The purchase of houses has been impacted in general by the tightening of credit brought about by the rise in interest rates since the end of 2022. However, luxury homes have experienced in parallel an exceptional year in which the price has grown above 6% compared to the 4% average for free housing, according to data from the real estate agency Engels & Volkers and the National Institute of Statistics (INE). The large luxury consultancies assure that Spain is one of the great rising values for large capitals and the reasons, they point out, are the hours of sunshine and the “cool” of cities like Madrid, as summarized by Humphrey White, general director of Knight Frank in Spain, at a company event.
The epicenters of exclusive houses in Spain are concentrated in the Balearic Islands, the Costa del Sol, Catalonia and Madrid. This trend has remained stable, but since the pandemic they have gained international relevance. For example, Knight Frank claims to have gone from having a proportion of 80% national and 20% international buyers in its Spanish portfolio to 60% and 40% in 2023, respectively.
Sun, beach…And terrace
After the pandemic, many foreigners “fell in love” with Spain’s more than 300 days of sunshine, explained Juan Galo Macià, president of Engels & Volkers for Spain, Portugal and Andorra this Wednesday during the presentation of the real estate company’s annual report.
In addition, teleworking allowed many senior managers to spend more time in a residence other than their workplace. The professor of Economics at the University of Barcelona, Gonzalo Bernardos, added that in many senior management positions, contract negotiations, beyond salaries, focus on how many days it is necessary to go to the headquarters, which rewards the mobility of personnel with very high purchasing power. In Bernardos’ opinion, cases like this have led to ‘prime’ properties, which are usually used as assets with a high buying and selling rate, being purchased for the purpose of enjoying the residence.
The new most exclusive promotions take these desires into account. Mainly in coastal areas, new construction has the common denominator of terraces, something that foreigners prioritize over proximity to the coastline. “The Spaniard likes to live with his feet in the water of the beach, the foreigner goes looking for the climate,” exemplified José Carlos Pérez, general director of Engel & Völkers. “The differentiating element is the views and the terrace. A project with sea views and very generous terraces costs 20% more [por los compradores internacionales]”he continued.
Hospitality opens wallets
In addition to the sun, Spain’s hospitality also whets the appetite of large real estate capitals. The general director of Knight Frank in Spain assured that Madrid, one of the European cities that is gaining the most relevance in the ‘prime’ housing sector, has a series of “intangibles” that increase its attractiveness. In White’s opinion, the same elements “difficult to put into data” that cause “after work they invite you to have a beer.”
In addition to the city’s cultural offering, the expansion of the supply of premium hotels “that have created demand” for wealthy profiles or the business schools present in the capital have promoted the city as the great tractor of luxury sales in Spain . .
There is also an economic factor. Luxury in Madrid is cheaper than other large exclusive areas. Knight Frank data reveals that with one million dollars you can buy three times more surface area in the capital of Spain than in London.
The union of all these factors has turned Madrid into one of the great Spanish attractions, which has had an impact on the price of its luxury assets. In 2023, Madrid raised the price of the ‘prime’ segment – starting at two million euros – by 6.4% and became the European city that raised its price the most in all of Europe.
Investment resists
Despite the global real estate slowdown, Spain received 1,918 million gross euros in international real estate investment last year, of which Latin American investors concentrated 255 million euros and American investors 425 million, according to the latest data from the Ministry of Economy.
