In Spain there are 40,295 homes for sale with prices above one million euros. Most of these homes are concentrated mainly in five areas of the country.
According to data from the First Report on the Luxury Housing Market in Spain by Hiscox, Alicante is the fifth province with the highest number of properties over one million, with 10.6%, especially due to the attraction factor of the Costa Blanca.
Who buys luxury housing in Spain?
The profile of the client looking for luxury properties in Spain is mainly international. Many of these investors come from European Union countries, mainly Germany, the United Kingdom and France.
However, there are also many national, Russian and Latin American investors.
Amongst buyers on the coast, the international profile clearly predominates, who are looking for a secondary residence where they can spend long periods of time.
The coast is the favourite destination of Germans, British, Russians and, increasingly, also Nordics.
The demand for luxury property purchases by foreigners in our country has been constant in recent years and is more elastic than national demand.
For British buyers, traditionally the leading nationality for home investment in Spain, Brexit has brought changes, such as the Capital Gains Tax (CGT) rate on the sale of property located in Spain, which increased from 19% to 24% for UK tax residents.
The areas most affected by Brexit are exclusive homes by the sea, such as the Costa Blanca.
Trend in the purchase of luxury homes
In the economic scenario in which we find ourselves, with the forecast of a new period of economic recession, exclusive homes are becoming more attractive as an investment due to their quality of refuge value and where we will see people, with high purchasing power, taking defensive positions by acquiring luxury residential properties in certain locations.
The global luxury market appears to be better prepared to cope with an economic downturn, thanks to a growing consumer base that is less sensitive to economic downturns.
Another fact that demonstrates the health of the luxury residential market is that over the last two years, prices have increased by 10-20% depending on the market above pre-Covid levels. For the next few years, the expectation is that prices in luxury housing will remain more or less stable.
The luxury real estate market in Spain among foreign buyers continues to boom in 2023, as many foreigners have returned to invest in our country after leaving behind the years of confinement, restrictions, crisis and uncertainty.
This is manifested in the fact that our country has positioned itself as thefourth most popular destination in the world among buyers in the UHNWI (ultra high net worth individuals)segment.
The weight of foreign residential investment in our country in 2022 reached 13.75% of the total, according to data from the Association of Registrars. In the luxury segment, this percentage is much higher.
What are luxury property buyers looking for?
The needs of buyers of exclusive homes, whether of national or international origin, have evolved over time.
In the wake of COVID-19, their habits and lifestyles have adapted to a new health situation and its economic, social and political consequences.
With telecommuting becoming more normalised, it is becoming relatively common for the ultra-rich to have residences in various destinations around the world where they can go seasonally.
As a result, new behaviours in terms of the simultaneous use of two or three residences, or even more, have become widespread in recent years.
Mobility and adaptation are now their new watchwords.
When choosing where to invest, luxury home buyers consider these factors essential:
- cultural richness,
- economic aspects.
There are also certain key indicators that condition the purchase of a luxury property:
- Emotional/sentimental: proximity and contact with other UHNWI, cultural richness and access to luxury shops and restaurants
- Practical: Security, state-of-the-art sanitary facilities, mobility/accessibility and ecological footprint
- Financial: Ease of setting up a business, property value for money and competitive taxation
Generations of luxury home buyers
Millennials or Generation Y (born between 1981 and 1995) and Centennials or Generation Z (born between 1996 and 2010) will account for more than 60% of the luxury market by 2025.
It is estimated that the spending of these generations will grow 3 times faster than that of other generations.
In Spain, this has already been noticed in the luxury housing market, which has seen how these new protagonists (Millennials) have come to represent 25% of total transactions.
However, the buying and selling of luxury properties is still led by Generation X (born between 1961 and 1980).
Millennials and Centennials are digital, hyper-connected generations with high social and ethical values. Professions related to health, science and research and all those with a “tech” component are the main ones among these individuals.
Socially active in the online environment, they put quality of life and time availability before a large salary, preferring social networks to television and books.
They prefer new or recently refurbished homes, but always of the highest quality.
According to their needs, we can consider that quality, flexibility in design and nature together with physical and technological connectivity will be the main keys that define luxury housing in the new generations.
They are looking for innovative and sophisticated spaces, highly desirable to live in, that integrate elements such as:-
- Green spaces: Gardens and courtyards with exotic vegetation or unique species that project a sense of wellbeing.
- Energy certificates: LEED, BREEAM or Nearly Zero Energy Buildings, mandatory from 2020 in the EU, with almost zero energy consumption.
- Communal areas: spacious gym with the latest sports facilities, gourmet lounge, wine cellar, cinema room or nursery.
- Union of concepts: Integration of art with architecture, or services typical of a 5* hotel, creating unique experiences.
Luxury buyers in our country mainly opt for locations on the coast, where they acquire a second or third residence.
At Hispania Homes we specialise in managing the sale and purchase of high value properties on the Costa Blanca North.