I’ve been investing in Spanish real estate for the past four years with good results, although the market is slowing down as of 2020.
You can read how I’ve been investing in my review of Spanish real estate crowdfunding platforms, and you can also read the individual reviews of the platforms I’ve used the most:
A question a lot of you ask me is what kind of returns can one expect from investing in real estate in Spain, in whichever way you choose to do so. It’s a bit of a generic question, however, we do have Idealista’s statistics that we can refer to.
According to one of the latest industry prospects articles from Idealista, in 2008, the lowest point in the past decades, the return was 2.8%. From then on things started looking brighter and brighter, with returns rising to 4.6%. However, over the past year the returns have gone down again, due to various factors including several elections and the Catalan independence crisis.
As of September 2019, the return is 3.8%, which is still a decent return on your money, especially if you invest in a passive way, as I’ve been doing through the crowdfunding platforms.
I would recommend being wary of loan deals, as things can easily get delayed due to bureaucracy or other reasons, leaving you uncertain about the date when you will recoup the investment, and no easy means to exit.
If you invest in a building that needs to be refurbished and sold again, you won’t have it as easy as it was a couple of years ago, precisely because the market has slowed down.
The luxury market shows no signs of slowing, largely because it is not very elastic. It would be a good way to invest in Spain at the moment, in my opinion.
Rentals, despite controversial rent controls being approved in 2020 by parliament, should perform well enough in the coming years. The demand in big cities is as strong as ever, and these types of properties are relatively easy to exit from, as the prospective buyer can easily make his calculations and take over your investment with minimal disruption.
What I’ve been doing, as a reaction to the slowing Spanish market, is to move some of my investments elsewhere. Germany is a good option, although there are talks of the real estate market being at the top of the cycle there. If not, you can try the Baltics, where returns are very impressive, although there is higher risk due to these countries’ economies being less regulated and business dealings more of a wild-west in nature, although with time they are adopting European values more and more.
What are your thoughts on real estate investing in Spain and Europe in general?