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Wednesday, January 21st, 2015

Foreign Investment in Spanish Real Estate continues to grow

Statistics need to be approached with caution, but there is no refuting the substantial factual evidence that reveal that over the past five years foreign investment in the Spanish real estate market has doubled.

Invest in properties on the Costa del Sol

In 2009 at the height of the Great Recession and financial crisis, investment in Spanish property was stagnating, with just under €3.5 billion invested. Since then however, the real estate industry in Spain has seen considerable growth with an influx of individual investors as well as large institutional funds.

The distribution of investment in the Spanish housing market is relatively regular with principal urban centres and coastal areas including the Costa del Sol and the Balearic Islands, performing predictably better than other regions. In 2013 foreign investment in Spanish real estate reached over €6.5 billion with strong demand for a variety of real estate assets including plots, individual properties, whole developments and commercial buildings.

In addition, we are seeing an interesting trend developing, whereby growth is occurring at a much faster rate than in previous years, stimulated by mortgage lending making a gradual comeback as well as the usual appeal of low prices and excellent conditions of these regions for individual buyers and larger investors. Investment for this year is expected to reach €7 billion, a 15% increase from the year before, and similar levels of growth are predicted for 2015.

While individual investors are predominantly cash buyers originating from Scandinavia, Russia, the British Isles or Middle Eastern countries, those looking to invest in commercial or retail properties in large cities normally come from China or the United States. In recent times Marbella has emerged as one of the most popular locations for these investors from the US as well as from Europe. The return of foreign investors to the region has seen transactions occur such as the acquisition of Sotogrande S.L. by the US based fund Cerberus while other investors have focussed on the purchase and development of apartment blocks, land banking and the acquisition of large stretches of bank held properties on a number of the Costas.

The increase in foreign demand for Spanish property reflects not only the revival of the real estate market, particularly in the main regions, but also shows the confidence investors have in its future growth potential. The factors contributing towards this optimism such as a stable financial sector, a thriving national economy, a growing tourist industry and increasing construction activity, all indicate a mature period of growth for Spain, making this a very exciting time for investors in the Spanish real estate market.

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