Spain has a magnificent marketplace for all kinds of businesses. Spanish government strongly promotes incentives to support foreign direct investment. These initiatives create an open, more dynamic space for business activities.
Spain’s positive stance on foreign direct investment (FDI) actively promotes business investments. There are several subsections under foreign investment types. These could be trade activities, manufacturing, retailing, or commercial property purchases.
The statistics show that Spain leaves countries like Japan, Italy, and UAE behind on Foreign Direct Investment inflow. These enticing incentives for international enterprises might be the reason for the increase in the country’s attractiveness. To give an example, we can take a look at the UNCTAD’s World Investment Report. The 2023 report ranks Spain as 12th for the inflow of foreign direct investment in the world.
In addition, there is another strategic point which is Spain’s expansive access to international markets. Its geographic position on the Iberian Peninsula has a great impact on its global ties.
In this way, Spain had a chance to establish direct access to key regions. Most of them include European countries, which stand as the world's largest common market. Additionally, its location facilitates business connections to North Africa, and the Middle East.
Not only that, Spain serves as a pivotal gateway for trade with Central and South America, as well as Mexico. The double-taxation agreements with numerous Latin American countries are other determining factors for foreign enterprises in Spain. Furthermore, the favorable free trade policies solidified Spain’s reputation for foreign investors from the United States.
Commercial Real Estate as a Profitable Investment Instrument
We can divide the benefits of commercial property ownership into two aspects. The first one is “Ownership” and the second is “Investment Gains”. Under both of these motivations for buying a business in Spain, this investment instrument brings specific benefits to the owners.
Ownership
Renting real estate for business activities may limit the flexibility of usage. Tenants might need the consent of the property owner for any remodeling. These could be on interior decoration or possible expansions.
Ownership brings full control over the property itself. If the buyer is a business manager, they will be able to renovate the spaces of their property as they wish.
On the other hand, owning commercial real estate also provides a high sense of security and stability. Tenants might face momentarily developments such as relocation inquiries on short notice from the landlord.
Or there might be an unexpected change in the ownership. The landlord can sell the property to another entity. This might negatively affect the tenant’s lease situation at any moment. Owning real estate gives peace of mind about any unexpected changes regarding the occupation of the property.
Investment Gains
Owning commercial properties brings additional advantages alongside building equity. The main reason for purchasing can be related to high-profit gains. In this case, commercial real estate investment could be one of the best investment instruments in Spain. Here’s why.
When you buy an off-plan commercial real estate, it will build a remarkable value over time. Newly built Spanish properties will enter the market with launch prices. However, buying it earlier might capitalize on your profit even more.
In that case, Spain presents the most attractive real estate market in terms of diversity in new projects. In this dynamic marketplace, selling your property will be a piece of cake.
However, the annual yield of the property value depends on several factors. These factors diversify from the property’s features to its location. For example, the data of the National Statistics Institute in Spain (INE) shows the average yield rate of properties. The report shows the highest increases in 2023 real estate values in Andalusia with an average rate of 5.3%.
The same factors determine the high level of regular income profits. Commercial real estate buyers also have the option to rent the property. Finding trusted tenants is another way of making the best of the investment in real estate.
Spain being a major tourism country benefits well to diverse enterprises in Spain, from retailers to service providers. This makes Spain an attractive country for establishing a new business or opening a new branch. You can easily rent your property to corporate tenants, regardless of the property type.
Key Points to Consider for a Commercial Property Investment in Spain
There are several things you can do to maximize your profit from your investment opportunities in Spain. These criteria can result differently depending on how you’re planning to make use of your property.
For example, you can consider using the store you have bought for your enterprise. In that case, you might need certain conditions for your Spanish company to do well in business. Here are some essential factors to consider while buying commercial real estate in Spain.
• Location
The property’s general and exact position is an essential factor. It has a big impact on the visibility and accessibility of the real estate. It is the primary factor that determines the demand for the business. This is especially the case for retail businesses or food service establishments.
While looking for a commercial property to buy in Spain, it is best to follow where the highest demand for your type of business focuses. For example, Spain’s sunny Costas are the best places to look for a business to buy in Spain. Especially when you are thinking about opening a shop of any kind.
From Costa Blanca to Costa del Sol, Spain’s kilometers-long coastline is the heartland of shopping culture. It will be even more advantageous if the property is located near the center and coastal promenade.
If we were to give an example, the Viva Altea Beach project in Alicante’s shining star Altea is an outstanding project in the context of location. The project is located right in the heart of Altea. It is positioned on a main road, only within 2-minute walking distance of the breathtaking coastline of Costa Blanca. Its significant location makes the project an amazing option with a high rate of visibility for commercial ventures.
Plus, the location factor also benefits the owner when they decide to rent or sell the property. Commercial properties in prime locations are sold or rented relatively faster. In a significant position in a touristic settlement like Altea, it will be even easier for it to be rented out. In this way, investors will get to collect regular income profits from their investments effortlessly.
• Suitability for the Business
The property must bear certain conditions to conduct business activities by the Spanish law. It is especially a crucial aspect for healthcare ventures and food service establishments. There are pre-determined criteria for several business lines. For example food chain suppliers, establishments like restaurants, and healthcare centers.
A great part of these criteria is related to having enough space and conditions. Most of these are created to safeguard the health conditions of the customers. Before buying a real estate, it will be a smart move to make sure its conditions are suitable and/or transformable according to the legal regulations.
• Meeting Physical Requirements
Another key point to pay attention to is the property’s qualifications. Regardless of the business, elements like interior space and infrastructure matter for commercial properties. It is always good to prepare a list of requirements your business needs to achieve 100% happiness from your investment. Then you can hand over your list to the local experts to find the perfect match.
There is an endless number of brand-new projects with commercial units in Spain. These new projects can be delivered unfinished to customize the spaces. This way it can perfectly cater to your business. Or they can come fully packed.
The ultimate property that meets all requirements of your business needs won’t surprise you with the additional costs of starting a business in Spain. You won’t need a whole new budget for renovations.
While determining what your business needs, it is always beneficial to be aware of the additional features. These details might ease your business activities. These additional features could vary. It could be a more common feature to look for in commercial real estate such as a storage room or a parking space.
It could be also specified according to the business needs. For example, the property can come with additional storeys. It could be built with a separate or attached production facility or specially designed display sections.
• Legal check
Last but not least, a legal investigation is essential to avoid any unwanted surprises. Investors always should secure their savings by playing safe. There shouldn’t be any encumbrances over the property they want to purchase. The property might be red-tagged or could bear unpaid Spanish taxes and liens.
Not to come across these kinds of hassles, working with a trusted partner can be useful. They will have complete knowledge of the local commercial real estate market in Spain. And thanks to your private real estate agents' services, you will be ensuring the legal background of your property is clear. Plus, specialized agents such as property experts of Spain Homes ® will handle all complicated transactions on your behalf.
For a smooth investment experience, you can always contact our real estate experts with years of experience. You can also read our blogs to find out more about the process of buying commercial property in Spain. The best time to step up your investment game in Spain is now!
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