Investing in Holiday Homes in Spain: a smart choice?

Population protests increase

Many people choose to buy a second home in Spain, not only to enjoy it themselves, but also to rent it out as a holiday home.
However, this trend has led to protests from local residents, concerns from the government, and concrete measures, especially as it causes house prices to rise, making it more difficult for local residents to find affordable housing.
This year, for example, there were already large protests against tourism and holiday homes in Spain, in Malaga no less than 20,000 people took to the streets.
In Barcelona, the mayor announced that by 2028, all eleven thousand tourist licenses will be revoked.
This is not good news if you have just invested or want to invest in a holiday home in Spain because it creates uncertainty.
It is therefore important to be well-informed before making any investment.

Current Market Data

Tourism in Spain has recovered strongly since the pandemic and remains an important pillar of the economy.
In 2023, tourism contributed 12.8% to Spain’s GDP, with a total economic impact of €18.66 billion (InvestinSpain).
The number of tourists continues to rise, with 35.7 million overnight stays in hotels in May 2024, an increase of 11.05% compared to the previous year (Dataestures).

The real estate market in Spain is on an upward trend.
In regions such as the Costa Blanca and the Balearic Islands, popular destinations for holiday homes, prices continue to rise.
In Alicante, the average price per square meter is 1,982 EUR, while in Barcelona it is around 3,907 EUR (Idealista).
For 2024, an average increase of 2-3% is expected (Idealista).
So far, investing in a holiday home in Spain seems like a good idea.

Permits and regulations

However, local governments in Spain are increasingly revoking rental licenses to control rising house prices.
Whether this will work remains to be seen, experts point out that only 1.3% of the number of homes is intended for holiday rentals and the cause lies mainly in the fact that too few homes are built in the social sector.
However, this policy can have major consequences for investors who want to rent out their property.
Without a permit, the possibility of renting out legally expires, which not only affects the return but can probably also reduce the value of the property.

Advice for potential investors in holiday rentals in Spain

1. Local Regulations: Thoroughly research local regulations regarding rental licenses.
   In some areas, these rules can be strict, and it can be difficult to obtain or maintain a permit.
2. Long-Term Value: Although there are risks associated with renting out a holiday property, property investment in Spain remains attractive in the long term.
   House prices are rising faster than inflation on average, especially in the popular holiday areas, which means that your investment is likely to increase in value.
3. Personal Enjoyment: If you plan to use the property for holidays, make sure it is a place where you like to stay.
   This ensures that you always get value from your investment, regardless of the rental income.
   After all, life is not only about returns, and certainly in Spain you can enjoy all the nice things that Spanish life has to offer every day.
4. Professional Advice: Engaging a local real estate advisor is essential.
   A local expert can help you navigate the complex regulations and provide insight into market trends, which can save you from unexpected problems.
   As a Personal Property Assistant, I can certainly help you with this.

In summary, investing in a vacation rental in Spain can be a smart move, provided you are well prepared and seek expert advice.
The market remains attractive for both rentals and personal recreation, but the key to success lies in a thorough understanding of the local market and regulations.
Do you have any questions or would you like to talk further about the possibilities in Spain and especially Valencia?
Please contact us.
We are happy to help you with sound and local advice.
This way, your investment in a Spanish property will not be a disappointment.