Foreign Investment in Spain continues to increase

Foreign investment will continue to increase in the following months of 2013 according to sources of Idealista. It reinforces the trend that started five years ago: foreign investment in Spain is experiencing its highest levels; in 2012 the purchase of property with foreign capital reached 8.12% of total investment.

This significant increase in foreign residential investment is justified by the 30% drop in registered property prices in Spain during the last 6 years, a drop that continued during the first trimester of 2013.

Other factors responsible for this increase in investment are the incentives that the Spanish government has approved to facilitate it; for example, the Project of the Law to help Entrepreneurs and Internationalization that is anticipated to pass in the next months.

At the end of the second trimester of 2013 the Price of housing will equal the prices recorded for 2007. Spain is one of only 3 European countries with such major drops in property prices and has a recorded 12.8% drop in comparison with an average 1.4% in the European Union.

The majority of this foreign investment registered purchases of new construction properties for tourist reasons. Citizens of the UK still make up the majority of investors (16.6%) followed by France (9.5%), Russia (9.4%), which replaced the traditional third place country of Germany, and finally, Germany (7.4%).

Málaga and Alicante, which received 42% of the total investment in 2012, are added as new destinations to other traditional destinations, the Balearic Islands, the Canary Islands and Murcia. Coastal properties are definitely grabbing the foreign tourists´ attentions. The greatest price drops occurred in Zamora, Santa Cruz de Tenerife and Vitoria. The preferred homes were over 100m (32.5%) first and then the 60 to 80m  homes.

Despite this data, surprisingly the number of foreign residents in Spain has decreased. This may explain the measures taken by the government through the Law to support Entrepreneurs and their Internationalization, which, among other measures, facilitates Spanish residency for any foreigner who invests a minimum of € 500,000.00 in property. This is intended to decrease the high numbers of available properties, while providing residency approval in Spain, without the need to obtain permanent residency in a country with a high residence and tourist attraction.

María Valencia

This article is not considered as legal advice

Mariscal Abogados

Mariscal Abogados is an international and multidisciplinary law firm with proven experience in diverse areas of the Law. Our working languages are English, German, French and Spanish. For any further enquiries please Contact us