Why is Iberia such an attractive destination for real estate investment?

Iberia is becoming one of the key poles for attracting capital in Europe. Strong economic and demographic fundamentals project investment returns well above the European average for the coming years. But what are the key reasons why the region has gained so much appeal for real estate investment?

The Iberian Economy Will Shift Up a Gear

• The Iberian economy is demonstrating its resilience. In 2024, GDP grew by 3.2% in Spain and 1.9% in Portugal, in both cases significantly above the Eurozone average of 0.7%. This stronger performance is expected to continue in the medium term, with Iberian GDP growth exceeding 2% annually in 2025 and 2026.
• Domestic demand will be the main driver of the Iberian economy, reinforced by the private sector's financial health, the recovery of investment, and the strength of the labor market. Employment is expected to increase by 2.4% over the next two years, more than double the Eurozone average.
• Demographic trends will also boost the growth of the Iberian economy. According to OECD forecasts, the total population of Portugal and Spain will increase by around 2.4% over the next five years, compared to the 0.9% growth projected in major European economies. These better results are attributed to positive migratory flows in a dynamic economic context. The difference is even more striking when considering the prospects for the early adult population. In Iberia, this age group is expected to increase by 7% between 2024 and 2030, while it is projected to decline in the rest of the Eurozone during the same period.

Strong Fundamentals for the Real Estate Sector

Strong economic and demographic fundamentals will support robust growth in the Iberian real estate sector. Prime yields have already peaked in most European real estate assets and, in some markets, have begun to experience a slight compression.

Real estate investment in Iberia gained traction in 2024 with a 23% year-on-year increase, reaching 16.282 billion euros, in line with the performance of the European market. By sector, Living, Retail, and Hotels accounted for three-quarters of the total.

In recent years, investment in Iberia has experienced consistent growth in its share of total investment in Europe, rising from 2% in 2015 to 8% in 2024, its highest ever. Spain accounted for 7%, while Portugal remained stable at 1% of total European investment. This trend highlights the growing attractiveness of the region for investors.

Real estate investment in Iberia is expected to continue growing this year, with forecasts to exceed 2024 volumes by +10% in Spain and +8% in Portugal.

In the Investors' Spotlight

Our latest report, European Investor Intentions Survey 2025, reveals that Iberia is a priority for investors. Both Spain and Portugal climb positions in the ranking thanks to positive market outlooks for the coming year. Spain ranks second and has two cities among the top five: Madrid second and Barcelona fourth. Portugal appears for the first time in the ranking, being the sixth most attractive country for real estate investment.

Opportunities Across Most Sectors

Opportunities arise in many sectors, driven by a significant supply-demand imbalance in the residential sector, a booming tourism industry, increased investment in retail, above-average growth in the logistics market, and above-average office market metrics. In the alternative sectors, the expansion of AI positions Iberia as a strategic hub for data centers.

This region is witnessing a significant increase in investments in the agribusiness sector, and increasing life expectancy is creating new and greater demands for the healthcare sector. Furthermore, Iberia's renowned excellence in education is increasing its appeal, making it a promising prospect for the future of the real estate sector.

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