The Terreta Spain guide for your investment in Spain in 2025 

Introduction

Sunny coasts, a powerful culture, paellas on every 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 right idea 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 property owner in Spain. Unlike other European markets where prices are prohibitive, Spain offers relatively affordable real estate prices. National and international buyers, both novice and experienced, can enter the market with less capital. 

Secondly, rental yields are high. The latest studies published by Spanish real estate portals show that the national gross average of returns is around 7%. 7.16% for Idealista, and 6.7% for Fotocasa. In tourist areas and university towns, this average increases. In short, yields have never been so high.

Legend: Returns in Spain in 2024

Source: Fotocasa

Specifically, Spain is now in second place among European countries offering the best return prospects for 2025 just behind the United Kingdom, according to the latest report from CBRE, one of the largest real estate services companies in the world.  

Demand is rising

For some years now, demand has been constant, it seems to be on life support. Rental vacancy is almost zero, rental income is rather stable. 

In addition, in recent months, potential buyers have seen interest rates return to tolerable levels: 3.3% on average, which is reassuring and encourages purchasing.

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

In 2025, real estate investment is expected to increase by 15%, according to experts. 

Quality of life

The last advantage of the country is its quality of life. It deserves an article of its own, but between its varied nature, rich culture, delicious cuisine, climate, and modern infrastructure, life in Spain ticks almost all the boxes. Living conditions are pleasant and promote outdoor living throughout the year. This also influences the attractiveness of properties with outdoor spaces and investment in general. The cost of living is also largely accessible, a big plus for retirees, students, or young professionals.

Macroeconomic context 

In January 2025, the world was surprised to learn that Spain is now the locomotive of Europe. Its growth stands at 3.5%, making France, Germany, and Great Britain pale with envy. This economic dynamism boosts the sector. The volume of transactions exceeded 515,000 last year, and 2025 seems set to follow the same pace. 

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

Real estate price evolution

As mentioned, the average price per square meter is now €2,271, marking an all-time record. This surge is due to a shortage of supply due to increased construction costs since the pandemic, and therefore a lack of new housing, according to Idealista experts.

Some cities have recorded particularly marked increases: 

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

At the regional level, Madrid (+17.5%), the Canary Islands (+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 in 2025, supported by international demand, lower interest rates, and the absence of price caps. This situation reinforces the interest in real estate investment in Spain, despite increasingly expensive access to property.

Trends in the Spanish market

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

• The market has been able to adapt to the growing demand and standards of international buyers, by offering a better quality service in several languages.
• It has largely gone digital, with the rise of virtual tours and remote transactions. These innovations facilitate access to the market 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 highlight these types of properties. 
• Sustainability is taken seriously in a country where most of the housing stock is more than 44 years old on average. The use of sustainable materials and properties with a low environmental impact are becoming increasingly attractive to buyers who are aware of environmental issues. For more on this topic, see our full article. (to be integrated once published). 
• Flexibility: short-term rentals are gaining momentum as international buyers look for properties they can rent out at a premium and occupy from time to time for teleworking or vacations. 
• Lastly, there is growing interest in emerging areas. While Barcelona and Madrid continue to attract, areas such as the Region of Murcia or Almeria offer great opportunities and attract investors with more limited budgets, looking for highly profitable market niches for the years to come.

Investment strategy: where and how to invest in 2025?

Safe bets: the metropolises 

The trio of metropolises that never disappoints is: 

1. Barcelona
2. Madrid 
3. Valencia 

Madrid and Barcelona rank second and fourth respectively in the ranking of the most attractive cities for international investment. Valencia is now a leading city for investment, despite the DANA (isolated depression at high levels) that ravaged its periphery in the fall of 2024. These floods have also triggered a general awareness of the need to adapt the housing stock to the realities on the ground and 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 profitability 2024: 6%. 

• High rental demand, supported by tourism (15.5 million tourists in 2024), the student population and young professionals, attracted by the city's economic dynamism. 
• Consolidated areas (Eixample, el Born, Gracia, etc.): ultra-demanded areas with almost zero risk. In these areas, average returns are lower than the national average, which must be taken into account. Long-term valuation and market stability are the priorities when investing there.
• Emerging areas: some neighborhoods, until now "asleep", are booming, such as Nou Barris, in the north of the city. The district has a gross return of 8.3%, the best rate in the Ciudad Condal. 10 years ago, the return did not exceed 5.5% in this area. Horta-Guinardo is in second position with an average return of 6.7%, followed by Sant-Andreu and Montjuic with an average return of 6.5%. It is possible to find interesting opportunities in these areas, as well as in the periphery, if you are well supported. 
• High quality infrastructure: its universities, hospitals and transport network are at the forefront and reinforce its international attractiveness. 
• Technological hub: Barcelona has also positioned itself as a tech hub in southern Europe, a strong point for real estate investors. 

⚠️Our advice if you opt for Barcelona: if you are leaning towards tourist rentals, look for a property that can also be rented long term. Indeed, local legislation is becoming increasingly strict on this subject. 

Madrid, the capital is experiencing a real estate boom

Purchase price: €5,100/m2 (+ 22%).

Rental price: €21/m2 (+15%). 

Gross profitability 2024: 5%.

• In 2024, Madrid is emerging as the nerve center of real estate investment in Spain and Europe.
• The living environment is attractive, with a quality of life that exceeds the index of 181.  
• The advantageous tax system (the "Mbappé Law" and other tax measures such as a low ITP attract foreign investors. 
• The economy is thriving (+3.2% growth in 2024). The capital generates 19.6% of Spanish GDP, captures more than 60% of the country's foreign investment and registers a strong creation of companies, particularly in tech. 
• The most profitable districts of the capital are: Villaverde with 11.9% (it went from 6.4% to 11.9% in just 10 years), Puente de Vallecas and its 9.8% profitability and finally, Usera, with 8.6%.
• Rental demand is exploding. 

To go further and discover the districts of Madrid, consult the guide of Terreta's experts based there. 

Valencia, a leading destination

Purchase price: €2850/m2 (+23%).

Rental price: €15/m2 (+11%).

Gross profitability 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 in 2024).
• Since the post-pandemic recovery, the city has experienced a period of economic growth and attracts investors (+2.5% growth in 2024). 
• The city has also positioned itself as a tech hub on the coast; you can read our full article on the subject by clicking here.
• Rental yields are excellent in certain districts such as El-Cabanyal and in the periphery (Castellon de la Plana, or Gandia for example). 

To find out more about Valencia, consult the guide from Terreta's experts based locally. 

The rising regions 

Murcia, Almería, Malaga and Alicante are rising destinations for real estate investment. These less saturated regions offer excellent opportunities. A rich culture, breathtaking natural beauty and a good quality of life are attracting more and more international investors.

Murcia, the Eldorado of rental yields 

Purchase price: €1285/m2 (+3%).

Rental price: €8.8/m2 (+8%).

Gross profitability 2024: 7.6%.

• The city is located 1 hour 30 minutes from Alicante or Malaga airport.
• The culture and natural setting are attractive.
• The weather is ideal.
• There is a golden triangle around the university where returns can exceed 12%. Stable cash flow and frequent rent re-evaluation are key. 
• In 2024, foreigners bought 23% of properties in the Region of Murcia. 
• La Manga, one of the jewels of the Murcia region, is an ideal area for tourism.
• Mazarrón, a small town on the coast of Murcia, was the most profitable city in the country during 2024 (11.4%). At the beginning of 2025, El Ejido, a town in the Province of Almeria, stole the show. 

Almeria, an emerging market with strong growth

Purchase price: €1420/m2 (+2%).

Rental price: €8.8/m2 (+11%).

Gross profitability 2024: 6.7%.

• The region is often overshadowed by concerns about its greenhouses and intensive agriculture, but it has many advantages: its location on the coast, its dry and warm climate throughout the year, and 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 ecological residences.
• Please note that regulations are likely to become stricter due to the interest in tourist rentals. 

Malaga, a tourist and technological powerhouse 

Purchase price: €3240/m2 (+20.5%).

Rental price: €15/m2 (+10.5%).

Gross profitability 2024: 5.6%.

• A very good quality of life index, exceeding 180.
• The city has become the tech hub of southern Spain. 
• The area is very attractive for tourism, with more than 14 million tourists in the entire Province in 2024.
• The luxury residential market is extremely dynamic.

Alicante, a magnet for foreigners

Purchase price: €2250/m2 (+15.4% in one year).

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

Gross profitability 2024: 6.3% (Idealista).

• An unparalleled climate and a high quality of life, with an index of 194.
• Economic center of the region. 
• A student city that is attracting more and more international students.
• Tourist area: +23% of traffic at Alicante-Elche airport in 2024.
• Luxury tourism on the rise: overnight stays in 4 and 5-star hotels have increased by 35% in the last three years. 
• The region accounts for more than 36% of the purchase demand from foreign investors.
• The port area, the historic center, and the city's surroundings are areas with high real estate appreciation.  

Gandia, the pearl of the Valencian Community

It's impossible to conclude this overview of geographical areas for investment in Spain in 2025 without mentioning Gandia, a small town on the Valencian coast.

Purchase price: €1343/m2 (+11.7%).

Rental price: €8.2/m2 (+11.4%).

Gross profitability 2024: 10.8%.

• Gandia was at the top of the ranking of the most profitable cities in Spain for 3 years, from 2021 to 2024. In 2024, it was overtaken by a small town in the Murcia region, Mazarrón.  
• It is ideally located by the beach (7 km of coastline), making it very attractive to tourists or digital nomads.
• Gandia is located less than an hour from the Valencian capital by train, making it easily accessible.
• The legislation is very favorable for seasonal rentals, which maximizes income, especially during the summer months. 

Terreta Spain has carried out numerous rental investment projects in the area; contact our experts for more information. 

Our advice for your investment strategy in 2025

Which type of rental should you choose?

The choice of rental type depends on your objectives and the target market. Don't get started without knowing the advantages and disadvantages of each strategy. 

• Long-term rentals: this type of rental has a main advantage: it generates stable income and requires little management. It's a rather passive type of investment, so to speak. 
• Short-term rentals: these can be much more profitable, especially in tourist areas, but be aware that they require a lot of management and, above all, a tourist license. This issue is regional. There are 17 autonomous communities in Spain and almost as many regulations. In other words, if you are looking to rent to vacationers, 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 to ensure that vacationers and local residents can live together without difficulty. Investors need to take this factor into account, as it influences how quickly and easily the property can be let.
• Student rentals / co-living: this is an excellent option for investors looking for maximum profitability by renting by the room. This type of rental is also less affected by seasonality, but it involves a great deal of management. You need to have the time or the budget to delegate to a competent company. 

Should you invest in new or existing properties? 

Note that investing in new builds offers an advantage in terms of construction standards and comfort, which may appeal to increasingly demanding tenants. However, when considering the potential for value appreciation upon resale, existing properties prevail, especially if they have been carefully renovated.

Beyond its property finder service, Terreta Spain offers to take charge of your renovation project. Contact our specialists to find out more and entrust the valuation of your property to experienced professionals. 

Managing your property 

The type of management can greatly influence the profitability of your property. If you take care of it yourself, you will certainly save money, but it can be complex and time-consuming.

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

Contact a property finder 

A real estate hunter will help you find the right opportunity, one that combines your budget and criteria. They have an in-depth knowledge of the local market and will be able to guide you. Avoid wasting time and increase your efficiency.

Study the market 

No investment without market research. You need to analyze local trends, prices, and current regulations, as these elements influence the rental potential of the property.

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

Surround yourself with competent professionals

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

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

Diversify

Never put all your eggs in one basket. It is always good to diversify 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, co-living in Murcia), secures cash flow, enhances assets, and allows you to adapt to market changes. 

Be patient

Real estate investment is a time-consuming process. It is important to be patient and not rush into a decision. Take the time to study all the options carefully and make sure that the investment corresponds to your objectives and risk profile.

Mistakes to avoid when investing in real estate in Spain

Be careful, some mistakes can jeopardize the profitability and security of your project. Here are the main pitfalls to avoid and how to get around them.

Failure to check local rental regulations

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

Underestimating acquisition and maintenance costs

The pitfall: in addition to the purchase price, you must include notary fees, local taxes, condominium fees, and property maintenance. (include practical guide on purchase costs once published)
Solution: calculate a total acquisition cost and allow a margin for unforeseen expenses (e.g., renovation work, increased charges).

Rushing into a "too good to be true" deal

The pitfall: a property advertised at a very attractive price may hide hidden defects, underestimated work, or legal problems (e.g., non-building land, debts attached to the property).
Solution: always request an expert report and check the land registry and the history of the property before buying.

Failure to optimize the taxation of your investment

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

Choosing the wrong location

The pitfall: buying in an unattractive area or overpaying for a property in a neighborhood that does not offer potential for appreciation.
Solution: analyze market trends, choose a location with strong rental demand and study upcoming urban development projects.

Poorly managing your property

The pitfall: managing a property remotely yourself can become a headache (rental 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 excellent opportunities due to a dynamic market and attractive returns. To succeed, it is essential to understand the best investment strategies, tax implications, and the importance of choosing the right location and property management. By following Terreta Spain's advice and staying informed about market developments, you will 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 still 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? 

The gross return is between 6.7% and 7.16% nationally, with peaks in certain cities like Gandia or Murcia, exceeding 10%.  

Which real estate markets are the most dynamic in 2025?  

Metropolitan areas like Madrid, Barcelona, and Valencia remain reliable choices, but cities like Murcia, Alicante, Malaga, and Almeria are attracting more and more investors.  

Are real estate prices increasing in Spain?  

Yes, prices are rising sharply, especially in large cities and coastal areas. For example, in Madrid, they have increased by +21.8% in one year, reaching €5,100/m².  

Which type of rental should you choose? 

– Long term: stable income, simplified management.  

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

– Student co-living: high demand, high yield, but more management.  

Is it better to invest in new or old properties? 

New properties offer guarantees and meet modern standards, while old properties have strong potential for appreciation after renovation.  

Which are the most profitable districts 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 advantageous taxation, with tax reductions on capital gains after 5 years and incentives for green investments.  

How to properly manage a real estate investment in Spain?  

It is recommended to use a local agency or concierge service to optimize rental management and ensure a good return.  

Which emerging regions offer the best opportunities?

– Murcia (7.6% gross return) with its strong appeal for student rentals.  

– Almeria (6.7%) for its living environment and attractive prices.  

– Alicante (6.3%) due to its tourist and economic growth.  

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

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

– Failure to verify local regulations on tourist rentals.  

– Underestimating management costs.  

– Investing without an in-depth market study.  

Why use a real estate hunter in Spain? 

A real estate hunter knows local trends, regulations, and hidden opportunities. They optimize your budget and secure your investment.  

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