Savills News

Spanish cities offer some of the best value prime property in the world as market recovers

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, says Savills in its Spotlight on Spain Residential, released today.

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

The strong economic growth has been helped by a tourism boom. Spain welcomed close to 83 million international visitors in 2018. This places Spain 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%, while prices of new build properties increased by 10.4%

Arturo Diaz, head of residential, Savills Aguirre Newman, said, “Spain is an attractive place in which to live and work and the combination of quality of life, security, modern infrastructure, together with legal and financial security underpins it as a place to invest. Demand for luxury real estate remains high across the country. This strong interest and the increasing quality of the new housing stock that is being delivered is expected to strengthen further the market fundamentals.”  

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 sqm. This is 23.1% lower than Berlin, 60.5% lower than London and 84.6% lower than Hong Kong. In Barcelona, prime values are 11.4% cheaper than Madrid at €6,200 per sqm. However, in both Madrid and Barcelona, prime values can reach €15,000 per sqm for the highest quality new build apartments.  Valencia and Malaga are significantly lower still at €5,000 per sqm and €2,600 per sqm respectively.

Alex Vaughan, founding partner, Lucas Fox, Savills associate, said, “Spain continues to be one of the top worldwide destinations for property investors and lifestyle buyers and it appears that the sustainable growth that the residential market has experienced since 2014 has provided a solid base for the coming years. We consider that the main city markets of  Madrid and Barcelona offer excellent value when compared to other European destinations, and secondary cities such as Valencia and Malaga still offer a lot of potential for growth.”

Prime residential values – prime markets in Spanish cities represent value in a global context


Capital value June 2019 (€ per sqm)

Hong Kong


New York
















Los Angeles
















Cape Town


Kuala Lumpur




Source: Savills Research  Note – values refer to the average price of prime residential properties in established and emerging markets.

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

 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% of purchases in 2018, followed by French and German buyers at 7.9% and 7.3% respectively.    

Sophie Chick, head of Savills World Research, said, “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.”

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