Madrid, Spain

The Savills Blog

Spanish cities now offer some of the world's best value prime property

With the Spanish economy outperforming the average within the EU, the country’s property market is seeing an increase in residential sales and construction activity as well as steady price growth.

Spain was one of the worst-hit European countries during the Global Financial Crisis, however since 2014, the situation has reversed and Spain is now one of the strongest performing economies in the region. In 2019, its economy is expected to expand by 2.3 per cent, slightly less than the 3 per cent seen in 2018 yet significantly higher than growth predictions for France (1.4 per cent), the UK (1.3 per cent) and Germany (1.0 per cent).

The strong economic growth has been helped by a tourism boom. Spain welcomed close to 83 million international visitors in 2018. This places it as the second most-visited country in the world behind France.

Prior to the GFC, Spain’s housing market boomed and residential construction, transactions and prices all experienced substantial growth. This was followed by six years of price falls until 2014 when prices began to recover, driven by economic growth, low interest rates, low property prices  attractive mortgage packages and an increase in international buyers.

The market is yet to return to the levels seen prior to the downturn, suggesting there is room for growth still. In the year to March 2019, house prices across Spain increased by 6.8 per cent, while prices of new build properties increased by 10.4 per cent.

National house prices

In a global context, Spain’s prime city markets offer value for money and higher growth potential than other key world cities. Madrid is the most expensive for prime property, with an average value of €7,000 per sq m. This is 23.1 per cent lower than Berlin, 60.5 per cent lower than London and 84.6 per cent lower than Hong Kong. In Barcelona, prime values are 11.4 per cent cheaper than Madrid at €6,200 per sq m.

However, in both Madrid and Barcelona, prime values can reach €15,000 per sq m for the highest quality new build apartments. Valencia and Malaga are significantly lower still at €5,000 per sq m and €2,600 per sq m respectively.

Prime residential values

The average rental yield for prime residential properties in Madrid and Barcelona sit at 3.0 per cent and 3.5 per cent. Barcelona’s more competitive returns for property owners is a result of the lower capital values and outperforms many European top-tier cities.

Prime yields

Spain remains a popular destination for visitors, investors and those looking to relocate to the country. International interest from buyers, both inside and outside of the EU, is increasing. In 2018, just over 100,000 homes were purchased by overseas buyers, accounting for nearly one-fifth of all sales. British buyers continue to make up the largest group and accounted for 14.8 per cent of purchases in 2018, followed by French and German buyers at 7.9 per cent and 7.3 per ent respectively.    

The hardships faced by Spain following the Global Financial Crisis are in the past and the future looks bright. The country’s status as a top visitor destination, coupled with the lifestyle and low cost of living will continue to attract buyers and underpins Spain’s lasting appeal.


Further information

View properties for sale in Spain or read our publication 'Spain Residential – 2019'


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