Spain´s real estate market is set for a strong rebound in 2025. Industry experts expect investment to grow by as much as 20%. Factors such as lower interest rates, reduced financing costs, and the return of international capital are creating a favourable environment for property transactions. However, levels are unlikely to reach the highs of 2018.
Following a year of moderate recovery in 2024, the Spanish real estate sector is regaining momentum. Experts attribute this growth to the favourable euro-dollar exchange rate, robust economic performance, and renewed interest from institutional investors seeking low-risk opportunities. The investment volume in 2024 ranged between €10 billion and €12 billion, setting a solid foundation for further growth.
“We expect 2025 to be an excellent year for real estate investment,” notes Enrique Losantos, CEO of JLL Spain in newspaper Expansión. However, he acknowledges that adapting to demographic changes and sustainability demands will remain a medium-term challenge.
Key trends shaping the market
One notable trend in 2024 was the repurposing of properties for new uses. For instance, the former Ministry of Finance building at María de Molina 50 in Madrid was acquired for over €200 million and is being transformed into luxury apartments and student residences. Experts predict this trend will continue in 2025, especially in urban centres.
Hotels have emerged as a standout asset class. Recent high-profile transactions, including the purchase of the Six Senses in Ibiza for nearly €200 million, highlight the sector’s appeal. Residences for students and logistics platforms are also gaining traction, bolstered by improved financing conditions.
The market is broadening its scope, attracting capital to alternative assets like data centres, senior living facilities, and mixed-use developments. These trends reflect shifts in demographics and technology.
Price developments in 2025
Property prices in Spain are set to rise further in 2025, continuing a decade-long trend. According to Juan Moreno Martínez de Lecea, a financial analyst at Bankinter, housing prices are expected to increase by approximately 5%, surpassing inflation rates. “We are witnessing a historic moment driven by a significant supply deficit,” he explains in newspaper ABC. The reduction in interest rates by the European Central Bank is anticipated to provide additional stimulus to the market, further accelerating price growth. Coastal areas, major cities, and the islands are likely to experience the steepest increases due to concentrated demand and strong interest from foreign buyers.
Challenges
Despite the optimism, the real estate sector faces several challenges. Political interference in the residential market has created uncertainty. This uncertainty particularly with regard to fiscal policies affecting real estate investment trusts (REITs). Additionally, access to affordable housing remains a pressing issue. Jaime Pascual-Sanchiz, CEO of Savills Spain, underscores the need for public-private collaboration to address this challenge effectively.
Moreover, while debt funds are gaining prominence, traditional banks are adopting a more conservative stance. This shift highlights the evolving dynamics of real estate financing in Spain.
Long-term outlook
Spain solidifies its position as a top investment destination and is therefore, drawing international investors to its strong economic fundamentals and well-located assets. The focus on sustainability and high-quality properties is expected to shape investment strategies moving forward. According to Adolfo Ramírez-Escudero, President of CBRE Spain, “Investor interest remains concentrated on premium, sustainable assets, which are increasingly crucial for long-term returns.”
Also read: Spanish housing market booms as buyers anticipate price hikes