We have just closed the second best year for real estate investment in Spain since the brick crisis, behind only 2018. In total, according to data provided by CBRE, the world’s largest real estate consultancy, in 2022 17,600 million euros were invested in our country, which represents a growth of 39% compared to 2021. Without a doubt, spectacular data that, according to this same entity, will not be repeated in 2023. In this case, expect a drop in investment that will be between 20% and 30%. As is logical, behind these pessimistic omens would be uncontrolled inflation and the repeated rises in interest rates to try to control it; as well as the tensions caused by the Russian invasion of Ukraine and the consequent energy crisis.
This relative slowdown in investment would have already been detected in the fourth quarter of 2022, which had nothing to do with the figures achieved in the first six months of the year. This situation suggests that, indeed, the beginning of the year will follow the regressive path that CBRE points out and that it will give way to a 2024 led once again by investment euphoria.
However, despite this slowdown that we expect to be momentary, we cannot lose sight of the fact that Spain continues to be a priority objective for foreign funds and family offices, which continue to find very interesting returns in our real estate sector and regulatory stability of which suffer in many of their countries of origin. This would be the first of the aspects that make our country the ideal recipient for this type of investment.
In recent years, a growing interest has been detected on the part of investors from Latin American countries, especially those that are plagued by political uncertainty and a certain instability that scares away money, which seeks safer spaces in which to operate. Countries like Venezuela have been in this situation for a long time, whose capitals have been carrying out important transactions in the wealthiest neighborhoods of Madrid for years. But other neighboring territories such as Mexico, Colombia, Bolivia, Chile and, more recently, Peru, would also be on the list, especially as a result of the latest internal problems with Castillo’s self-coup.
In this case, Spain would be taking advantage of all those capitals that are fleeing from an unstable political and social situation and that find in our real estate sector the stability that any long-term investment needs. Undoubtedly, we cannot ignore the language and cultural brotherhood when choosing Spain as the destination of their operations, instead of other European or world markets, which are less close to them. In this sense, we share a series of circumstances that facilitate the carrying out of this type of operation, but also, our real estate sector continues to be much more attractive from the point of view of price than other European cities that could compete for the attraction of this investment. . Paris or London still have prices that are much higher than those of Madrid or Barcelona, which despite the increases in recent years, still have much more to offer in price.
To the flow of investment from Latin America we must also add the permanent interest that the Spanish coast has for foreign investors, in general, and for Eastern Europe, in particular. In this sense, it is worth noting the case of Marbella, favored for years by the interest shown by Russian investors and which, now, equally attracts those Ukrainian investors who have had to flee the war and who are entering the residential area, but also in businesses related to hospitality and tourism.
In short, 2023 may be a year of adjustment, but investment expectations are between 12,000 and 14,000 million euros, an amount that continues to position us among the most interesting countries for real estate investment. It is therefore clear that foreign investment continues to bet on Spain as a destination for their investments with great interest and that in real estate, Spain continues to be fashionable.
Jorge Martin Losa is a Partner of Balms Abogados