Real estate investment in Spain is going through one of the strongest periods of the last 15 years. Investment volume grew by nearly 20% in 2024, and in the first half of 2025 it recorded a year-on-year increase of 22%, according to CBRE. Adding to this momentum is a record appreciation of housing, above 14% year-on-year, based on data from Idealista.
In this context, the real estate market in Spain is attracting growing interest among investors seeking to capitalize on an expansionary cycle. Below, we analyze the factors that explain why the current moment is considered strategic to invest in real estate.
Key factors driving real estate investment in Spain
Demand
One of the defining factors of the current moment for real estate investment in Spain is the strong imbalance between demand and available supply. The housing stock is not growing at the same pace as market needs, especially in consolidated urban areas. In Madrid, for instance, buying interest is six times higher than the available supply.
The increase in immigration in recent years has been a key driver in this scenario, intensifying competition for housing in both the sales and rental markets.
On top of that, the intention to purchase property continues to rise: 23% of Spaniards state their intention to buy a home in the coming years, a figure that climbs to 48% among young people. This behavior reflects a market with high potential demand, capable of sustaining sector dynamism even in scenarios of economic adjustment.
More favorable financing costs
After the rise in interest rates in 2023 and part of 2024, mortgages in Spain have become significantly cheaper in recent months. The stabilization of inflation and adjustments by the European Central Bank have allowed banks to improve their conditions, offering loans with more competitive costs than in the previous two years.
This change in financing costs has a direct impact on real estate investment in Spain:
- It improves the economic viability of both home purchases for own residence and investment-oriented acquisitions, reducing the financial burden and increasing expected net returns.
- It reactivates demand from buyers who had postponed entering the market during the phase of higher interest rates.
In a context of strong demand and limited supply, more accessible financing conditions can accelerate the absorption of assets and strengthen medium-term appreciation potential.
Competitive returns compared to other assets
Real estate investment in Spain maintains its appeal thanks to the appreciation potential it offers in a context of sustained price growth. In buy, reposition, and sell operations, profitability comes mainly from the capital gains generated between acquisition and the subsequent commercialization of the asset.
In a market characterized by strong demand and limited supply, this model makes it possible to capture significant value increases over the medium and long term. The ability to achieve returns on tangible assets, combined with the sector’s stability and upward outlook, reinforces real estate as a competitive alternative compared to other investment vehicles.
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Diversification of opportunities
The real estate market in Spain offers multiple investment models that allow strategies to be tailored to the available capital, time horizon, and level of risk to be assumed. This variety makes it possible to address different investor objectives and approaches.
Among the most common real estate investment strategies are new developments, usually linked to an opportunistic approach, and flipping, framed within the value-add model. The first involves developing an asset from scratch, while the second consists of acquiring and renovating an existing asset for subsequent sale.
Both strategies stand out for their appreciation potential and for delivering higher returns in the current context compared to more conservative formulas.
Economic stability and legal security
Spain has a solid and predictable legal framework for real estate transactions, ensuring ownership protection and transparency in processes. This regulatory environment, together with institutional stability, strengthens the confidence of both domestic and international investors.
The real estate market in Spain is positioned in 2025 as the second most attractive in Europe for investment. The strong performance of the Spanish economy, driven by tourism, demographic growth, and GDP expansion, stands out.
In this context, Madrid and Barcelona rank among the ten key European cities to invest in real estate, reinforcing their role as hubs for capital inflows. Our recent success stories in El Viso, Madrid, and Eixample, Barcelona—with returns above 20%—reflect this trend.
Conclusion
Real estate investment in Spain is going through a period supported by solid factors: demand that exceeds supply, more favorable financing costs, competitive returns, diversified investment strategies, and a stable economic and legal environment.
In this context, the country is positioned as one of the most attractive destinations within the European landscape, for both domestic and international capital.
Identifying opportunities with rigorous technical and legal analysis, combined with a financial approach, is key when deciding to invest in real estate. At balize, we select projects with high appreciation potential and develop them with efficient execution, aligned with current market trends. Explore strategic opportunities.
