Foreign buyers boost Spain’s luxury property market

The German firm Engels & Volkers has reported a significant uptick in sales to foreign buyers in 2023, marking a buoyant period for Spain’s luxury real estate sector.

In 2023, Engels & Volkers saw its foreign transactions surge by over 50 per cent. La Informacion reports that Constanza Maya, the firm’s Director of Expansion for Iberia, revealed foreigners constituted ‘more than half’ of their clientele last year, a notable increase from approximately 40 per cent the year before.

Shift towards cash purchases

The company noted a shift from credit-based to cash transactions, with foreigners leading this change.

Despite a sharp increase in interest rates to 4.5 per cent, over half of the properties sold were bought without loans.

In Madrid, cash purchases jumped from 39 per cent in 2021 to 53 per cent in 2023, similar trends were observed in Barcelona and Valencia.

Market dynamics

According to the National Institute of Statistics (INE), the average price of free housing in Spain rose by 4 per cent in 2023. Gonzalo Bernardos, a professor of Economics at the University of Barcelona, ‘the incidence of “quality” purchases has caused the indicator to rise,’ despite a decline in the general residential market.

Juan-Galo Macia, Engels & Volkers’ president for Spain, Portugal, and Andorra, pointed out that purchases by non-residents in the ‘premium’ sector usually represent the market’s most expensive transactions.

Looking ahead, Bernardos is optimistic about 2024, citing job creation, potential interest rate reductions, and increased immigration as positive indicators.

He predicts a 15 per cent rise in transactions and a price increase of between 5 and 7 per cent, barring any international disruptions. ‘For the economist, this year transactions will increase by around 15 per cent and the price will grow between 5 and 7 per cent.’