The luxury real estate market in Spain is a solid economic segment that it seems to emerge stronger from crises. The recent boom began in 2021, post-pandemic, as investors started to back large architectural projects offering multipurpose interior spaces with natural light from gardens and terraces. The trend has continued.
A growing sector
In 2022, data confirmed the upturn was holding. According to the I Report on the Luxury Housing Market in Spain by the insurance company Hiscox, 8,000 operations of more than €3 million each were recorded that year, a figure that represented an increase of 55% over 2021, and the numbers have continued to rise. According to the Report on the Spanish Real Estate Market by the real estate company Lucas Fox, in just the first half of 2023, 10% more sales and purchases of over €2.5 million were signed than in 2022, and in some regions the transactions represented 50% more than in 2022.
Spain is consolidating its position as the fourth country worldwide and the top country in Europe for Premium Real Estate experts. The countries above it are the United States, the United Kingdom and Australia, but the geographical location and the other benefits of the Iberian Peninsula are far more attractive than its competitors when it comes to buyers looking for an investment that doubles as a residence.
The British, Germans, French, Latin Americans, Russians and Chinese are, in that order, the primary owners of luxury real estate in Spain. They seek, according to Hiscox, “a secure investment or, alternatively, a second residence where they can live for a few months of the year.”
Expansion into the Canary Islands
The luxury segment is estimated to comprise 5% of the total Spanish residential market and is concentrated primarily in the areas of Malaga, the Balearic Islands, Madrid and Barcelona. However, expectations are high that there will be expansion into other regions, as affirmed by plays like that of real estate company Berkshire Hathaway Home Services, owned by tycoon Warren Buffet and specialized in this market. According to reports, the company wants to further strengthen its presence in Spain with a second office in Malaga and the opening of new offices in the Canary Islands, the Balearic Islands and on the Mediterranean coast.
“The luxury real estate sector in Spain is growing and has great potential,” said Christy Budnick, CEO of the company, who is very satisfied with the firm’s growth because it responds to a careful selection of exclusive sectors in large cities and the detailed study of new market niches.
The interest in the Canary Islands, for example, is explained by the growing demand and scarce supply of luxury homes for potential buyers from Germany and the United Kingdom. According to the latest report by real estate platform Idealista, approximately 30% of the owners of luxury homes in Spain are foreigners, but in the Canary Islands this percentage rises to 37% in Las Palmas and almost 50% in Santa Cruz de Tenerife, considerable figures representative of the islands’ potential and their ability to attract new buyers.
New projects
Projects under construction, including the Los Jardines de Abama apartments and the Las Villas del Tenis villas in Abama Resort Tenerife join the offer of modern luxury homes in Tenerife with a differential factor: they are zoned for tourism use within a golf resort. This opens a very attractive window of opportunity for buyers who want to spend a few months at their property and allocate the remaining months to tourism rental managed by a company specializing in 5-star hotel services.
For these investors, the proximity to an international airport, the ease of doing business and access to high-end commercial establishments are key factors. But the luxury real estate market also demands lifestyle proposals. Buyers look to property developers that offer high-end architectural design, customized interiors, guaranteed privacy, a discreet environment and quick access to exclusive services. And these added-value elements are being offered by more and more projects in Spain located away from intense urban centers and surrounded by protected natural environments.
