Spain Condominiums and Apartments Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

The Spanish Condominiums and Apartments Market is poised to register a CAGR of 5.4% during the forecast period.

Key Highlights

• The residential real estate market came to a halt due to the COVID-19 pandemic, as the government implemented lockdowns and citizens were forced to stay at home. Because of rising returns, Spain again appeared as a potential investment destination after slowing down due to the COVID-19 outbreak.
• According to the Bank of Spain, Spanish home prices increased by 2.59% (-0.78% inflation-adjusted) to EUR 1,662 per sq. m (USD 1,775) during Q3 2021, marking the country's strongest performance in two years. In Q3 2021, house prices rose somewhat on a quarterly basis by 0.75% (or 0.45% when adjusted for inflation).
• In terms of autonomous areas, Canarias experienced the highest year-over-year price growth, at 6.95%, followed closely by Cantabria, the Balears, Melilla, Murcia, Andalusia, Galicia, and La Rioja.
• Spain has one of the lowest rent rates in all of Europe, with only 23% of households renting their houses. Greater provinces have greater rent rates. The ratio of renters is 26% in Barcelona and 24% in Madrid, the two largest cities. This percentage is less than 15% in more rural or smaller urban regions.
• According to Eurostat, Spain has one of the largest proportions of flat dwellers in the continent. With the exception of Latvia, the highest proportion of people in the EU live in flats-nearly two-thirds of the population. The percentage is around half in Italy and a little over a third in France. In the UK, only 15% of people live in apartments. According to Fernando Encinar of the Spanish real estate website Idealista, 65% of properties for sale in Spain are apartments, as opposed to only 25% on the UK website Rightmove.

Spain Condominiums and Apartments Market Trends

Rise in International Buyers in Spain

For many years, foreign retirees and investors have chosen Spain as the location of their dream home in the sun. British investors have been particularly drawn to it, and they continue to purchase most residences in Spain.

According to transaction data released by the Ministry of Transport, Mobility, and Urban Agenda, the number of operations to buy real estate in Spain by both residents and non-residents increased by 22.85% in the third quarter of 2022 to 32,701 operations, compared to 26,617 registered in the same period of 2021.

Starting in the third quarter of 2021, when more foreigners were allowed to enter Spain after the stringent measures to regulate access to the nation owing to the pandemic ended, the number of foreigners buying apartments once again reached pre-pandemic levels. Transactions did not dip below 16,000 since July 2021 over the course of the following four quarters.

Foreigner transactions exceeded 20,000 in each of the first two quarters of 2022, an absolute record. Foreign purchasers purchased 21,638 properties between January and March and 24,029 homes between April and June, exceeding this total. Registrars note in their study that "this is unquestionably a segment with a substantial growth tendency, which is helping to attain particularly important numbers in residential real estate activity."

The Germans (9.1%), the French (6.6%), the Belgians (4.9%), the Romanians (4.8%), the Dutch (4.8%), the Moroccans (4.9%), the Belgians (4.9%), the Romanians (4.8%), the Dutch (4.8%), and the Italians (4.6%) purchased the most homes.

With a share of about 8% of all international buyers in Spain during the second quarter of 2022, the British took the lead in this category. The second and third most common nationalities among overseas buyers were German and French, respectively.

To Prevent Rent Hikes, New Rent Control Measures are to be Implemented

Between Q3 of 2015 and Q3 of 2021, rental prices increased by more than 46%. Spain has adopted a plan to implement rent restrictions and raise taxes on some vacant homes in the nation in an effort to slow the country's recent rise in housing expenses.

The key elements of the housing bill are rent increases by landlords with numerous homes restricted; they are taxed more heavily, and it would be necessary for some new real estate developments to put aside some units for social housing.

Raquel Sanchez, Spain's Minister of Transport, Mobility, and Urban Issues, stated that it was important to battle the unjustified price rises, growing inequality, and degrading conditions that were present. The Minister said, "It is a route out of the maze where many individuals find themselves because they can't afford the home they want to buy or locate a home to rent at a reasonable price."

This comes after a government order that restricts rent hikes and broadens tenant protections and rights, which took effect in March 2019. The measure, among other significant changes, increases the length of the rental agreement from three to five years (or seven years if the landlord is a business entity), caps annual rent increases at the rate of inflation within the contract period, and introduces a state benchmark index for rental prices that will be used to assess the state of the market. For leases signed after March 6, 2019, the aforementioned law is in effect.

Spain Condominiums and Apartments Industry Overview

The Spanish condominiums and apartments market is highly fragmented, with the presence of both global players and regional players, and the competition in the market is very high. Some of the major players include Dragados Sociedad Anonima, Ferrovial Construccion SA, Constructora San Jose SA, Acsa Obras E Infraestructuras SAU, and Ortiz Construcciones Y Proyectos SA. The market is anticipated to regain normalcy by the end of 2023. Companies are gearing up to meet future needs, and many companies are entering the market for further opportunities.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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