The Spanish luxury real estate market is establishing itself as one of the most attractive investment destinations globally. This is supported by data such as the optimistic forecasts from the International Monetary Fund (IMF), which has predicted a 2.3% growth for the Spanish economy in 2025. This upward revision confirms that Spain will be one of the fastest-growing economies in the Eurozone, as noted by Alexander Vaughan, CEO of Lucas Fox.
We are, therefore, in a favourable moment, which is contributing to the boom in the prime real estate sector. Spain is increasingly in demand among buyers of high-end, exclusive properties – those with distinctive characteristics and prime locations – valued at over €2.5 million. This is not a fleeting trend, but a reality that continues to strengthen year on year.
This luxury segment saw a 7% increase in supply in the first half of 2024, while the overall supply in Spain's real estate sector fell by 12%. The market is, therefore, in good health, but there is a limited supply to meet customer demand. In the first half of 2024, demand for new builds grew by 24%; however, construction experienced a sharp decline, with a 53% year-on-year drop, which is hindering market growth.
Regarding the motivations of buyers, international clients are increasingly valuing everything this country has to offer: areas of exceptional beauty, an unbeatable climate, excellent cuisine, a rich cultural and educational offering, security and a cost of living that is often lower than in their home countries, along with a more favourable price per square metre.
The growing attractiveness of Spain as a real estate investment destination has been reflected in house prices, which saw an average increase of 5% in the first half of 2024, a trend expected to continue throughout the year. Additionally, looking at the past five years, it is notable that Spain has experienced an average price growth of 7.9%, outperforming Portugal (+7.8%), Italy (+2.9%) and England (+1.9%), among others.
In 2025, Spain is in a favourable position for growth, with new factors contributing to this, such as increased demand, intensified by the ECB rate cuts. However, a significant portion of transactions in the luxury segment are made without the need for credit. Furthermore, the strength of the dollar and robust economic indicators further enhance the appeal of investing in real estate in Spain.
We are also witnessing the end of the Golden Visa; however, since its introduction in 2013, this regulation has had minimal impact on the total number of transactions in the real estate market. As a result, international clients will continue to buy prime homes in Spain, considering the advantages the country offers and the positive outlook for the coming years.
This year will also be characterised by two significant trends: the growing demand for rural properties, typically situated in privileged natural environments while still offering good connections to the city, and the rise of Branded Residences, a concept that is becoming increasingly popular and highly sought after.
The geographical diversification of investment brings attention to the rise of prime rural properties. We anticipate an increase in demand due to their significant appeal, a trend that has continued to strengthen post-pandemic as customer priorities have shifted. Typically, these properties feature a blend of rustic and modern design, located in the countryside, offering a tranquil environment just a few kilometres from urban areas. Remote work remains a key driver for the growth of demand in this segment.
On the other hand, this year is expected to see a notable rise in the Branded Residences segment, a residential concept that is solidifying in Spain. These properties combine the luxury, exclusivity and services of a five-star hotel with the privacy and comfort of an independent home. Branded Residences are super-prime properties associated with globally renowned brands, which adds prestige and value to the asset. As a result, they generally command a price 30% higher than other residences not associated with a brand, depending on the location. In terms of the national offering, Branded Residences in Marbella – an iconic destination on the Costa del Sol – stand out, as well as in Madrid, one of the most sought-after luxury capitals, particularly among Latin American investors, who account for 14% of sales, second only to EU buyers. Madrid is gaining increasing prominence as a strategic global market with substantial growth potential.
In short, 2025 offers excellent prospects for the prime real estate sector in Spain, at a time when new trends are beginning to emerge in response to the needs of buyers, who increasingly value exclusive experiences and a high quality of life.
To support this growth, we must continue to promote an offering that combines privacy and luxury, while highlighting the virtues that are solidifying Spain's leadership as both a destination for investment and a place to live. This will contribute to the dynamism of the local economy from the real estate sector.
This article was written by Alexander Vaughan, a British lawyer and one of the co-founders of the luxury real estate agency Lucas Fox. These are exciting times for the Spanish property market, with several positive indicators, a significant level of demand both domestically and internationally, and the growing importance of Spain on the global investment stage.
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