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What to expect from property investments in Spain in 2022?

What to expect from property investments in Spain in 2022?

Real estate in Spain in 2022 continues to occupy a leading position in the list of the most popular investment destinations. Construction, purchase and sale of residential and commercial real estate, land plots suitable for residential and/or commercial development, as well as long-term and short-term rentals are consistently in demand among Spanish and foreign investors.

According to important players in the sector, housing transactions will develop in a positive direction this year, although it depends on various factors, for example, the epidemiological situation, inflation and shortage of raw materials, which can lead to an increase in property prices. The source gives crucial information about what to expect from property investments in 2022.

Property investment forecasts for 2022

Spain has a great investment attractiveness, especially for foreign nationals. Although the first and worst months of the pandemic were quiet, investment has gradually begun to recover. As quarantine measures weakened, interest in real estate increased more and more.

Real estate in Spain in 2022 was and continues to be a reliable asset. Even in the midst of crises, the housing market will not collapse like the stock markets. Therefore, the demand for real estate in Spain, which fell in 2020 due to lockdown and closed borders, completely recovered in 2021 and continues to grow rapidly in 2022.

Reasons to invest real estate in Spain 

Property investment is still a major investment for many Spaniards. This applies not only to the purchase of housing for living but also for commercial use. Spain has always been a homeowner market, and the pandemic has fueled this interest, as real estate is considered safer and less risky.

Therefore, investment in the housing sector continues in 2022. According to the Bank of Spain, properties with an annual yield of about 7% are much more profitable assets than other financial investments. This yield is much higher than that of other investment assets, such as government bonds, with a yield of about 0.4% or bank deposits – 0.5%.

There are also factors that have contributed to this situation, such as the ability of investors to save money in the worst months of the pandemic and the flexibility of banks in providing mortgages.

Investors took advantage of the health crisis to strengthen their financial position and low interest rates, especially on housing loans.

Experts and market analysts predict that foreigners will seek to invest in luxury homes, which are expected to grow by about 7% due to an increase in the number of transactions.

The Association of Real Estate Agents of Catalonia (AIC) notes that the sector is focused on investors from Northern Europe who want to come to Spain to enjoy the climate and stay for a long period. They also highlight the growing interest of buyers from Latin America, especially Argentines and Ecuadorians.

Which locations will be most in demand? 

Urban centers, their periphery, the Mediterranean coast, and islands will continue to be the main locations. Moreover, this is reflected in prices, which are rising due to higher demand. Professional and private investors realize that the location of real estate with developed infrastructure, services, educational institutions increases its value. These are the places that are the most interesting when it comes to investing in real estate.

Indicators of ROI in real estate in Spain in 2022 by region

If we talk about the cities that are of the greatest interest to investors in the demand for real estate, Madrid and Barcelona will take the first two places. They are followed by Tarragona and Malaga, and then Lleida, Toledo, and Valencia. Here, demand traditionally exceeds supply, and good properties both on the secondary market and on the rental market are sold off in a matter of days.

The return on investment indicators are as follows:

  • Murcia (7.5%),
  • Navarre (7.3%),
  • Valencian community (7.3%),
  • Catalonia (6.6%),
  • Canary Islands (6.5%),
  • Aragon (6.4%),
  • Castilla-La Mancha (6.3%),
  • Asturias (6.2%),
  • Cantabria (6.1%),
  • Castilla y Leon (6.1%),
  • Andalusia (6.0%),
  • La Rioja (6.0%),
  • Extremadura (5.8%),
  • Basque Country (5.5%),
  • Galicia (5.5%),
  • Madrid (5.2%),
  • Balearics (5.0%).

On average in Spain, the ROI of residential real estate in 2021 was 6.5%.

Nationwide, two districts of Alicante – Carolinas Bajas (8%) and Pla de Bon Repós (7.8%), two districts of Valencia – Rascanya (8.3%) and L’olivereta (8.1%), and the district of Granada – Almanjáyar (7.9%) became the most profitable urban areas in 2021 in buying real estate and renting it out. Numancia (7.6%) was the most profitable area of Madrid, and the Provençals del Poblenou and El Raval (5.7%) ranked first in Barcelona.

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