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How will coronavirus (COVID19) affect the real estate market in Spain?

Because we are still in the eye of the storm, the answer to this question is neither simple nor straightforward. It's not a secret that the whole world is facing a serious crisis, the extent of which we can't really predict at the moment. Forecasts appearing in various sources and figures showing short-term market responses to the global situation are not really optimistic.

Mark Stücklin and his study on the impact of coronavirus on the real estate market in Spain

Mark Stücklin, an expert in the Spanish real estate market for many years, approached the title question very interestingly. Instead of "predicting", Mark decided to ask his blog readers about their thoughts. During the week, over 600 people answered Mark's set of questions about the impact of CoVid19 on key real estate market processes. The group of Mark's respondents included:

  • "expats", i.e. foreigners living in Spain,
  • property owners (sellers),
  • potential buyers,
  • realtors working on the Spanish market.

Mark asked his respondents 5 questions about the impact of coronavirus on the real estate market:

  1. How long will the paralysis in the Spanish property market last?
  2. What will happen to real estate prices ('second residences')?
  3. What impact will the pandemic have on foreign investors?
  4. What will buyers do?
  5. What will sellers do?

Below I will describe how Mark's respondents answered to his questions and add my comment to each of them.

How long will the paralysis on the Spanish property market last?

This is how people asked by Marek answered this question.

How long will the paralysis in the Spanish property market last

In general, I agree with the largest group of respondents here. Because of the coronavirus pandemic, the real estate market in Spain has been blocked for over a month, we do not know how long the government will maintain the "estado de alarma" and how long it will take us to go back to normality. We also do not know when the borders will be opened or how long it will take to restore international flights. Without them the real estate market in Spain, especially on the coasts and islands, does not exist. An important note here: when I say: "the real estate market in Spain", I always mean the so-called second residences most often bought by foreigners. This does not mean that the Spaniards do not buy holiday properties, because of course they do, but it is foreign investors that are leading in this market.

What will happen to real estate prices ("second residences")?

Some Mark respondents have rightly pointed out that price changes depend on the type and location of the property. A luxury villa in Marbella is not the same as a small apartment in Manilva. However, it is also true that people have some general opinion about prices, even if there are big differences depending on the region. 57% of respondents believe that coronavirus will cause property prices in Spain to fall significantly, while 37% say that price adjustments will be minor. Only 6% do not expect any impact on prices.

What will happen to real estate prices

In my opinion, the price reduction will depend heavily on the location and type of property. As usual in this kind of situations, "premium" properties those in the price range from 1 million up, will live their own lives and coronavirus will not affect them at all or minimally. I expect the biggest reductions in the real estate sector up to 500,000 EUR. There are the most on the market and a lot is still being built. Here, I will watch with curiosity how big developers like Neinor or Aedas, building estates of several dozen to several hundred flats throughout Spain, will behave. This crisis associated with coronavirus (COVID19) appeared literally overnight and did not give anyone a chance to prepare plan B. The developers found themselves in a very difficult situation, because from 13.04. they can build again, but at the moment there are no customers. Those potentially interested in buying now can't even come to see the projects, and without that it is difficult to expect that they will buy anything. Unless the prices will become so attractive that it will be worth in their opinion to invest based on marketing materials provided by the developer, general market knowledge and the location.

As for the secondary market, there will be opportunities arising from financial trouble in which many people will find themselves due to the crisis. When you need to save a bankrupting business, the first thing you try to cash quickly is a holiday apartment. 

What impact will the pandemic have on foreign investors?

More than three-quarters of Mark's respondents expect the impact to be temporary and not last more than a year or two (76%), and 17% expect the impact to be limited to a few months. Only 7% expect permanent damage.

What impact will the pandemic have on foreign investors

I admit that I do not expect much of the rest of 2020. My company, despite operating on the Spanish Costa del Sol, sells and rents mostly to foreigners, so we are dependent on open borders and operating flights. I hope that Spain will start to open slowly in May, and in June it will be possible to come and visit us. Opening the Spanish borders alone will not help us much if Poland, Germany and Scandinavia do not open, because the vast majority of our 'shopping' customers come from these countries. After opening the borders, we will have to defeat another enemy: fear. Fear of airports, planes, large clusters of people, of getting sick. It will also take time. That is why I think that foreign investors will return to Spain no sooner than in a few to several months, although we have signals from people who are waiting for the opening of the borders to come and buy their dream home in Spain as soon as possible.

What will buyers do?  

This is how people asked by Mark answered this question.


What will buyers do

I think, anyway, all purchasing decisions will have to wait until the coronavirus situation in Europe has normalized enough to be able to travel. Transactions that are being implemented will be finalized - perhaps with a slight slip. In most cases authorized lawyers act on behalf of both sellers and buyers. However, it will be more difficult to find new buyers, and here I agree with the largest group of Mark’s respondents, who said that "buyers will wait for prices to fall and opportunities to appear.". 

What will sellers do?

What will sellers do

We will have to face two trends:

  1. There may be significantly fewer properties on the secondary market for a while.
  2. If in fact 41% of sellers do not lower their prices and 52% of buyers expect "coronavirus" discounts, they will find it difficult to get to an agreement. This can translate into frustration on both sides and an even longer market blockage because buyers and sellers will have completely unrealistic expectations.

Summary and conclusions 

  • I assume that there will be opportunities in the first three to six months after easing travel restrictions.
  • We can expect a slight price correction in the real estate sector to 500,000 EUR. Various sources say about 10% reductions, but this should not be taken as a rule, because any reductions will depend on the individual situation of the seller.
  • Luxury properties will not be strongly affected by coronavirus (CoVid19).

We are waiting for developer moves. For now, we are not receiving information about any reductions. Since Monday construction has begun, and our clients who bought off plan apartments and are waiting for completions, inform that development companies are in contact with them to ask, for example, to choose tiles for bathrooms or furniture for the kitchen. I also spoke to a friend today, whose beautiful development project we will have the pleasure to present to you in May and I have also been assured by him that they work and look rather optimistically into the future. For now, we are observing the situation and waiting for the opening of borders, and only then will we know how our financial situation actually is. A crisis like this has always got two faces: it is a problem for some and an opportunity for others.


See also

[PRIMARY MARKET] 2 modern apartments on the Costa del Sol at prices below 350,000. EUR

Do you want to buy a house in Spain? Here's what you need to know in 2024

Luxury real estate in Spain – this is worth knowing in 2024

Legal regulations for renting real estate in the most popular regions of Spain in 2024

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