Tourist accommodation is gaining more prominence in the political, social and real estate debate. This is particularly the case at a time when tourism is at an all-time high and there is a shortage of long-term rental properties.
Given this scenario, the Bank of Spain has analysed the weight of holiday accommodation in the 25 urban areas with the highest density of holiday rentals in their respective rental markets.
The main conclusion reached is that Elche (Alicante) and Marbella (Malaga) are the towns where holiday rentals are most prevalent. According to the presentation made by the financial supervisor during an economic meeting in Extremadura, both places lead the national ranking.
Elche is the city with the highest proportion of holiday homes in its periphery, accounting for almost 70% of all rental properties, while Marbella stands out for having the highest density of tourist accommodation over rental properties in its urban centre, with more than 60%. The Costa del Sol city also has the second highest proportion of holiday properties on the outskirts of its urban area, after Elche, and followed by Malaga. In both cases, the weight exceeds 50%.
In the other towns and cities analysed, however, tourist accommodation accounts for less than 30% of the market. And their weight is reduced in cities such as Madrid or Barcelona, where they represent less than 5%.
Another reading from the Bank of Spain's presentation is that most towns and cities have a higher density in their outskirts than in the urban centres, with the sole exception of Marbella.
The 25 urban areas analysed are Madrid, Barcelona, Valencia, Seville, Bilbao, Malaga, Zaragoza, Mallorca, Murcia, Gran Canaria, Granada, Vigo, Santa Cruz de Tenerife, Alicante, Valladolid, A Coruña, Pamplona, Santander, Cordoba, Marbella, San Sebastian, Oviedo, Gijon, Vitoria and Elche. Their choice, according to the Bank of Spain, is because the 25 largest urban areas had the highest ratio of tourist accommodation in August 2023 compared to the latest available figures for the number of residential rental properties at municipal level.
Holiday rentals reduce stock
Last week, the organisation chaired by Pablo Hernández de Cos published its ‘2023 Annual Report’, which included a special section on housing to examine the problems affecting the residential market and to propose measures to help improve access to housing.
In the document, the financial supervisor estimates that Spain needs 600,000 homes by 2025 to balance supply and demand and criticises the latest government measures in this area, such as controlling rents or implementing Offical Credit Institute guarantees to help young people and families with minors to buy a property, considering that they will have negative consequences.
It also explains that tourist apartments now account for around 10% of the rental market and have an estimated ratio of 1.8% of the total number of main homes in the residential market, with some 340,000 homes. And it mentions the boom in holiday rentals in recent years as one of the factors that is reducing the stock of properties available for long-term rental, together with the appearance of formulas such as temporary rentals or room rentals or new regulations, with rent caps or more protection for tenants in situations of non-payment.
In this sense, he maintains that "in 2023, it is estimated that there will be an aggregate housing stock of around 27 million units, of which 19.3 million (72 % of the total) will be primary residences. The rest of the available housing stock, some 7.5 million, is distributed among several uses such as second homes, unoccupied properties, and tourist and seasonal rentals. In recent years, there has been less dynamism in the new housing stock for residential use. This has led to a significant increase in converting second homes into primary residences. At the same time, the emergence of new housing uses, such as holiday homes (both owned and rented), and the rise of alternatives such as seasonal and room rentals would contribute to a slower growth in the supply of residential housing in its usual format. Recent regulations to limit tourist rentals in some areas and increase protection for lower-income tenants could contribute to a shift in housing supply to these alternative uses. In particular, there is a rapid growth in the share of seasonal rentals – typically between 1 and 11 months – which would present a looser and more favourable regulatory framework for landlords. Overall, the housing stock is growing at a slower rate than the demand for its main uses".
On tourist accommodation, he adds that, despite having a modest weight at national level, "this activity is heavily concentrated in the main tourist areas, in certain urban areas (such as Malaga, Marbella, Elche and Palma de Mallorca) and large city centres with the most tourist activity (Barcelona, Madrid, Seville and Valencia). According to the economic literature,
those neighbourhoods in which there is a greater concentration of tourist rentals (which displace residential housing) are experiencing greater relative increases in house purchase and rental prices".
The financial supervisor also recalls that in some areas of Spain, regulations are being tightened to limit a boom in holiday homes, although it recommends analysing the issue in depth and taking into account the economic impact they generate.
"Several Spanish cities and autonomous communities have tightened the conditions for developing holiday rentals as an economic activity, although there are serious difficulties in guaranteeing effective compliance with this type of regulation. These measures have been justified by considering how these activities contribute to price increases in a context of housing shortage and housing accessibility problems, as well as by the negative effects that holiday rentals could generate among residents. On the other hand, holiday rentals have been justified by them potentially contributing to economic activity and employment, in cases where holiday demand could not be absorbed by the professionalised sector (hotels). In this context, applying restrictive measures in this area should consider a cost-benefit analysis, taking into account not only the impact on the housing market situation but also the effects on economic activity," he explains.
Record price difference compared to non-tourist areas
As mentioned above, the Bank of Spain states that "according to the economic literature, those neighbourhoods where there is a higher concentration of tourist rentals (which displace residential housing) experience greater relative increases in house purchase and rental prices". This is also confirmed by a CaixaBank Research study, which shows that the price gap between tourist and non-tourist locations is at an all-time high.
Based on data from the Ministry of Housing and its internal card spending figures, the research service considers a total of 64 towns and cities throughout Spain to be tourist destinations, including Madrid, Barcelona, Valencia, Malaga, Palma, Alicante and San Sebastian. The study puts the average price of housing in these cities at €2,943/m2, which is almost 75% higher than the average for the rest of the country. This gap recorded in 2023 is the highest recorded.
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