In 2023, Engels & Volkers, the renowned German real estate firm, reported a remarkable surge in sales to international buyers, heralding a vibrant era for Spain's luxury real estate market. Their foreign transactions soared by over 50 percent during this period, with American buyers standing out. Let's find out more.
Surge in Americans buying property in Spain
More and more Americans are deciding to buy a home in Spain. According to data from the General Council of Notaries, citizens from the world's leading power bought more than 2,600 homes in Spain between the second half of 2022 and the first half of 2023, breaking records.
And the trend seems to be far from over. At least, that is what luxury real estate agency Engel & Völkers claims, recognising that it has "never had as many American clients". This increase is because foreign buyers have fewer financing needs than Spanish clients and, therefore, have not suffered the impact of the interest rate increases. What's more, it is likely due to other factors, such as good weather or a favourable Euro-Dollar exchange rate.
With this scenario as a backdrop, North Americans are continuing to buy homes in Madrid, although, in recent months, their interest in cities such as Barcelona and Valencia has grown strongly. So much so that in both Mediterranean cities the weight of the American buyer is now more than double that of the Spanish capital.
Barcelona and Valencia among the top cities for investment
In Barcelona, US citizens accounted for 4.88% of the homes transacted by the German real estate agency in 2023, compared to 3.26% a year before. As for Valencia, its weight rose to 6.93%, compared to 3.04% recorded in 2022, while in Madrid, Americans were involved in 2.11% of the purchases which Engel & Völkers brokered, with a timid improvement compared to the previous year (2.03%).
The capital does, however, stand out in terms of the average price of homes that Americans have bought, with an average of €1.08 m, 33.5% higher than the 2022 average (€815,000). On the other hand, the average price of properties purchased by US citizens in Barcelona grew by 15.3% in 2023, reaching around €828,500. As for Valencia, where these buyers have a greater weight in the real estate market, the average property price is much lower, after remaining at €483,700 in 2023. Even so, this amount is 17.5% higher than registered a year earlier.
Within these three cities, the German real estate company has also detected specific 'hot spots'. In Madrid, Americans prefer the districts Retiro, Salamanca and Centro, while in Barcelona, Eixample, Ciutat Vella and Gràcia stand out. In Valencia, the most notable areas are Ciutat Vella, Quatre Carreres and Cullera. As for housing type, Engel & Völkers assures that apartments and penthouses by far lead the demand.
Driving factors for increasing home sales by foreigners
Many factors are driving home sales by foreigners in Spain in recent times; among them, the good weather, public health, the boost in remote working after the pandemic and the favourable Euro-Dollar exchange rate.
During the presentation of the Engel & Völkers real estate market report, the economist and real estate consultant Gonzalo Bernardos explained that "to foreigners, a home in Spain, even if it is expensive, seems cheap. And for them, the sun is important, that's why they look for homes with views and terraces".
The real estate agency assures that 90% of the most expensive transactions they mediate are carried out by foreign buyers and that just for views and the terrace, they are capable of paying a premium for the home. That the increase can be up to 20% more than a similar property without views or outdoor areas. This is the case of penthouses, one of the most sought-after types of housing. "Penthouses barely account for 7% of the offer and usually have a 20% premium," Gonzalo Bernardos highlighted.
Changes in Spain's luxury market after the pandemic
Engel & Völkers also assures that, after COVID-19, senior managers or board members of large companies who only have to go to their workplace one or two days a week, or professionals with technical profiles (programmers, engineers, etc.) have purchased homes in Spain. The pandemic was, in fact, a turning point, because now homes are viewed as a place to be used and enjoyed, while before they were more of an investment product that generated profitability.
"More than ever, we are the Florida of Europe. And not only the Mediterranean but also Madrid." For foreigners, the climate here is amazing. That's what they value most," insisted the economist and real estate consultant.
Another major drive for some nationalities, such as North Americans, is public health – especially for those buyers who are recently retired or close to retirement – as well as political factors, especially when elections are held.
Bernardos stressed that the trend of home purchases by foreigners "is growing and unstoppable," and many of the foreigners who will arrive in Spain in the coming years will have "a high purchasing power."
Foreigners applying for mortgages in Spain earn €6,000 and search for houses that are 20% more expensive
Every year, tens of thousands of foreigners decide to buy a home in Spain, regardless of whether or not they need to take out a mortgage. According to idealista/hipotecas, the profile requesting financing to buy a property in 2023 is a foreigner with an average income of almost €6,000 per month looking to buy a house for around €213,000 – 20% higher than the national average.