Purchasing property in Spain, is it risky?
Intro
Considering how close per metre square prices have become between Spain and Poland, it’s not surprising that more Poles are now thinking about purchasing real estate abroad. But is buying property in Spain a good idea? In short – the benefits outweigh the downsides.
In this article, I discuss the perks and potential risks of making your property investment in Spain, to help you make the right choice.
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Property investment in Spain – is it risky or worth it?
Investing in property in Spain can be a great idea for foreigners due to its attractive climate, vibrant culture, and potential for rental income. Cities like Barcelona and Madrid offer strong rental markets and high demand, while coastal areas like Malaga and Valencia provide appealing options for holiday rentals. Each city has its advantages, so consider your investment goals—whether it’s for long-term rental income or vacation properties—to determine the best fit.
Why is it a good option?
Rental prices are growing
The Consumer Price Index shows that the price of housing rents in Spain went up by 2.2% in May 2024, compared to just a year ago. This is the highest increase since October 2009. Believe it or not, but rental prices maintained growth of at least 2% in both 2023 and 2024, without even a slight decline.
If we want to dive even deeper, we can take a look at the regional level. Several autonomous communities have experienced rent cost increases at or above the national average. The Balearic Islands recorded the highest growth at 2.7%, followed by Andalucía and the Comunidad de Madrid, each at 2.6%. Extremadura saw a 2.5% rise, while the Valencian Community and Basque Country both reported 2.4%. The Canary Islands and Castilla-La Mancha each registered a 2.2% increase, and the Murcia Region recorded 2.1%. So growing rental prices is just one reason why it’s worth buying property investment in Spain.
Per metre sq prices are going up, too
In some parts of the country, property prices are steadily increasing. Let’s take Costa del Sol’s Marbella (which is also where we’re based at Hometailor).
The year-over-year increase in average asking price between October 2023 and October 2024 stood at 12.9%. Properties have reached a record 4,978 €/m2. Just five years ago, per metre square prices oscillated around €3,000 – few investment opportunities give such a stable (and impressive!) ROI.
Good mortgage conditions
If you’re considering buying property investment in Spain on credit, then you’ll be happy to hear that the mortgage market is bouncing back. I believe that Spanish banks will offer more attractive mortgage terms, so it will be easier for both locals and foreigners to secure financing. Lower interest rates and more flexible conditions should drive property purchases.
High demand for Spanish properties
Foreigners, including Poles, love Spain. The demand for properties is high. Barcelona, Madrid, Marbella, and other coastal areas are expected to see the highest demand. Although properties there are more expensive than in other places, the return on investment is also higher. And considering that prices per square metre are going up, if you ever wanted to sell it, not only will you make profit, but also you won’t have any problems with finding a buyer.
Buyers don’t pay commission
I believe this benefit of making property investments in Spain doesn’t get enough recognition. Unlike in Poland, you don’t have to worry whether the realtor will charge you a fee once you sign on a property – these expenses are 100% on the seller’s side.
It's also worth mentioning that it’s quite easy to estimate costs for a property in the South of Spain. In fact, in collaboration with our legal advisor, we’ve prepared an entire article that walks you through the costs of buying and owning a property in Spain. It’s the single-most detailed piece on the topic online, so I recommend you give it a read.
Plenty of properties to choose from – both resale and new
Some buyers, particularly those who have just recently started considering real estate investments in Spain, think they’ll have a limited choice of new properties. Especially if they want a place along the coastline.
This is only partially true. Some popular tourist hotspots, like Costa Brava and Costa Blanca, saw a surge in apartment and hotel constructions in the 1970s and 1980s, which means many properties there are dated.
Costa del Sol also experienced a tourist boom from the mid-20th century onward, but has also been seeing a lot of new real estate developments in recent years. The best part is, these new apartments and villas come with floors, doors, a fully equipped bathroom and kitchen appliances – all you need to do is to buy furniture.
Pitfalls of buying property in Spain
What about some potential risks or inconveniences worth knowing about before buying property here? Here are a few you need to know of.
Risk of illegal residents
The topic of squatters (or “okupas”) in Spain comes up frequently on Facebook groups and Reddit – especially, when someone asks “is it safe to buy property in Spain”. Some parts of the country get single incidents only, while in others it’s a notable problem. Costa Brava remains the most affected area – in 2022, over a half of all such incidents took place in the Barcelona region.
How high are the chances of having unwanted guests occupy your property? As someone who’s lived in Spain for 7 years, I can tell you that the safest property types are new developments. These neighbourhoods often come with on-site security or 24/7 monitoring. Also, in regions like Costa del Sol squatters are a marginal issue, because of an all-year-round tourist season. From my observations, properties that see illegal residents are either abandoned, remotely-located buildings and real estate taken over by banks by those who stop paying off mortgages.
International connections can get sparse in the winter
This doesn’t usually relate to flights to main urban airports like Madrid, Barcelona, and Malaga. However, if you rely on cheap airlines like Ryanair or Wizzair to get to and from your place in Spain, you should expect fewer connections per week from the end of October through March.
This is most likely to affect you if you don’t live in Warsaw or another European capital. For example, one Reddit user had to take a train to Rome to get to their place in Spain, as their city no longer had winter flights:
On a personal note – I travel to Warsaw from Malaga regularly, and I don’t experience any issues during the winter. It’s just harder to rely on spontaneity, and requires you to plan your travels a little more beforehand.
Buying a rundown property, just because it’s cheap…
One of the pitfalls of buying property in Spain is the temptation of getting it cheaply. The property market is really varied – from very expensive, luxurious villas to suspiciously cheap properties in rural areas.
You need to be wise. The lower the price, the higher the chance the real estate will require major renovations. This could significantly add to the total cost, and the worst is that without a construction appraiser it might be difficult for you to estimate the renovation cost.
Imagine a scenario where you buy an old property that looks charming. After closer inspection you discover that the pipes must be replaced and the roof must be fixed, which will require a lot of extra cash that you might not have. My advice to you is to stay away from properties that are simply too cheap as they will only cause problems.
It can get crowded
This is true especially in the summer seasons, since Spain has been seeing record-high volumes of visitors in the past few years. Some sources even call it a “remarkable tourist sector recovery post-COVID”, with the number of visitors in 2023 going back to that of the last pre-pandemic year:
However, if you want to purchase a rental property, then knowing that the sector is back on track is a good thing. And if you’re looking to buy a place for your own use, then crowds ease when the summer comes to an end (but the weather still stays great).
Some regions are starting to limit touristic licences
There’s no beating around the bush – just like in Poland, not everyone is happy about the number of short-term rental properties, and there’s pressure on local authorities to secure more permanent housing.
This primarily relates to major cities in the country, with Barcelona leading the way. In fact, the Catalan capital has announced they’ll stop granting tourist licences within the next four years.
These voices are less vocal in smaller coastal cities, as many of them rely on the tourist sector. Costa del Sol is a region that has one of the most liberal tourist licence policies in the entire country. Also, many neighbourhoods allow converting apartments into rentals – they only tend to request a higher administration fee in return.
What is the verdict? It’s definitely worth it.
Spain is one of the safest markets for real estate investments, thanks to its stable economy, consistent year-over-year price increases per square metre, and growing tourist demand. And I can speak from personal experience – not just as a realtor, but also as someone who made the decision to buy property and relocate to Spain myself.
Of course, like any real estate investment, there are factors to consider, such as potential hidden renovation costs in resale properties or making sure the property aligns with your investment goals (or lifestyle, if you're planning to call the place your new home). But with the help of a local realtor, you can avoid risky decisions.
If you're looking for apartments for sale in Spain, get in touch! We'd be happy to recommend the best options that fit your goals and budget.