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The Spanish economy and the Real Estate market: Outlook for 2024

David Gutierrez,  December 25, 2023

Spain has increasingly established itself as an ideal investment destination, including for Latin American investors. 

While the European economy faces uncertain times, Spain stands out as a vigorous competitor, outperforming expectations with Gross Domestic Product (GDP) growth projected at 2.4% by 2023, contrasting sharply with the Eurozone’s 0.5%.

This performance is attributed to a resilient labour market and a remarkable tourism recovery. Although a moderation is anticipated by 2024, Spain is projected to outperform the EU average, a sign of an economy that, despite challenges, continues its upward march.

The Spanish real estate market reflects this economic dynamism. Investors, motivated by robust growth and disparities between real estate supply and demand, are particularly inclined towards the hotel and residential sectors. Sovereign wealth funds, with significant Middle Eastern participation, reflect considerable confidence in Spain, which in 2023 ranked as Europe’s fourth largest market in terms of commercial real estate investment volume.

Among the most notable hotel transactions was the July acquisition of the Mandarin Oriental in Barcelona by the Saudi company Olayan. More recently, in September, the Abu Dhabi Investment Authority completed a deal for a Spanish portfolio of 17 hotels. In October, Singapore’s sovereign wealth fund GIC reported that it has invested in a 35% stake in Hotel Investment Partners, part of the Blackstone Group, which has a portfolio of 72 hotels in Spain, Italy and Portugal.

Despite predictions of a challenging 2024, the country presents continued opportunities, especially in hotels, housing and logistics, with an anticipated price adjustment that could further revitalise investment.

In the specific area of tourism and hospitality, Spain shines with a clear strategy: investment in luxury hotels in key destinations. In the hotel sector, investors are expected to continue to invest in luxury hotels in major tourist destinations such as Madrid, Barcelona, the Balearic Islands, Costa del Sol and the Canary Islands.

Spain has established itself as a global tourist destination with strong tourism numbers in 2023, despite the European economic slowdown, which could imply that people are prioritising leisure and travel.

This focus not only reflects the strength of the tourism sector but also a keen understanding of maintaining and elevating Spain’s status on the global tourism landscape.

Madrid and Barcelona, in particular, stand out as hotspots for real estate investment. Madrid, with its open atmosphere and solid infrastructure, has climbed significant positions, ranking as the third most attractive destination in Europe.

Barcelona is not far behind, maintaining an enviable position in the ranking of attractive cities for investment. In addition, cities such as Zaragoza, Valencia and Malaga are emerging as new stars, demonstrating that investor interest extends beyond the traditional urban centres.

The case of Madrid does not go unnoticed and deserves a separate analysis. In 2023, Madrid witnessed several significant transactions that underlined its attractiveness as a foreign investment destination. In the real estate sector, there were major asset purchases and new project developments, especially in office and luxury residential areas, attracting global investors and investment funds.

Despite the above magnificent news, the political situation in Spain has been a constant topic of debate and concern, marked by parliamentary fragmentation and challenges in the formation of ideologically uniform governments.

However, despite the political volatility and changes in the governmental landscape, the impact on the economy and the real estate market has been surprisingly muted. Investors seem to focus more on the country’s solid economic fundamentals, such as its GDP growth, robust tourism and resilient labour market, rather than political uncertainties.

This apparent disconnect between politics and economics highlights the maturity of the Spanish market and its ability to navigate the complex terrain of politics without deviating from its economic course.

In conclusion, while Europe’s economic and legal landscape faces challenges, Spain stands as a beacon of opportunity, both in its overall economy and in the real estate market. Attentive investors would do well to consider Spain not only as a viable investment destination but as a model of resilience and growth in uncertain times.


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