Real estate investment strategies are booming in the Spanish market, especially in the residential segment. Investment volume grew by 20% in 2020 and recorded an increase of nearly 40% in the first quarter of 2025, according to CBRE. This trend is also reflected in a record increase in property value, which rose by more than 12% in early 2025 — the highest in recent years, according to the INE.
In a property market defined by growth and momentum, understanding the most established investment strategies is key to identifying how opportunities are created. In this article, we will also take a closer look at new development and flipping, exploring their main characteristics within the current market context.
Real estate investment strategies: what are they and which ones stand out?
Real estate investment strategies are formulas designed to generate income through the sale or rental of properties. These strategies mainly differ based on the level of risk involved, the degree of operational involvement, and the investment time horizon. Below, we explore the main types — core, core plus, value add, senior debt, and opportunistic — to understand how they are positioned in today’s market and what approach they offer depending on the asset profile and investor objectives.
Senior Debt
The investor acts as a lender, financing real estate projects in exchange for a fixed return secured by a mortgage on the asset. It has payment priority over other creditors and lower exposure to operational risk. This strategy is focused on capital preservation, offering stable returns and controlled risk.
Core
A more conservative approach based on stabilized assets, with solvent tenants and long-term leases. It is ideal for preserving capital and generating predictable income without the need for active management. It prioritizes stability over growth, with low but steady returns.
Core plus
Targets well-located and high-quality assets with room for optimization: management improvements, rent updates, or minor refurbishments. It requires some intervention, but without assuming structural or regulatory risks. This is a moderate-risk strategy that allows for enhanced asset performance without the need for a major transformation.
Value add
This involves acquiring second-hand properties that require renovations or upgrades. The main goal is to increase their value through improvements, enabling a higher return on investment once the asset is sold or rented. One of the most common variants of this strategy is flipping — purchasing a property, refurbishing it, and reselling it in a short period.
In a market strained by limited supply, licensing hurdles, and rising construction costs, this strategy is gaining ground by leveraging the existing real estate stock and generating appreciation through upgrades.
Opportunistic
A strategy aimed at generating returns through complex operations such as new development, distressed assets, legal or financial complications, or occupancy issues. These investments require intensive management, longer timelines, and high risk tolerance, but can also offer significantly above-market returns. This is a strategy best suited for experienced investors with operational capacity and long-term vision, typically out of reach for retail investors.
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Comparison of real estate investment strategies: new development vs. flipping
In this article, we focus on new development, typically part of the opportunistic strategy, and flipping, which falls under the value add approach. Both stand out for their higher returns in the current market compared to more conservative strategies. Whether through launching new constructions or transforming existing properties, these strategies offer access to high-potential opportunities.
New development |
Flipping |
|
Acquisition cost
|
Lower, as land is acquired instead of a built property, which reduces the initial cost and allows value to be generated through ground-up development. |
Higher than in new development, since these are existing assets located in established areas with defined market value. However, because they are not yet renovated, the acquisition price is typically below the local market value. |
Return on investment (ROI) |
Higher, but over the long term. |
Moderate to high in the short to medium term. |
Licensing and administrative risks
|
Higher risk due to the complexity of administrative procedures and obtaining permits. |
Lower risk, as it involves existing assets that, in most cases, already have consolidated residential or commercial use. |
Execution time |
Obtaining permits and completing administrative processes takes longer, and as this involves construction from scratch, timelines usually extend from 24 to 36 months. |
Processes are significantly faster, as work is carried out on existing assets, with total execution typically ranging from 6 to 18 months. |
Location |
Often located farther from city centers due to limited land availability. |
Allows operations in prime areas by enhancing the value of properties in well-established neighborhoods. |
Summary Table: Real Estate Investment Strategies
Choosing between new development and flipping depends on various factors, such as budget, risk tolerance, and execution timelines.
- New development: Offers high returns, though it involves longer timelines due to administrative procedures, license acquisition, and the full construction process. While the initial land acquisition cost is usually lower than the existing properties, the result is a modern residence that complies with current regulations and is ready to move in.
- Flipping: This strategy, based on property renovation, offers moderate to high return potential in the short to medium term. Working with existing buildings reduces associated risks and allows for faster execution, generally within 6 to 18 months. It also enables action in consolidated, high-value areas. A clear example is the operation on Gran Vía, L’Eixample, fully managed by balize, which delivered a 22.07% IRR in just 5 months.
Both strategies represent distinct approaches within the field of real estate investment, and the right choice will depend on the investor’s profile and preferences. Those prioritizing newly built assets and higher yields often choose new development, while those seeking agility and returns over a shorter horizon find in the value add strategy a more dynamic formula.
Nonetheless, regardless of the chosen strategy, the success of any real estate investment lies in rigorous analysis during the sourcing phase. Having a specialized real estate team is essential to distinguish a purely opportunistic deal from a solid investment. At balize, for instance, over 20,000 assets are analyzed annually, and only 15 to 20 meet the strict criteria required to be presented to its private investment club. This level of filtering allows us to identify assets with strong appreciation potential, backed by solid technical planning and thorough risk control.
Conclusion
The real estate market in Spain is experiencing a period of growth, and real estate investment strategies — opportunistic, value add, core, core plus, and senior debt — offer different ways to capitalize on this momentum.
Among them, new development and flipping stand out for their potential for appreciation and for delivering higher returns compared to more conservative formulas. Both are viable paths to invest in real estate, but their suitability will depend on each investor’s priorities, available capital, and risk profile.
At balize, we simplify the investment process with end-to-end management, selecting strategic opportunities in Spain’s prime locations. Discover flipping projects with returns above 15%.
