Property Investment in Spain for Promising Profit Potential

Spain proudly carries the reputation of being Europe's major tourist destination. With that, the country has also become an outstanding option for second-home buyers and profit-seeking real estate investors.

Having rapidly accelerated growth in value and demand, all the outcomes of property investment in Spain have become a matter of great curiosity for the new generation of investors.

Buying a property in Spain brings various advantages for investors, from remarkable annual yields to a source of regular rental income. In that case, Spain gladly enjoys the advantage of being an appealing country for a wide selection of investor profiles. Because of motivations like these, Spain has gone beyond being the tourism capital of Europe. It has now also become a leading real estate investment center in the world.

So, what investors who want to invest in real estate in Spain should expect in the near future?

• Safe investment environment

Spain is on top of the countries with the highest margins of attracting foreign investment in Europe. The country showcases an annual GDP acceleration of around 2.6%. Plus, Spain accounts for 8.3% of Europe's total GDP. According to the notary’s data, the volume of transactions by foreign buyers in Spain's real estate sector grew by approximately 6.1% in 2023.

Spain’s strong economic dynamism creates a low-risk environment and provides a secure financial infrastructure to support foreign investment. With a consistent economic policy, Spain attracts investors looking for safe ground to multiply the value of their investments.

• Remarkable returns on investment

With a wide range of real estate options and attractive ROI rates, Spain appeals to buyers looking for profitable investment opportunities. In a single year, Spanish real estate value gain reached 4.33% and even increased to 7% only in the first quarter of 2024.

Plus, Spain’s construction market’s dynamism also adds to the advantage of being an early bird. There are endless numbers of high-class projects that investors could invest in off-plan or under-construction properties. In that case, they can even add up to more value gain over time and watch these properties pay for themselves shortly. The statistics show that the Spanish property market is becoming a lucrative platform for all kinds of investors.

• Opportunity to earn high rental income

The Spanish government does not impose any restrictions on property owners. Whether local or foreign, real estate owners can use their assets to generate income under the law. In this context, real estate purchased in Spain can be easily converted into a source of income through the rental method.

Spain's real estate offers a rental yield of approximately 7.65%. Offering 320 days of sunshine and being one of the most preferred countries for 4 seasons, Spain offers high return potential with short-term rentals all year round.

• Advantageous tax initiatives

Taxation is another important consideration for real estate buyers. There will be differences in tax laws between countries. However, the countries can have two-sided agreements to lower the burden of double taxation. It can be avoided through partnerships between the investment country and the investor's country of citizenship.

Foreign investment is a major contributor to the country's economy. To support foreign investments in the country, the Spanish government also offers some convenience to facilitate the process for foreign real estate buyers.

Investors could check out if there is a double taxation agreement signed between Spain and their home countries to avoid heavy tax burdens. These agreements protect the investor’s interests to moderate the expenses gained from their assets.

• Numerous relocation alternatives for investors

Investors who do not plan to become a residents can freely buy real estate in Spain. Property ownership in Spain does not require the buyer to be a resident of Spain. This gives the buyer a great deal of flexibility. This offers ideal conditions, especially for buyers who do not plan to live in Spain, and who plan to earn investment income and short-term stays.

However, there are also investors who are considering moving to Spain. In that case, buyers often need clarification on the misconception that the Golden Visa is the only way to obtain a residence permit in Spain.

Spanish government offers several different visa options to non-EU foreigners. In this context, the Golden Visa in Spain is not the only residence option for property owners. You can find everything you wonder about the process of obtaining a Spain residency by investment on our Residence Permit in Spain page.

How Will New Golden Visa Decisions Affect the Spanish Real Estate Sector?

While spending their life’s savings on a big purchase, it is always normal for buyers to ask the question “Is Spain worth investing?”. The answer is yes, the time is now, and here’s why.

The benefits of buying real estate in Spain can differ between investors in several aspects. The results depend on the main purchasing motivations. If we are to talk about “meeting the expectations” point, it is important to begin by analyzing the motivations behind investing. There are three main types of investor profiles in Spain: Buyers who look for an opportunity to live in Spain, second-home buyers, and profit-seeking investors.

Spain’s both construction and real estate markets meet the expectations of all types of buyers with different motivations, listed above. This is the main reason that accelerates the country's real estate sales momentum in the international market.

Spanish Prime Minister Pedro Sánchez announced that the Spain Golden Visa program is abolished on April 9, 2024. It has been a matter of great curiosity how Golden Visa investors and the local real estate sector will be affected by this decision.

Although this new decision regarding the Golden Visa aims to reduce the rising purchase prices in Spain and solve the housing problem, it is far from doing so. Industry experts predict that this new decision will not have the expected impact on real estate sales and rental prices.

In Spain, hundreds of thousands of real estate sales take place every year. The total number of real estate sales has reached 4.5 million in the last 10 years. Among them, only 14,576 purchases were made to get a Golden Visa. When the ratio of the intensity of the Golden Visa purchases to overall sales is analyzed, it is seen that Golden Visa buyers constitute 1% of the overall investor profile.

The rest of the sales in Spain are made up of investors who focus on lucrative ROI gains and second-home buyers. These buyer profiles dominate Spain's real estate sector, and the Golden Visa is merely an additional benefit of the purchase, rather than the main objective. For this reason, the recent decision to abolish the Golden Visa will not affect these buyers. In parallel, it is unlikely to see a significant drop in real estate prices as well.

In addition to the Golden Visa program, there are several visa programs also. Non-lucrative Visa and the Digital Nomad Visa also offer both short and long-term stay options to foreigners. These optional visa programs have also had a positive influence on the demand from foreigners to Spain. This trend has contributed to the country becoming a premier destination for short-term living and exclusive vacation experiences in Europe.

Contact Us for Everything About Real Estate Investment in Spain!

There are many things to consider when investing in Spain's property market. Contact our experienced real estate agents to complete this process safely. Learn about your residence options, get information about advantageous offers, and turn your dreams into reality with Spain Homes ®.