Record Tourist Year Good News for Investors In Spanish Property

According to the most recent figures, which cover this year from January to July, Spain is on track for a year of exceptionally strong tourism. As the tourist …

According to the most recent figures, which cover this year from January to July, Spain is on track for a year of exceptionally strong tourism. As the tourist industry plays a central role in the nation’s economy, this could be a vital step towards recovery from recent economic difficulties. It is also good news for investors in holiday homes and other Spanish properties, with values and rental rates both forecast to increase on the back of a strong tourist year.

Since many property investments in Spain take the form of holiday homes, tourist numbers lay a very direct role in the ability of investors to fill their properties and earn returns from rent. Even for those who don’t have quite such direct exposure to Spain’s tourist industry, the number of international visitors coming to Spain still plays a vital role.

The sector contributes roughly 10% to Spain’s GDP, and plays a role in a much wider section of Spain’s economy with many businesses thriving on tourist custom. As a result, the economic health of the country is significantly affected by tourism, and this can have effects on property values, demand and rental rates.

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Amidst recent economic troubles, Spanish property has seen values tumbling. This has been bad news for those who already held properties in the region, who saw the value of their assets shrink significantly. However, confidence in a recovery remained strong and many new foreign investors were drawn into the Spanish market hoping to pick up a bargain while values were low and then benefit from a later correction.

This has left the market in a situation where Spanish properties are widely considered to be undervalued, and some quarters are now predicting that the much-anticipated correction may soon arrive. The boom in tourism is leading to increased demand for properties in Spain and a more competitive market, and this is likely to drive up accommodation costs.

The fact that, after such a difficult period, Spain has already recorded 11% growth in construction of new properties over the year to date is also being taken as a sign of recovery in the sector. Many believe that both rental rates and capital growth will soon increase, and this will reward investors who were willing to wait out the difficulties as well as those who seized the opportunity to snap up bargain properties.

The correction is being forecast as a rapid one, with values quickly appreciating. As one of the key factors leading to the expected recovery is a strong year for Spain’s tourist trade, this is naturally expected to be focused around the prime tourist areas. Andalucia, Marbella and Sotogrande are predicted to be key markets for imminent growth.


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