The beginning of 2021 has been tough. The downward trend of foreign investment in Spain seemed to continue following the first year of the Coronavirus pandemic. However, an effective vaccination campaign opened up a more optimistic outlook that fostered the general economic recovery in Spain, especially in the real estate sector.
Along with the improvement of the health situation in Spain, the vaccination campaign helped to relax the mobility restrictions, opening the borders not only to tourists but also to investments.
"Madrid, Valencia and Malaga" are the provinces with the best recovery prognosis, as far as investments are concerned, explains Jesús Duque, vice president of Alfa Inmobiliaria. But other areas are also looking up. "The Balearic Islands and Barcelona are cities that are receiving foreign demand," Duque added.
According to the real estate expert, "both international managers and Latin American, Russian, Chinese, and Central European buyers find it attractive to set up a residence in our country." This is not new, before the covid pandemic, these citizens also showed great interest in Spain. However, now they are also “driven by the advantages of teleworking,” Duque clarifies.
This recovery in the real estate market has resulted in an increase in property prices in these areas. But this is not a problem for foreign investment. In fact, Duque explains that "this public is willing to buy the properties of their choice without paying too much attention to their price." In fact, according to the expert this is "helping to increase the price of property" more generally.
Luis Corral, CEO of Foro Consultores Inmobiliarios, confirms the words of Jesús Duque. "During the summer there has already been a greater interest on the part of foreigners, not only on the coast but also in large cities or in the urban areas of coastal cities," said the expert. Among the main reasons for this, he clarifies, is "teleworking and the need for more open spaces."
This is a trend that we also see among national investors, who are looking for a home that is “not only for vacation, but also to spend long periods of time or even telecommute”, adds Luis Corral, who explains that national and international investors “both have a special role in this recovery”.
British retirees and Brexit
Of course, apart from national investors and other international buyers, there is the unique case of British investors. Two important factors converge here: the covid pandemic, which has affected them the same as other foreign citizens, and of course, Brexit.
According to Luis Corral, "Brexit was already taken into account." This means that the consequences of this political decision had already begun to be noticed in the market. Remember that British citizens and, especially British retirees, were the foreign nationality that gave the greatest contribution to real estate investment in our country. Now, things have changed, with many of them selling their properties in Spain.
According to the College of Registrars, the British continued to lead the investment ranking in the second quarter of 2021. However, they also showed a significant drop, accounting for 9.5% of total purchases a reduction likely due in part to travel restrictions. Nonetheless, since August 20, they have been able to travel again, and Corral affirms that "the demand has retracted, but it is getting going again."
As well as these data in isolation, another important question follows naturally if we compare them to data from the past. In 2010, investment from British nationals reached 35% of home purchases in our country. 9.5% is not an inconsiderable decrease.
However, it should be noted that British investment pre-Brexit was concentrated in the sale of homes in areas such as the Costa del Sol, the Costa Blanca and the Canary Islands. Now, foreign investors seem to be looking to invest in other areas as well as these.
What will happen in the short term?
Luis Corral is optimistic and affirms that since the beginning of 2021 “a moderate recovery is already being observed”, so we will surely continue in this vein in the coming months. Thus, he believes that an increase "in interest in the purchase or rental of a second residence" has begun, both from foreigners and nationals.
Moreover, as it relates to international demand, he thinks, “second homes are being considered beyond just the summer season." For this reason, investors will look for "homes that can allow you to work many miles away, also having good services and communications."
And it is the simple indicator, which Luis Corral affirms, that “there is liquidity in the market”, which indicates “good prospects for the real estate sector”.
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