One of the pillars that have boosted the Spanish real estate sector in recent years has been the demand for housing from foreigners. In just 10 years, housing purchases by foreigners have tripled, reaching 12.6% of the total. And the trend remains upward.
The purchase of housing by foreigners has played a decisive role in the recovery of the Spanish real estate sector. While in 2009, in the mids of the global financial crisis, real estate transactions by this group totalled only 17,940 homes purchased or 4.2% of total sales, these have since increased rapidly, reaching 13% of the total, while the internal demand remained stagnant until the end of 2014.
In 2018, foreigners bought 65,300 homes in Spain.
The most recent data, analysed by the research service Caixa research, confirms the good progress of foreign demand: in 2018, foreigners bought 65,300 homes in Spain, or 7.3% more than in 2017, reaching thus a figure very close to that of 2007, before the explosion of the housing bubble. It is curious to note that each nationality has its favourite tourist destinations, with certain areas where up to 40% of purchases correspond to nationals of the same country. Thus, the British have a predilection for the coast of Alicante and Andalusia, and the Germans, the Balearic Islands and the Canary archipelago. The French and the Portuguese choose Catalonia and Galicia respectively, because of their proximity. The Italians, on the other hand, prefer the Canary Island, while the Nordics prefer the Community of Valencia and Andalusia.
The British lead.
The British are at the top of the ranking of nationalities who bought a house or an apartment in Spain in 2018, with more than 10,000 purchases, or 15.5% of total foreign demand. Germans and French completed the podium, with around 5,000 homes, followed closely by Belgians and Swedes. Without the uncertainty generated by Brexit, there would certainly have been more than 10,000 homes acquired by the British, since purchases made by the rest of the nationalities have increased significantly during the same period. With regards to the UK, it should be noted that the exchange rate plays an important role in the decision to buy. As the uncertainty surrounding Brexit dissipates after Johnson´s election, an appreciation of the pound, which had declined significantly, should boost British purchasing power and, therefore, “boost” real estate transactions.
But do foreigners buy a house in Spain only for the holidays? There is a high degree of coincidence between the nationality of international tourists in Spain and that of buyers. This correlation suggests that these tourists, many of whom have retired, after repeatedly spending holidays in Spain, decide to acquire a second home. The main reason for choosing Spain are the climate, quality of life, perceived security and good air transport links to their countries of origin. Over the past decade, these factors have been joined by attractive investment from the Spanish property sector, following the sharp drop in house prices during the recession. In other words, for foreign citizens whose country was less affected by the crisis than Spain, buying a home had become more accessible and an excellent investment opportunity.
The number of foreigners who settle in Spain to work there is increasing.
But, beyond the purchase of accommodation for tourist reasons, in recent times the number of foreigners who establish their residence on Sapin to work there has increased. This demand is generally much more linked to domestic economic conditions, so it is not surprising that it was reactivated following the recovery of the Spanish economy that started in 2014. In addition to the traditional forecast of economic variables, there is a very useful tool for analysing the intention that foreigners may have of buying a property: this is the Google search for a house in Spain from third countries. So Google trends show that buying a property in Spain is still a very popular search in the main buying countries. Google search of Dutch, French, Belgian and, above all, Moroccans, are very important so that purchases from citizens of these nationalities could increase in the coming months.
With a longer-term view, it is important to understand whether the increase in foreign demand is a passing phenomenon or whether there are still the conditions to continue to progress. It will depend on the good functioning of the economy and the capacity to attract workers internationally. As regards to tourism demand, the growth potential will be determined in large part by adopting policies aimed at positioning Spain not only as a tourist holiday destination but also as a residential destination for the retirement of Europeans. in the end, the progressive ageing of the European population and a climate, culture, enviable security and quality of life put us in an advantageous position. IT REMAINS TO BE SEENS WHETHER SPAIN WILL REALLY BECOME EUROPEAN FLORIDA.
