The European real estate market is set to enter a phase of moderate recovery in 2025 after two years of correction, with Spain emerging as one of the best-positioned countries to benefit from this new cycle, according to the Global Trends and Tactics Q1 2025 report by Nuveen Real Estate.
The study highlights that despite macroeconomic and geopolitical uncertainties, the Spanish real estate market has shown remarkable resilience. Since the global peak in 2022, Spain has recorded one of the smallest declines in asset values (-13%), well below the European average and far less severe than drops seen in Ireland or Germany. Moreover, in Q3 2024, Spain achieved positive returns from both rental income and capital appreciation, solidifying its reputation as one of the most robust and attractive markets for investors.
The Nuveen report highlights that the sector’s recovery across Europe will be uneven, depending on local contexts and asset types. While the UK and Nordic countries lead the rebound, major economies like Germany and France continue to face challenges. In this landscape, Spain distinguishes itself with strong performance across key real estate sectors:
Residential: strong price growth
Spain ranks among the European countries with the highest housing price growth, with an 8% year-on-year rise in Q3 2024, second only to the Netherlands (+11%). This growth is driven by strong demand and limited supply, particularly in major cities. The rental market also outperformed the Eurozone average, increasing by 2.3%, further enhancing residential real estate’s appeal to institutional investors.
Madrid stands out with one of Europe’s lowest vacancy rates in prime CBD areas, at just 3.7%. While capitals like Berlin, Dublin and London face high vacancy rates, Madrid benefits from stable occupancy and strong demand, supported by limited new supply and robust corporate leasing.
Logistics: Barcelona and Madrid, engines of growth
The Spanish logistics sector continues to thrive. Barcelona ranks among European cities with the highest year-on-year logistics rent increases (double digits), while Madrid leads prime rent growth at +5% in Q4 2024. This contrasts sharply with the European average rise of just +0.6%, cementing Spain’s status as a top logistics hub.
The retail segment is also showing signs of recovery in Spain, with retail sales growing by +2.8% year-on-year in Q4 2024, exceeding the European average (+2.1%). This rebound points to an improvement in domestic consumption and renewed interest in commercial assets, especially in prime locations.
Outlook for 2025: cautious optimism
Lower interest rates, the return of value-add investors – particularly from the US – and stabilising income and valuations point to a gradual recovery in 2025. However, the report cautions that limited supply, fierce competition for quality assets and geopolitical uncertainties will continue to influence the pace and extent of this recovery.
Against this backdrop, Spain stands out as a preferred destination for investors seeking stability and growth in Europe, thanks to its robust structural demand, competitive returns and strong performance across key real estate sectors.