Spain is an attractive real estate investment country

Spain is an attractive real estate investment country

To date, it has been proven, time and time again, that the Spanish real estate market is in good condition. The market did this on its own, with impressive growth and recovery performances.

One need only look at the sector indicators in the first months of 2022. The economic context has changed significantly in the country. The critical phase of the pandemic has ended and new problems have emerged on the scene. Of course, it is about the conflict between Russia and Ukraine.

But even if the new situation changes the expected market development scenario a little, the real estate industry and investments in this sector will continue to show strong growth. At least this is true for Spain.

According to all available information, currently, the Spanish property market does not show any serious problems due to geopolitical and economic instability.

During the first months since the beginning of the Russian-Ukrainian conflict, there was, in fact, an increased demand for housing even with rising prices. The reason for this lies in the fact that growth was driven not so much by inflation but by a growing demand-driven base among solvent local residents and foreign buyers.

According to some market experts, the combination of these factors - the lack of large-scale construction of new projects, the short supply of free land for these developments, and administrative delays in the project launches - has led to higher prices.

According to provisional data from the National National Statistics Institute in Spain (INE), home sales have been growing for the last 12 months in a row. By February 2022, they had grown by 27.5% in annual terms. Regarding the second-hand property market, the annual growth was 31.5%, while the first-hand market improved by 13%.

At the same time, the number of taken mortgage loans also increased. In February of this year, the mortgage debt increased by 14.7% in annual terms. At that time, it was around the pre-pandemic level.

According to analysis by CBRE, the real estate services firm, real estate investment, in particular, in housing rental properties, was 11% higher compared to the pre-COVID levels. The investment in building plots should be mentioned too. Despite the growth in construction costs, a stable positive purchase dynamics for these assets is expected in the next few months.

Growing interest in all sectors of the Spanish market

Positive dynamics occur not only in the residential housing market. Today, investors are trying to cover all possible market sectors. They are encouraged by, among other things, the recovery of the Spanish tourism sector and interest rates.

According to JLL, it is known that, in general, investments in the Spanish property market grew by 141% in the first quarter of 2022 compared to the same period in 2021. Specifically, investments have increased to 3,000,000,000 euros in this field. It indicates that the country is taken seriously by investors as a safe haven and a source of stable income.

If we take into consideration other calculations for the past year, such as CBRE data, then the investments have increased to 4,300,000,000 euros.

Returning to the information provided by JLL, between January and March 2022, almost all sectors of the real estate market reached levels higher than in 2021. This occurs because of the large amount of free capital in the market and the general recovery of economic indicators.

In commercial real estate (note: offices, logistics facilities, and retail facilities), the investment reached 1,710,000,000 euros. It is 191% more than in the first quarter of 2021. Especially noteworthy is the logistics sector, In 2022, it showed the best results, with 432% growth in the first quarter since 2017. In total, this segment raised up to 865,000,000 euros.

At the same time, investments in the housing sector (note: residential buildings, student housing, and healthcare facilities) reached 1,140,000,000 euros. It is 92% more compared to a year earlier.

CBRE expects that in the first half of 2022, the cost of office space will exceed the pre-pandemic levels in Madrid and Barcelona. Agricultural real estate (note: agribusiness) and data centers should attract great interest.

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