Real Estate: Why Invest in Spain?

Many believe that investing in real estate is the safest way to guarantee financial stability. It also offers the possibility of building up a perennial heritage. Most investors turn to invest abroad because of the dynamic real estate market in certain countries. Spain ranks among the most coveted regions for European buyers. The price of the properties, the tax advantages and the quick profitability explain this choice. Discover in this article the advantages of investing in real estate in Spain.

Spain: a tourist destination favourable to real estate investments

According to the World Tourism Organization, the latest ranking of the world’s tourist countries places Spain second after France. In order to revive the sector affected by the health crisis, the government has implemented a tourism promotion campaign. The high rate of vaccination against Covid (70% of the population, according to the Johns Hopkins Center) is contributing significantly to this recovery.

In August 2021, the number of tourists increased by 112.79% compared to the same period of the previous year (datosmacro.com, 2021). The Costa Brava is one of the most popular destinations for foreigners, especially the towns of Rosas, Playa de Aro and Empuriabrava.

Rosas: a city with great potential for real estate investment

Rosas is a seaside resort in the autonomous community of Catalonia. The city is perfect for buying a property for sale or for rental investment. Rosas has all the necessary assets to attract buyers looking for a second home or holidaymakers looking for seasonal accommodation. Ranked among the most beautiful bays in the world, it is surrounded by natural parks rich in exceptional fauna and flora. The city also has over 45 km of beaches. If you are looking to invest in a property on the Costa Brava, we advise you to look at what real estate agencies are offering to find accommodation that meets your expectations and your budget.

La Playa de Aro: a coastal town on the Catalan coast

Playa de Aro (or Platja d’Aro in Catalan) is popular for its beautiful white sand beaches. From Cala Del Pi (in the north) to Cala Sa Conca (in the south), the natural environment is conducive to a variety of entertaining and relaxing activities. Like other towns on the Costa Brava, the possibilities for real estate investment are diverse in Playa de Aro. Thanks to the mild, sunny climate in both summer and winter, the area remains the best tourist destination all year round.

Empuriabrava, the Venice of Spain

The town of Empuriabrava is built on marshes and crossed by about thirty kilometres of navigable channels. The flourishing of tourist activities favours the dynamism of the city, especially the residential marina. This pearl of the Mediterranean is prized for the modernity and comfort of its buildings. The region is ideal for high-quality rental investment and the purchase of luxury villas for sale.

High demand for housing in Spain due to population growth

According to the World Bank, Spain will have more than 47 million inhabitants in 2020. The average annual growth rate was 0.74% for the period 1960-2020. The influx of entrepreneurs, students, expatriates and retirees offers many real estate opportunities in Spain.

Spain, the number one destination for retirees

Located in southwestern Europe, Spain is bordered by the Atlantic Ocean to the west, north and south and the Mediterranean Sea to the east. This geographical location and its topography create a typical Mediterranean climate (mild and sunny all year round), especially in the coastal areas. These weather conditions lead many Europeans to settle there for their retirement.

Le Figaro published the ranking of the most popular European countries in 2021. Unsurprisingly, Spain is at the top of the list. This choice is also explained by:

the security and political stability in the country,

the lower cost of living than in other European countries,

the quality of health care,

the richness of the culture,

the gastronomic diversity.

The conditions are, therefore, ideal for investment in Spanish real estate. These retirees plan to buy individual houses and not rent.

Spain, a cosmopolitan country

At the intersection of Portugal and France, Spain is close to some of the capitals and major cities of European countries. This situation facilitates the arrival of entrepreneurs and multinational companies. The development of the tourist sector also generates a construction boom. The various urban developments require the arrival of qualified workers who also need to be housed.

The agricultural sector also attracts seasonal or permanent workers from North Africa and Latin America. Areas with strong economic activities are conducive to investment in rental properties. In this case, the purchase of apartments or houses for a long-term or seasonal rental is recommended.

The recovery of the real estate market in Spain

The crisis of 2008 hit the economy in Spain hard and weakened the real estate market. Due to the decrease in the purchase price of apartments and houses at the local level, a flood of foreign investors is turning to the country. Although there has been a recovery since 2014, property purchases are still very cheap. The price per square meter varies depending on the region of purchase and the type of property. In October 2021, the average cost was €2,816 in Spain (Barometer LPI-SeLoger).

Due to the pandemic, prices have once again fallen by between 5 and 7%. The drop is particularly noticeable in the sale of high-quality properties. Many owners decided to sell their properties at this time. The supply is, therefore, far greater than the demand in Spain.

Thanks to the return of foreign buyers, Spaniards are hoping for an explosion in purchases. According to INE statistics, the country recorded significant real estate transactions. It was estimated that 267,700 sales would occur in the first half of 2021. Interestingly, foreigners represented 11.3% of visitors to the coastal area (Idealista, June 30, 2021), and buyers would prefer villas with sea views of the Costa Brava.

The more advantageous Spanish tax system for real estate investors

In addition to the advantages of owning a property in a sunny country, the advantageous tax system and simplified procedures also encourage investors to turn to Spain.

A profitable tax system

The Spanish tax system is more interesting for foreign buyers with the absence of property tax. The tax system in Spain varies according to the status of the investor (resident or not in the country). It also takes into account the nature of the property (new or old) and its price. For the purchase of a new property, the payment of a tax is required with a basic rate of 10%. There is also a tax on legal documents. Regarding the purchase of an old property, the buyer is required to pay a property transfer tax. This varies between 4% and 10% of the purchase price, depending on the location of the property.

Investments made easier with a real estate agency

Before buying a property in the Spanish real estate market, it is advisable to use the services of a real estate agency. Professionals master the specific characteristics of the local market, allowing them to provide effective assistance. Their assistance is crucial during administrative and financial procedures. In general, the steps to acquire a property in this summer country can be summarized as follows

obtaining a Spanish identification number,

opening a bank account in the local institutions,

signing a deposit contract (purchase contract),

sign the deed of purchase in the presence of a notary,

pay the various fees and taxes,

register in the Spanish land registry.

Spain is an ideal choice for an investment in real estate abroad. The country offers many possibilities, both in new and old purchases. The risk of your home being vacant is also limited due to the high migration rate.