The luxury real estate market in Spain continues to grow
The luxury real estate market in Spain has been flourishing and showing no signs of slowing down in 2023. Building on the momentum of the previous year, where it experienced an astounding 55% increase, the market seems to be reveling in a Golden Age, attracting the attention of both local and international investors alike. Even in the face of the Covid-19 pandemic, which posed challenges to various sectors, the luxury real estate segment has resiliently carved out its position, now commanding an impressive 5% share of the entire Spanish real estate market.
The surge in luxury property transactions has been particularly notable in the segment involving properties worth over three million euros. In 2022, this segment witnessed an exponential 55% surge compared to the previous year’s results, reflecting the heightened interest of affluent buyers seeking exclusive, high-end properties. Remarkably, this growth rate is twice as high as what was observed in 2019, indicating a sustained momentum in the luxury property market.
Within a single year, the number of real estate transactions for luxury properties exceeded the remarkable milestone of 8,000. This influx of transactions reflects the consistent demand for prestigious homes in Spain and solidifies the country’s position as a desirable destination for luxury real estate investment.
Delving deeper into the dynamics of the market, the First Report on the luxury housing market in Spain, meticulously conducted by the reputable Hiscox de Catella, serves as an invaluable resource for understanding the intricacies of the high-end luxury property segment. The report’s findings not only validate the continuous growth of the luxury real estate market but also offer invaluable insights into its emerging trends and preferences.
How does a luxusious Real Estate Market Spread in Spain?
As the luxury market in Spain continues to expand, specific regions have emerged as magnets for affluent buyers. Among these prime destinations, Málaga and the Balearic Islands shine as beacons of allure. Málaga, with its strategic location along the sun-kissed Mediterranean coast, boasts a remarkable portfolio of luxury homes, making it a sought-after location for European citizens in search of an idyllic lifestyle. The Balearic Islands, known for their breathtaking beauty and unparalleled charm, entice luxury buyers with their exclusive waterfront properties and serene island landscapes.
In major cosmopolitan centers like Madrid and Barcelona, the allure of luxury living is undeniably strong. These vibrant cities, steeped in history and cultural heritage, offer a seamless blend of contemporary urban living and the charm of Old World elegance. As a result, luxury properties in these cities enjoy considerable demand from high-net-worth individuals seeking a taste of refined living in dynamic urban centers.
The resilience and growth of Spain’s luxury real estate market are underscored by the changing preferences and lifestyles of discerning buyers. In the wake of the Covid-19 pandemic, many buyers are seeking more than just opulent homes; they desire a balanced and enriched lifestyle. Spain’s rich cultural heritage, picturesque landscapes, and culinary delights offer the perfect combination for an idyllic and fulfilling living experience.
As the luxury real estate market in Spain continues to thrive, the prospects for both investors and homebuyers remain promising. Whether you seek to invest in high-return properties or find your dream luxury home, navigating this dynamic market requires expert guidance and insights. At A New Life, we pride ourselves on our unparalleled knowledge of the luxury property landscape in Spain, and we are dedicated to helping you make informed decisions for a prosperous future.
As reflected in the First Report on the luxury real estate market in Spain, 85% of homes worth over three million euros are concentrated in Málaga, the Balearic Islands, Madrid, and Barcelona, making these four locations prime destinations for international investors.
Málaga – A Leader in Luxury Real Estate
Málaga leads the list with 2,500 luxury homes, which account for 34% of the total number in the country. This type of real estate represents 6% of the overall housing stock, and the municipalities of Marbella and Benahavis are designated as the two most sought-after areas for clients interested in this kind of property.
The reason behind the province’s leadership lies in its strategic location and connectivity, which is advantageous for European citizens, as foreign investors account for nearly 90% of purchases of this type of real estate.
Whats’s happening in the rest of the world?
As explained in the analysis of the current state of the wealthy world, also known as Ultra High Net Worth Individuals (UHNWI), according to Wealth-X, by 2023, the proportion of those whose wealth exceeds $30 million will increase by 14% to reach 417,468 individuals.
Of these, approximately 135,000 are from the United States, around 120,000 from Asia, primarily Continental and Japan, and around 100,000 from Europe, especially France, Germany, and the United Kingdom. Latin America constitutes only 3% of UHNWI worldwide.
The luxury housing market continues unstoppable: What are the reasons?
The luxury housing market is experiencing a moment of great excitement. Already in 2022, it experienced a significant increase, and this year is on track to repeat the same trend. The profile of luxury home buyers has distinct characteristics and requirements compared to the average buyer. Nonetheless, the surge in luxury properties isn’t due to a single cause; it originates from the confluence of several factors.
One of the phenomena explaining this progression is the surge in property purchases by foreigners, reaching a 45% increase in 2022, during which 88,800 transactions occurred, according to data from the College of Registrars. Foreigners who buy property tend to have a profile characterized by higher incomes. In fact, out of the 80,800 transactions, nearly 9,000 exceed 500,000 euros.
During the past year, the price of luxury apartments in Spain rose by 4.8% to reach 7,135 euros per square meter, according to data from Idealista. However, this increase is by no means deterring buyers, who are increasingly interested in the Spanish offering of high-end housing.
What are the causes of this growth? What are customers seeking with the acquisition of properties? In which cities are they buying more? How are the processes in the marketing of luxury housing changing? Are they seeking financing to acquire the property?
To shed light on these questions, this article features the opinion and experience of Bruno Rabassa, CEO of Berkshire Hathaway Homeservices Spain, a real estate company focused on the luxury and unique assets segment; Sonia Bentué, country manager of Unlatch, a proptech specialized in the digitization of the real estate sector; and Rafael Serratosa, business director of Colibid, the first platform for reverse mortgage auctions.
The sale of luxury housing in Spain is skyrocketing: What are the reasons?
Luxury housing broke sales records last year. And this year, this trend is expected to continue. The consulted experts provide their opinion on why this phenomenon is occurring.
Large portfolios, immune to crises and inflation
Sonia Bentué, director of Unlatch in Spain, explains that the luxury housing market is the most resilient within the real estate sector: “It is the one that best withstands different situations that are experienced. It is a safe haven for the wealthy.” Bruno Rabassa, CEO of Berkshire Hathaway Homeservices Spain, confirms this: “Luxury endures crises and financial storms much less than citizens with normal incomes.”
Why isn’t the sale of this type of property affected by the rise in interest rates? The main reason, according to Bentué, is clear: “They typically are not subject to mortgages but are usually investment-related, and that’s why they are not impacted by the rise in interest rates.”
A boom in acquisitions made by foreigners
Rabassa emphasizes the “undeniable attractions of Spain for foreigners,” who are pushing the market’s growth the most: “We are the second most visited country in the world for tourist reasons. Every year, we see increasing numbers of foreign buyers in Spain. For a long time, we had the boom of the British market, which not only leaned towards luxury but also towards more popular real estate markets. In recent years, there has been a significant increase in other nationalities, such as Americans.”
According to the specialist, the increase is also motivated by higher savings rates during the Covid years which, combined with other factors such as the weakening of the euro against the dollar, have caused “certain foreigners who had savings in dollars, when buying here, to benefit from even cheaper prices than they already had due to their high purchasing power.”
Additionally, Spain is an incredibly inexpensive country for foreign investors: “They come eager to buy with a high purchasing capacity. If we compare the Miami market with that of Malaga or Marbella, here they will have access to much more surface area while investing the same amount of money. Moreover, community expenses, utilities, and services are also much cheaper.”
