Value-add real estate investments are becoming increasingly popular as high housing demand continues to outpace limited supply—especially in well-established urban areas. The lack of new developments, limited availability of buildable land, and high construction costs, along with strict urban planning regulations, are driving many buyers and investors to seek opportunities in existing properties.
In this context, assets that require full remodel, upgrades, or a change of use offer a competitive alternative. Their appeal lies in their strategic locations and potential for appreciation. This type of investment not only allows access to properties at more reasonable prices but also creates added-value in a market where demand continues to rise.
According to CBRE’s Real Estate Market Outlook 2025, real estate investment in Spain grew by 20% in 2024 and is expected to increase by another 10–15% in 2025. This growth is being driven by lower financing costs and renewed interest in assets with transformation potential. In fact, over 60% of European investors now prioritize value-add strategies, according to the Investor Intentions Survey 2024—making it one of the most prominent trends in the real estate market today.
What are value-add investments?
Value-add investments involve acquiring properties with untapped potential to increase both market value and future income. These opportunities typically require significant upgrades or repositioning to maximize the asset's value.
This might include full remodel, flips, change of use, redistributing interior layouts, increasing occupancy, or improving energy efficiency. The goal is to turn an underperforming or outdated property into a high-performing one that aligns with current market demand.
Benefits of value-add investments
The main draw of value-add investments is the ability to significantly increase the asset’s value—both in terms of market price and rental performance.
You can generate higher capital gains at the time of sale, and improve rental income during the holding period thanks to the upgrades. A full remodel, for instance, can reposition a property to attract better tenants and reduce vacancy and default risk. Properties that incorporate energy efficiency standards are also more appealing to today’s market.
A common value-add tactic is the flip—quickly upgrading a property and selling it for profit. These types of properties are often purchased below their potential market value, allowing investors to enter with a built-in margin of safety and unlock strong returns from day one.
How to identify high-potential value-add investments
Finding a truly profitable value-add opportunity requires careful analysis across several key areas:
Location
Location is one of the most critical factors. You’ll need to assess available services, accessibility, and the area's potential for appreciation. It's also important to monitor future developments, zoning regulations, and evolving demand in the area.
Understanding the local market
It’s not just about where the property is—it’s about who it’s for. Study:
Financial viability
A thorough financial analysis is crucial. This includes:
Execution timeline
Estimate how long the project will take before the property is ready for the market. Timing affects returns and cash flow.
Permits and taxes
Administrative and legal aspects can make or break a project:
What kind of returns can value-add investments offer?
Since value-add projects focus on unlocking hidden potential, they offer strong upside from the start. When backed by a solid strategy, these investments can yield returns of over 15%.
At balize, we simplify the process for our investors through full-service project management. We carefully select strategic opportunities in prime locations across Spain. We focus on high-impact projects like flips and full remodels, offered exclusively to our private investor club. Discover projects.
Interested in learning how to calculate the returns on a real estate investment? Check out our practical guide!
