Introduction

Sunny coastlines, a powerful culture, paellas on every street corner and, above all, unparalleled real estate opportunities - that's why investors from all over the world are turning to Spain. In 2025, investing in Spanish real estate is THE way to diversify your portfolio or maximize your returns. The experts at Terreta Spain explain everything. 

Why invest in Spain?

Several factors make Spain a prime destination for real estate investment. 

Affordable prices and excellent returns 

In February 2025, expect to pay €2,271/m2 to become a homeowner in Spain. Unlike other European markets where prices are prohibitive, Spain offers relatively affordable property prices. National and international buyers, novices as well as the more experienced, can enter the market with less capital. 

Secondly, rental yields are high. According to the latest studies published by Spanish real estate portals, the national average gross profitability is around 7%: 7.16% for Idealista and 6.7% for Fotocasa. In tourist areas and university towns, this average rises. In short, yields have never been higher.

Caption: Returns in Spain in 2024

Source : Fotocasa

In concrete terms, Spain today ranks second among European countries offering the best prospects for profitability by 2025, just behind the UK, according to the latest report from CBRE, one of the world's largest real estate services companies.  

Demand is on the rise

Demand has been steady for several years now, and seems to be on life support. Rental vacancies are virtually non-existent, and rental income is fairly stable. 

Moreover, in recent months, potential buyers have seen interest rates return to tolerable levels: 3.3% on average, which reassures them and encourages them to buy.

The international clientele is growing and now accounts for 13% of overall demand. Since the pandemic, the real estate crisis in some European countries has redirected many investors to Spain.

By 2025, real estate investment is set to increase by 15%, according to experts. 

Quality of life

The country's final advantage is its quality of life. It would deserve an article of its own, but between its varied nature, rich culture, delicious cuisine, climate and modern infrastructure, life in Spain ticks almost every box. Living conditions are pleasant and encourage year-round outdoor living. This also influences the attractiveness of properties with outdoor spaces and investment in general. What's more, the cost of living is largely affordable, a big plus for retirees, students or young professionals.

Macro-economic context 

In January 2025, the world was surprised to learn that Spain is now Europe's powerhouse. Its 3.5% growth rate makes France, Germany and Great Britain green with envy. This economic dynamism is boosting the sector. Transaction volumes exceeded 515,000 last year, and 2025 looks set to follow suit. 

The Spanish real estate market in 2025: price trends and developments

Real estate price trends

As we said, the average price per square metre now stands at €2,271, marking an all-time record. According to Idealista's experts, the reason for this surge is a shortage of supply due to the increase in construction costs since the pandemic, and the consequent lack of new housing.

Some cities recorded particularly sharp increases: 

• Valence (+24%)  
• Malaga (+21.5%)
• Madrid (+20.2%)
• Alicante (+18.2%) 

On a regional scale, Madrid (+17.5%), the Canaries (+17%) and Murcia (+16.3%) show the strongest increases, while the Valencian Community (+16%) and the Balearic Islands (+15.3%) confirm their attractiveness to investors.

Experts agree that, without an increase in supply, this dynamic could continue into 2025, supported by international demand, falling interest rates and the absence of price caps. A situation that reinforces interest in real estate investment in Spain, despite increasingly expensive access to property.

Spanish market trends

In recent years, the Spanish real estate market has shown its resilience and great capacity to adapt. In 2025, it is looking to the future and seems well equipped to continue attracting a maximum number of investors: 

• The market has been able to adapt to the growing demand and standards of international buyers, offering better quality service in several languages.
• It has become increasingly digital, with the rise of virtual tours and remote transactions. These innovations facilitate market access for foreign investors.
• Demand for properties with outdoor spaces is exploding. Terraces, gardens, balconies: buyers are looking for a better balance between indoor and outdoor living, and agencies are trying to promote this type of property. 
• Sustainability is taken seriously in a country where most of the housing stock is over 44 years old on average. The use of sustainable materials and low environmental impact properties are becoming increasingly attractive to ecologically conscious buyers. To find out more, read our full article. (to be integrated once published). 
• Flexibility: short-term rentals are on the rise, as international buyers look for properties they can rent at full price and occupy from time to time for telecommuting or vacations. 
• The latest development is the growing interest in emerging areas. While Barcelona and Madrid continue to appeal, areas such as Murcia and Almeria offer excellent opportunities and are attracting investors with more limited budgets, looking for highly profitable market niches for years to come.

Investment strategy: where and how to invest in 2025?

Safe bet: metropolises 

This is the trio of metropolises that never disappoints: 

1. Barcelona
2. Madrid 
3. Valencia 

Madrid and Barcelona are second and fourth respectively in the ranking of the most attractive cities for international investment. Valencia, for its part, is now a leading city for investment, despite the DANA that ravaged its outskirts in autumn 2024. The floods also triggered a general awareness of the need to adapt real estate stock to the realities on the ground and to minimize their impact on the climate.  

Barcelona, the Mediterranean jewel

Purchase price: €4,700/m2 (+10.5%).

Rental price: €23.6/m2 (+13.5%).

Gross return 2024: 6%. 

• High rental demand, driven by tourism (15.5 million tourists by 2024), students and young professionals attracted by the city's dynamic economy. 
• Consolidated zones (Eixample, el Born, Gracia, etc.): ultra-demand zones with virtually no risk-taking. In these areas, average returns are lower than the national average, and this must be taken into account. It's the long-term value and stability of the market that counts when you invest there.
• Emerging areas: some previously "dormant" neighborhoods are now booming, like Nou Barris in the north of the city. The district boasts a gross return of 8.3%, the best rate in Ciudad Condal. Ten years ago, yields in this area were no higher than 5.5%. Horta-Guinardo is in second place with an average yield of 6.7%, followed by Sant-Andreu and Montjuic with an average yield of 6.5%. It is possible to find interesting opportunities in these areas, as well as in the suburbs, if you are well accompanied. 
• High-quality infrastructure: our state-of-the-art universities, hospitals and transport network enhance our international appeal. 
• Technology hub: Barcelona has also positioned itself as a tech hub in southern Europe, a strong point for real estate investors. 

⚠️Notre If you choose Barcelona as your destination, look for a property that can also be rented on a long-term basis. Local legislation is becoming increasingly strict in this area. 

Madrid, the capital, is in the midst of a real estate boom

Purchase price: €5,100/m2 (+22%).

Rental price: €21/m2 (+15%). 

Gross return 2024: 5%.

• By 2024, Madrid will be the nerve center of real estate investment in Spain and Europe.
• The living environment is attractive, with a quality of life that exceeds the 181 index.  
• Advantageous taxation (the "Mbappé Law" and other tax measures such as a low ITP attract foreign investors. 
• The economy is flourishing (+3.2% growth in 2024). The capital generates 19.6% of Spain's GDP, attracts more than 60% of the country's foreign investment and is home to a large number of new companies, particularly in the tech sector. 
• The capital's most profitable districts are: Villaverde with 11.9% (up from 6.4% to 11.9% in just 10 years), Puente de Vallecas with 9.8% and Usera with 8.6%.
• Rental demand is exploding. 

To find out more about Madrid's neighborhoods, check out Terreta's expert guide. 

Valencia, a top destination

Purchase price: €2,850/m2 (+23%).

Rental price: €15/m2 (+11%).

Gross return 2024: 6%.

• Valencia is the capital of the Valencian Community.
• It is located on the Mediterranean coast, facing the Balearic Islands.
• Valencia is regularly ranked among the cities with the best quality of life in Europe. Its index exceeds 200.
• Tourism is a financial windfall for the city and boosts the real estate sector (2.4 million tourists by 2024).
• Since the post-pandemic recovery, the city has enjoyed a period of economic growth, attracting investors (+2.5% growth in 2024). 
• The city has also positioned itself as a tech hub on the coast, and you can read our full article on the subject by clicking here.
• Rental yields are excellent in certain neighborhoods, such as El Cabanyal, and on the outskirts (Castellon de la Plana and Gandia, for example). 

To find out more about Valencia, consult the Terreta experts' guide to the city. 

Regions on the rise 

Murcia, Almeria, Malaga and Alicante are up-and-coming real estate investment destinations. These less saturated regions offer prime opportunities. A rich culture, breathtaking natural beauty and a high quality of life are increasingly attracting international investors.

Murcia, the Eldorado of rental yields 

Purchase price: €1,285/m2 (+3%).

Rental price: €8.8/m2 (+8%).

Gross return 2024: 7.6%.

• The town is 1.5 hours from Alicante or Malaga airports.
• Culture and natural surroundings are attractive.
• The weather is ideal.
• There's a golden triangle around the university where returns can exceed 12%. Stable cash flow and frequent rent revaluations. 
• In 2024, foreigners bought 23% of property in the Murcia Region. 
• La Manga, one of the jewels of the Murcia region, is an ideal area for tourism.
• Mazarrón, a small town on the Murcia coast, was the most profitable city in the country during 2024 (11.4%). In early 2025, El Ejido, a town in the province of Almeria, stole the show. 

Almeria, a fast-growing emerging market

Purchase price: €1,420/m2 (+2%).

Rental price: €8.8/m2 (+11%).

Gross return 2024: 6.7%.

• The region is often overshadowed by concerns about its greenhouses and intensive agriculture, but it has many assets: its coastal location, its dry, year-round warm climate, its low cost of living. 
• El Ejido, a small town in the province of Almeria, is now the most profitable in the country. 
• The city offers a premium real estate market, with a boom in eco-friendly residences.
• Beware: given the interest in tourist rentals, regulations are likely to become stricter. 

Malaga, a tourism and technology powerhouse 

Purchase price: €3,240/m2 (+20.5%).

Rental price: €15/m2 (+10.5%).

Gross return 2024: 5.6%.

• A very good quality of life index, in excess of 180.
• The city has become the tech hub of southern Spain. 
• The area is very attractive for tourism, with over 14 million tourists expected to visit the entire province in 2024.
• The luxury residential market is extremely dynamic.

Alicante, a magnet for foreigners

Purchase price: €2,250/m2 (+15.4% in one year).

Rental price: €11.8/m2 (+10% in one year).

Gross return 2024: 6.3% (Idealista).

• An unrivalled climate and a high quality of life, with an index of 194.
• The region's economic hub. 
• A student city that attracts more and more international students.
• Tourist zone: Alicante-Elche airport traffic up 23% by 2024.
• Luxury tourism on the rise: overnight stays in 4- and 5-star hotels have risen by 35% over the past three years. 
• The region accounts for over 36% of foreign investor demand.
• The port area, the historic center and the outskirts of the city are areas of high real estate value.  

Gandia, the pearl of the Valencian Community

It's impossible not to end this overview of where to invest in Spain in 2025 without mentioning Gandia, a small town on the Valencian coast.

Purchase price: €1,343/m2 (+11.7%).

Rental price: €8.2/m2 (+11.4%).

Gross return 2024: 10.8%.

• Gandia topped the list of Spain's most profitable cities for 3 years, from 2021 to 2024. In the course of 2024, it lost the top spot to Mazarrón, a small town in the Murcia region.  
• It's ideally located by the beach (7 km of coastline), making it very attractive to tourists and digital nomads alike.
• Gandia is less than an hour by train from the Valencian capital. So it's easily accessible.
• Legislation is very favorable for seasonal rentals. This maximizes income, especially in the summer months. 

Terreta Spain has carried out numerous rental investment projects in the area, contact our experts to find out more. 

Our advice for your investment strategy in 2025

Which type of rental to choose?

The type of rental you choose depends on your objectives and your target market. Don't jump in without knowing the advantages and disadvantages of each strategy. 

• Long-term rental: the main advantage of this type of rental is that it provides a stable income and requires little management. It's a rather passive type of investment. 
• Short-term rental: this can be much more profitable, especially in tourist areas, but beware: it requires a great deal of management and, above all, a tourist license. This is a regional issue. There are 17 autonomous communities in Spain, and almost as many regulations. In other words, if you're looking to rent to holidaymakers, find out exactly what the law is. These licenses guarantee that rentals meet quality and safety standards, but also that the supply of tourist accommodation is controlled to preserve the local residential fabric. The aim is for vacationers and local residents to cohabit without difficulty. Investors need to take this factor into account, as it influences how quickly and easily a property can be rented out.
• Student rental/sharing: this is an excellent option for investors seeking maximum profitability by renting by the room. This type of rental is also far less affected by seasonality, but involves a great deal of management. You need to have the time or the budget to delegate to a competent company. 

Should I buy new or old? 

It's worth noting that investing in new-build property offers an advantage in terms of construction standards and comfort, which may appeal to increasingly demanding tenants. But when it comes to resale value potential, the old wins out. Even more so if it has been carefully renovated.

In addition to our property hunter service, Terreta Spain can also take charge of your renovation project. Contact our specialists to find out more and to entrust the enhancement of your property to experienced professionals. 

Managing your property 

The type of management can have a major impact on the profitability of your property. If you do it yourself, you'll certainly save money, but it can be complex and time-consuming.

Terreta Spain's expert advice: opt for a specialized local agency or concierge service if you choose tourist rentals. You'll save time and be more efficient. 

Contact a property hunter 

A property hunter will help you find the right opportunity. The one that combines your budget and your criteria. He or she knows the local market inside out and will be able to guide you. Avoid wasting time, and gain in efficiency.

Market research 

No investment is complete without market research. You need to analyze local trends, prices and current regulations, as these factors influence the property's rental potential.

Contact the experts at Terreta Spain to benefit from their free expertise. 

Surround yourself with competent professionals

A lawyer specialized in real estate law, a tax expert, an experienced property manager and an insurance broker: this is the best equation for a successful real estate investment in Spain. 

The local real estate market can be complex, so a team of experts can help you avoid pitfalls and save you precious time. And time is money.

Diversify

Never put all your eggs in one basket. It's always a good idea to diversify your real estate projects. This reduces risk by avoiding dependence on a single type of market, optimizes returns (for example, tourist rentals will be more profitable in Malaga, shared accommodation in Murcia), secures cash flow, enhances the value of your assets and enables you to adapt to market trends. 

Be patient

Real estate investment is a process that takes time. It's important to be patient and not rush into a decision. Take the time to study all the options and make sure the investment matches your objectives and risk profile.

Mistakes to avoid when investing in real estate in Spain

Beware: certain mistakes can jeopardize the profitability and safety of your project. Here are the main pitfalls to avoid and how to get around them.

Do not check local rental regulations

The catch: each Spanish region has its own rules on tourist rentals (Airbnb, seasonal) and some cities impose strict restrictions (compulsory licenses, rental quotas).
Solution: check with the local authorities and verify whether the property you have chosen is eligible for short-term rentals.

Underestimating acquisition and maintenance costs

The catch: in addition to the purchase price, you need to include notary fees, local taxes, condominium fees and property maintenance. (Include fact sheet on purchase costs once published)
Solution: calculate a total acquisition cost and allow a margin for unforeseen events (e.g. renovation work, increase in utilities).

Rushing into a "false bargain

The pitfall: a property advertised at a very attractive price may conceal hidden defects, underestimated work or legal problems (e.g.: land that cannot be built on, debts attached to the property).
Solution: always ask for an appraisal report and check the land registry and the history of the property before buying.

Failure to optimize the taxation of your investment

The catch: taxes on capital gains, rental income or property tax vary according to the tax status of the owner. Some foreign investors pay more tax than they should.
Solution: enlist the help of a tax expert to optimize your tax regime and benefit from local tax advantages.

Choosing the right location

The pitfall: buying in an unattractive area or overpaying for a property in a neighborhood that doesn't offer any potential for value enhancement.
Solution: analyze market trends, choose a location with strong rental demand and study future urban planning projects.

Mismanaging your property

The pitfall: managing a property yourself from a distance can become a headache (vacancies, tenant management, maintenance).
Solution: use a rental management agency or concierge service to optimize returns and minimize constraints.

Conclusion

Investing in real estate in Spain in 2025 offers great opportunities thanks to a dynamic market and attractive returns. To succeed, it is essential to understand the best investment strategies, the tax implications and the importance of choosing the right location and property management. By following Terreta Spain's advice, and keeping up to date with market developments, you'll maximize your chances of making a profitable and sustainable real estate investment in Spain. 

Sources: Idealista, Fotocasa, El Pais, CBRE

FAQ - Investing in real estate in Spain in 2025 with Terreta Spain

Why invest in real estate in Spain in 2025?  

Spain offers attractive prices, high rental yields (up to 7.16%), sustained rental demand and an exceptional quality of life.  

What is the average return on a rental investment in Spain? 

Gross profitability is between 6.7% and 7.16% nationwide, with peaks in some cities, such as Gandia or Murcia, exceeding 10%.  

What will be the most dynamic real estate markets in 2025?  

Metropolises such as Madrid, Barcelona and Valencia are still safe bets, but cities such as Murcia, Alicante, Malaga and Almeria are increasingly attracting investors.  

Are property prices rising in Spain?  

Yes, prices are rising sharply, especially in major cities and along the coast. In Madrid, for example, prices have risen by +21.8% in one year, reaching €5,100/m².  

Which type of rental to choose? 

- Long-term: stable income, simplified management.  

- Short-term (tourist): more profitable but requires a license and more management.  

- Student flatshare: high demand, high return, but more management.  

Is it better to invest in new or existing property? 

New-build properties offer guarantees and meet modern standards, while older properties have strong potential for value enhancement after renovation.  

What are the most profitable neighborhoods in Madrid and Barcelona?  

- Madrid: Villaverde (11.9%), Puente de Vallecas (9.8%), Usera (8.6%).  

- Barcelona: Nou Barris (8.3%), Horta-Guinardó (6.7%), Sant Andreu (6.5%).  

What are the tax advantages for foreign investors?  

Spain offers an advantageous tax system, with tax reductions on capital gains after 5 years and incentives for green investments.  

How do you manage a property investment in Spain?  

We recommend using a local agency or concierge service to optimize rental management and guarantee a good return.  

Which emerging regions offer the best opportunities?

- Murcia (7.6% gross margin) with its strong appeal for student rentals.  

- Almeria (6.7%) for its lifestyle and attractive prices.  

- Alicante (6.3%) thanks to its growth in tourism and the economy.  

- Malaga for its luxury real estate market and technology hub.  

What are the pitfalls to avoid when investing in real estate in Spain?  

- Do not check local regulations on tourist rentals.  

- Underestimating management costs.  

- Investing without in-depth market research.  

Why use a property hunter in Spain? 

A property hunter knows local trends, regulations and hidden opportunities. He optimizes your budget and secures your investment.  

Do you have an investment or renovation project in Spain? Contact the experts at Terreta Spain for personalized assistance.