selling point in Spanish residential developments.
11) Virtual reality will transform home viewings, making it easier for buyers to explore properties remotely
Virtual reality is changing how we buy homes, making it easier to explore properties from anywhere.
In Spain, VR technology in real estate took off in 2023 and 2024, driven by a demand for more engaging and interactive experiences. This shift not only made the buying process smoother but also sped it up. Imagine being able to walk through a house without leaving your couch; that's the power of VR. Real estate companies quickly saw the potential, and investments in VR startups surged.
By 2024, the AR & VR market in Spain was expected to hit US$749.6 million, fueled by the desire for immersive experiences. Buyers loved it; surveys showed that 67% preferred listings with virtual tours. This trend wasn't just about convenience; it was about transforming the entire home-buying experience. You could explore every nook and cranny of a property, all from your living room.
Sales of VR headsets and related tech soared as more people embraced this new way of house hunting. Big names like Sotheby’s and Redfin jumped on board, offering VR tours for their high-end listings. These tours were a game-changer, boosting property views by 87% compared to those without virtual tours. It was like having an open house that never closed.
For buyers, this meant more options and less hassle. You could tour multiple homes in a day without the travel. It was a win-win for everyone involved. The real estate market was evolving, and VR was at the forefront, making the process more efficient and enjoyable.
As VR technology continues to advance, expect even more innovations in how we buy homes. The future of real estate is here, and it's virtual.
Sources: Statista, Lobostudio, The Luxury Playbook
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.