Report

Real Estate Market Outlook Spain 2025

January 20, 2025

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The Spanish economy starts the year on a firm footing and with a positive outlook. The strength of the labour market and the recovery in investment will boost GDP growth to 2.6%. The favourable environment of lower financing costs, a strong dollar and positive economic fundamentals is making real estate investment in Spain more attractive. However, uncertainty about the economic scenario and financial markets remains high, and we expect greater caution in the early stages of the year.

Real Estate Keys:

Real estate investment in Spain experienced a 20% increase in 2024, and it is anticipated that in 2025 this dynamism will be maintained with growth between 10% and 15%. Investment will continue to focus on those assets with the capacity to generate more value, and cross-cutting aspects such as digitalization, AI or sustainability that will make the difference.
In the office segment, space contracting in Madrid is expected to stabilize 550,000 square meters, while in Barcelona an increase of 20% is expected. Demand will be oriented towards quality space, driving up prime rents.
The logistics sector will continue to show dynamism, with absorption stabilizing in the main markets in line with the average of the last five years. High demand and the limited supply of new product will maintain the upward trend in prime rents. In addition, the return of large portfolio deals to the market has revitalized investment, while prime yields, which compressed at the end of 2024, will continue to tighten in the near term.
Investment interest in the retail sector will continue, supported by the e-commerce slowdown and improvement in existing assets focused on customer experience. Annual retail sales growth of approximately 3.5% is projected for 2025, driven by rising private consumption and tourist arrivals.
Living's main challenge will continue to be supply, which will continue to meet only half of demand, straining access to housing, but will position itself as the preferred sector for investment. A 5.3% growth in house prices is forecast for 2025, with around 680,000 sales.
Tourism will continue to be a key driver of the economy, and the hotel segment will experience moderate growth in travelers, with a 3.4% increase and increases in ADR and RevPAR. Interest in the luxury market will persist, while more economical proposals and other alternative segments (Branded Residences, serviced apartments and glamping) will be developed.
The focus on ESG will continue to revolutionize the real estate sector, promoting the adoption of renewable energy technologies and sustainability standards across all asset classes.