How Spanish Real Estate Delivers Strong Monetary Returns

Spanish real estate investment

When investing in the property market anywhere as well as Spain there are two key aspects to look at, potential monetary benefits such as money made from rental or asset price appreciation, and potential personal benefits such as having a greater freedom of movement and discovering a new culture.

Monetary advantages of investing in Spain property

Investing in properties in Spain can be extremely profitable due to two key factors, property purchase price, a booming short term rental market due to high tourism. Spain, in particular the southern regions of Costa Del Sol and Costa Blanca, are able to offer beautiful coastal properties at affordable prices while maintaining high rental desirability through tourism. 

Spanish real estate investment

Spanish property market

 After Spain’s slow recovery from the financial crisis which has had a disproportionately large effect on their housing prices their property market has been steadily increasing year on year. Spain’s housing price index YoY been averaging around 5% since 2014 reaching the highs of 8.5% and remaining positive throughout which has been unique within the Euro Zone. The YoY house price index within the euro area was at a 10 year low of -2.2% as of September 2023 with the previous quarter coming in at 1.6% with the UK also coming in at lows of -4.5% in 2023. Despite the recent consistent growth in the Spanish property market the average house prices in Spain are still below their all-time highs of 2008 leaving much area for potential future growth. 

How much money can I make?

Let’s have a look at the potential cost and return on a property in the beautiful Costa Blanca region: 

A 2 bedroom and 2-bathroom modern bedroom property in Torrevieja within walking distance of the sea is likely to cost around €300,000. This type of property within this region would most likely get an average of €110/night, with peak season prices of up to €220/night, and off-season prices of €80/night. This type of property it estimated to be rented out about 220-260 days of the year giving an average yearly return of around €24000-€28000. 

Spanish real estate investment

 Despite Spanish tourism being one of the highest in the world it has only just begun to reach a similar number of international visitors per year giving it incredible potential for additional growth in the coming years as well as current trends indicating the continued growth in property value.

Maximise your investment profits

 There is also plenty of property development options within the regions with projects awaiting investments giving you the opportunity to lower acquisition costs by up to 25%. Although investing into projects can mean there will be a longer amount of time before you see any returns on your investment, it will allow you to maximise potential profits. It is important to understand the more affordable entry price of properties in Spain compared to the UK giving you more investment opportunities.  

Euro Investment Security 

One other advantage investing in Spanish property could offer you great diversification opportunity due to the Euros being the Spanish currency which has become 30% stronger compared to the pound since 2000 where £100 was equivalent to nearly €170 compared to the current exchange rate of £100 being equal to €117. Therefore, and investment within Spain allows you to hedge against the 20-year declining trend of the British Pound compared to the Euro. 

Overall Investing in Spanish property can offer you both monetary and personal benefits with the right research and support when purchasing a property. There are plenty of possibilities within the markets with a strong emerging economy that has an increasing power within the EU as well as an excellent short term rental market. Before making any investment decision it is important to do your own research about individual properties and areas of investment.

Please contact one of the Tripinvest UK specialists to learn more about the possibility of investing in the Spanish property market.

Written by Nicholas Wiciak

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