Since 2019, transactions have increased dramatically, almost 90%, and in the first half of 2018, they broke a record with more than 1,100 units. Is the interest in Spain golden visa program increasing?
The Wall Street Journal described in an article the increasing amount of real estate operations that American citizens are leading in Spain, which are shattering all records, as the newspaper correctly noted.
The General Council of Notaries reports that just in the first half of 2022, Americans made 1,162 home purchases in Spain, which is 76% more than in the same period the previous year. This represents the sixth highest growth by nationality and the highest volume of transactions in the entire historical series. In addition, they are the ones who pay the higher prices per m2, second only to buyers from Denmark.
Over time, the momentum has gotten stronger. Purchases of both primary residences and second homes have increased dramatically since 2019 by almost 90%, and the trend thus far does not indicate a slowdown.
The data from the Property Registrars seem to support this. According to the Real Estate Yearbook from the previous year, US citizens’ share of home purchases in 2022 increased by 0.29 percentage points, making up 1.19% of all foreign operations that year and 0.16% of all transactions in Spain.
Real estate agencies also point out that in the luxury market there has been an acceleration in demand in recent times from Americans, becoming sometimes 30% of the total luxury operations in places like Barcelona
Among the factors are the standard of living and a strong US Dollar
What is the cause of the recent rise in American interest in Spanish real estate? According to experts, structural factors, including the climate, culture, gastronomy, and low real estate prices relative to those in the major cities of the world’s largest economy, as well as other more conjunctural factors, such as the exchange rate between the dollar and the euro, are what are driving the upward trend. The USD has been regaining strength since 2021 with an exchange rate of 0.97, going to October 2022 at 1.03 against the euro. The exchange rate moves today at 1.09 US dollars for each euro.
When compared to other cities around the world, particularly cities in the United States like New York, San Francisco, or Los Angeles, the price per square meter in cities like Barcelona, Madrid, or Marbella remains significantly lower.
The cost of living in New York, San Francisco, and Los Angeles was among the top ten most expensive in the world in 2022, according to an analysis of more than 400 prices for goods and services across 172 cities. Additionally, the cost of luxury housing is more than twice as high in San Francisco and Los Angeles as it is in Madrid or Barcelona, and it is even triple in New York.
Given that the Spanish real estate market has recovered and has remained stable since the financial crisis of 2008, many Americans may view Spain as an investment opportunity. It is crucial to remember that Americans are becoming more and more interested in purchasing luxury homes in Spain, where they typically invest more in homes in the most upscale and in-demand areas.
Increased direct flights between the US and Spain is another factor cited by experts. For instance, United Airlines introduced a new route from New York to Palma de Mallorca last summer. There are currently frequent flights from NYC, Miami, Los Angeles, Atlanta, or Philadelphia to various regions of Spain, primarily Madrid and Barcelona. A new line connecting Newark and Malaga will begin service in June 2023.
Beyond the major coastal areas
Even though other, more urban areas have recently become more popular, Americans still tend to place their bets on the coastal regions when purchasing a home in Spain.
The rise of Americans in Valencia and Madrid is noteworthy. For instance, purchases made by foreign customers were dominated by Mexicans (3.45%), Americans (2.12%), and French (1%). It is noteworthy that Americans preferred Chamartín among the districts (Where the mega project Madrid Nuevo Norte is projected to be built), controlling 6.82% of the purchase operations there. In some of Valencia’s neighborhoods, such as L’Olivereta, where 33% of purchases made there have been signed, the percentage has also been very significant. The Americans have a monopoly of 8% in Ciutat Vella, closely followed by Benimaclet and Quatro Carreres (7%), and they also have a significant presence in Eixample and Extramurs.
Additionally, interest is expanding to other inland and more rural areas as well as the major urban and coastal tourist centers.
Additionally, there is a rise in interest in rural properties and in Spain’s interior, particularly in the interior of Andalusia and the La Rioja wine region.
According to the Property Registrars, Americans tied with the British for fourth place among foreigners who bought homes in Asturias in 2022 (representing 4.04% of formalized foreign transactions). Additionally, it ranked seventh in Galicia (2.38%), eighth in Extremadura (0.81%), and seventh in the Basque Country (2.95%).
A positive trend, but one that comes with uncertainty
Given that those looking for luxury homes are not impacted by the rise in the cost of financing, interest from US citizens in homes in Spain could rise in the coming months.
Another factor is that there are fewer entry points to the European market because northern European countries like Ireland and neighboring Portugal no longer grant Golden Visas. The requirements are less stringent in Spain, Greece, and Malta in terms of the amount to be invested (500,000 euros in real estate investment), despite the fact that many EU countries have adopted this measure to entice foreign investment.
At this point, it should be recalled that Portugal has recently been a significant market for US buyers. Along with the British, Germans, and Dutch, they were the major foreign applicants for homes in Lisbon, Porto, Cascais, or Lagos at the end of last year, and they are among the major foreign owners in the nation. However, the bill to abolish the Golden Visa that António Costa’s socialist administration has approved may have an effect on present and future business dealings, which would be advantageous for the Spanish market.
Read our article The end of the Golden Visa in Spain?
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