Spanish Property Market Goes Global

Recently published figures show a geographical shift in overseas investors looking to buy Spanish property during the latter part of 2018, with greater interest emerging from outside the traditional, European customer base. The largest share of the market still went to the British who, despite concerns over Brexit, made up 17% of foreign buyers in 2018. German investors replaced the French as the second biggest group of buyers during three out of four quarters of last year, with a market share of 8% compared with a 7% share for France.

This is good news for the Balearic Islands, an area which tends to attract German buyers, but bad news for Catalonia, a region more popular with French investors. Included in the remaining major countries to invest were: Belgium with 6%, Sweden and Italy both finishing on 5%, China with 4% and 3% from the Netherlands.

After several years of growth foreign demand for Spanish property remained largely static and actually fell slightly during the last quarter of 2018, for the first time since 2010. Domestic demand, however, was up by 8.6% in the final quarter of the year. Sales to Spanish citizens finished at 104,982 over the period, whilst the number of homes bought by foreign buyers was 15,217, a figure almost unchanged from the fourth quarter of 2017.

Analysis of results indicate that most overseas markets have actually contracted over the last period, with buyers from Norway and Belgium decreasing by 16% and 15% respectively and a sharp decline in sales from Sweden of 29% -almost double that of the aforementioned countries. In contrast, sales to UK buyers have seen a 6% increase, possibly indicating an eagerness to move into the Spanish property market before the withdrawal of Britain from the EU.

Investment from the rest of the world has echoed this trend with a 13% rise in Spanish real estate purchases, bringing about a change in the traditional market. Obviously, the latter category includes a great number of different countries many of which have not contributed sufficiently to appear on the list of major investors. It is interesting to note however, for the first time since figures have been published, the USA has featured, with American investors having bought 144 properties in Spain during the last quarter of 2018.

The latest report from the Association of Spanish Land Registrars shows an overall increase in sales of 7% across the board. There were 120,199 home sales inscribed in the Spanish Land Registry from October to December. The fourth quarter of 2018 showed zero growth in foreign demand, compared with an increase of 20% per annum in 2017 and over 30% during some periods of 2016. Overseas investment, however, still represents some 13% of Spain’s property market and foreign sales have remained at this level since their recovery in 2014 from their lowest of 4% in 2009.

The fact that UK buyers are still the single biggest group of investors in Spanish real estate suggests that confidence is still high amongst British buyers. It may also indicate an eagerness to finalise sales before any new legislation. The emergence of growing interest from the global market, and in particular the USA, can also be seen as optimistic news for Spanish property and Spain’s economy in general.