Investors from abroad play an important role in the Spanish property market, with their share of transactions in the past years ranging between 10 and 15 per cent. Among the locations chosen by non-Spanish investors, real estate on the Costa del Sol is leading the way.
Andalusia and Málaga in the lead
The regions where foreigners accounted for the largest share of transactions carried out in 2021 were the Balearic Islands (32.67%), the Canary Islands (23.73%) the Community of Valencia (20.81%), the Region of Murcia (16.92%), Andalusia (11.48% ) and Catalonia (11.05%). This trend is also continuing in the current year, as confirmed by the reports for Q1 and Q2 2022 published by the Registradores de España. All the regions mentioned are located in the south and east coast of Spain, confirming the strong position of properties located in areas of high tourist interest and therefore representing high investment potential.
In 2021, as many as 36 of Spain’s 52 provinces could boast an increase in the number of transactions carried out by foreigners. Two inland provinces – Alicante (34% foreigner share) and Malaga (27%) – and two island provinces – Balearic Islands (32.67%) and Santa Cruz de Tenerife (28.60%) – lead the entire list. This is followed by Girona (22.31%), Las Palmas (19.38%), Murcia (16.92%), Almeria (15.29%), Castellón (12.83%) and Tarragona (11.35%).
Which properties do foreigners choose?
Properties of more than 100m2 are the most popular. This confirms that the main object of interest for foreign investors are flats and houses of a higher standard, which work well both as a second (holiday) home and as a rental property. Of all properties in Spain bought by foreigners, properties over 100m2 accounted for almost 39%.
Next, foreign investors are looking for flats of 60-80m2 (23% of transactions made in 2021) and 80-100m2 (19%). Properties of less than 60m2 are the least popular – flats of 40-60m2 accounted for 10% of last year’s transactions, while those under 40 metres recorded only a 4% share of transactions by foreign investors.
If you are curious to know what kind of properties Poles are looking for, we encourage you to read our blog post on the purchases made by our compatriots.
Foreign investors in Andalusia
Analogous to the Spanish property market as a whole, the nation with the highest number of transactions in Andalusia in 2021 was the British (16% of deals made by foreigners). They were followed by the Swedes (10%), Moroccans (8%), Belgians (7%) and the Dutch and Germans (over 5%). When it comes to deals in the Malaga area, where the Costa del Sol or Marbella are located, the British, Swedes and Belgians dominate.
Andalusia’s popularity with foreign investors is the aftermath of the region’s excellent leisure and tourism conditions, as well as the efforts of local authorities – aimed at attracting the attention of those interested in buying property in Spain. A year ago, an indefinite reduction and unification of the transfer tax for secondary market properties was announced. This decision has proved to be very successful. According to data from the Registradores de España, 82% of the transactions made by foreigners last year were for properties in this segment.
However, this is not the only tax convenience that the Andalusian authorities have implemented. In September 2022, they decided to introduce a 100% rebate of wealth tax, which until now had to be paid by those with total assets of more than €700,000. Thus, Andalusia became the second region in Spain, after Madrid, where citizens and residents do not have to pay tribute on accumulated wealth. You can read more about this in another post on our blog.
