Spain moves closer to being a core market for many international investors

Exclusive takeaways from this year’s España GRI 2024 which gathered 170 market players for two days of private discussion sessions

May 2, 2024Real Estate
Written by Helen Richards

The sentiment at Espana GRI 2024 this year certainly emitted optimism, as Spain is reported to be rapidly changing in the eyes of international investors.

Historically considered a periphery market within the European real estate context, with many investors apprehensive around the higher risks, discussions at GRI Club’s annual Spanish flagship event revealed that the country is now being eyed up for its fantastic fundamentals and resistance against macro-economic turbulence.

The most recent GRI Club report reveals the major takeaways from the event, including discussion insights around cross-border capital, residential, hospitality, refinancing and more.

Access the full GRI Club report here.

More than 170 leading real estate players gathered to discuss opportunities within the Spanish market (Credit: GRI Club)

Generally, GDP performance and growth of the economy drive returns in real estate investment, and as Spain boasts one of Europe’s highest levels of GDP growth in 2023, this is supporting Spain’s increasing attractiveness to investors.

Forecasts predict this trend to continue in both the short and medium-term, and potentially even beyond that.

Doubts persist, however, stemming from the size of the overall economy, capital flows, limited amount of domestic capital, and ultimately liquidity.

Spain’s real estate industry continues to rely on the inflow of capital from the US, London, Paris, and Germany. When turbulence hits, this capital dries up as investors retreat to the safety of their local markets, to the detriment of liquidity in Spanish real estate.

Furthermore, some of Europe’s major markets, including Germany, France, and the UK, have experienced price corrections, providing opportunities for considerably higher yields than normal with less competition - which has not been the case in Spain - drawing investors back to these markets.

In summary, although these more mature European markets may remain more “comfortable” options for international capital, discussions emphasised that there is far less hesitation from investors to deploy capital in Spain nowadays. The market share allocated to Spain in international portfolios is certainly growing.