A Guide to Investing in Spain

Spain, with its dynamic economy, diverse sectors, and strategic location, offers a compelling landscape for investors seeking opportunities in Europe. From the bustling streets of Madrid to the sun-soaked shores of Barcelona, Spain's investment climate holds promise for those looking to grow their portfolios.

Spain's economy is driven by various sectors, and it's essential to note that economic conditions can change over time. Historically, tourism has been a significant economic driver for Spain. The country is known for its rich cultural heritage, beautiful landscapes, and attractive coastal areas, making it a popular destination for tourists.

Other important sectors include:

Services: Spain has a diverse service sector, including finance, real estate, and telecommunications.

Industry: The industrial sector, including manufacturing and construction, contributes significantly to the economy.

Agriculture: While its contribution has decreased over the years, agriculture remains an essential sector, particularly in certain regions.

Exports: Spain is a major exporter of goods and services, with key exports including automobiles, machinery, chemicals, and agricultural products.

Real Estate: The real estate sector has played a crucial role in Spain's economy, although it has experienced fluctuations, especially in the aftermath of the global financial crisis.

Here's a comprehensive guide to navigating the world of investing in Spain.

Economic Resilience #

Spain has showcased resilience, rebounding from economic challenges in recent years. Government initiatives, structural reforms, and a focus on innovation have contributed to a steady economic recovery, making it an attractive destination for investors seeking stability.

In 2021, the European Commission adopted a positive assessment of Spain's recovery and resilience plan. This was an important step towards the EU disbursing €69.5 billion in grants under the Recovery and Resilience Facility (RRF) over the period 2021-2026. This financing will support the implementation of the crucial investment and reform measures outlined in Spain's recovery and resilience plan. It will play a key role in enabling Spain to emerge stronger from the COVID-19 pandemic.

The map below shows a number of the projects in the plan. To learn more about the EU Recovery and Resilience Facility for Spain, check out the link at the end of the article.

Real Estate Sector #

The Spanish real estate market presents lucrative opportunities. Cities like Barcelona and Madrid, along with coastal regions such as Mallorca, have seen a surge in demand for residential and commercial properties. Favorable mortgage conditions and a growing tourism sector contribute to the appeal of real estate investments. The Balearic Islands, specifically Mallorca, provide a solid expat life with excellent healthcare and schools.

The Canary Islands and Balearic Islands emerged as prominent leaders in hotel investment in Spain, recording figures of €1,175 million and €796 million. While the hospitality sector is overbuilt, the Affordable Mallorca team is able to assess each project on its merits and analyse the tax and regulatory aspects to ensure a stable investment.

To watch the Mallorca Real Estate Summit for 2024, which contains information about other markets in Spain, click here >>

Recording of Mallorca Real Estate Summit with an english translator.

Renewable Energy Boom #

Spain has positioned itself as a leader in renewable energy. The commitment to sustainability and government support for clean energy projects create an environment ripe for investment. Solar and wind energy initiatives offer long-term potential for those looking to align their portfolios with environmental goals.

Spain committed to investing 40% of its total allocation into the green and digital transition to mitigate the adverse affects of climate change. Spain’s first commercial renewable hydrogen production facility is located in Lloseta, Mallorca.

Tech and Innovation Hubs #

Cities such as Barcelona and Valencia are emerging as tech and innovation hubs. With a thriving startup ecosystem and a pool of skilled talent, investing in technology companies or participating in venture capital opportunities can be a strategic move.

More than 28% of the allocation will be used to build the digital revolution. To learn more on Spain's Digital Innovation Plan, click Spain's National Initiatives for Creating Jobs in Digital Innovation.

Tourism Sector #

Spain's tourism sector, a perennial strength, remains a key investment area. According to the latest data by Instituto Nacional de Estadística, tourism contributed over €160bn in 2023 to the economy. Hotels, resorts, and related services continue to attract investors as Spain welcomed 83.1 million tourists in 2023 for 4 to 7 night stays on average. As the industry evolves, opportunities for innovative and sustainable tourism ventures abound.

While many potential investors see opportunities to purchase or lease agri-tourism properties, other investment opportunities - sometimes more lucrative - are available to invest in large-scale projects.

A 10 km. project to transform a tourist’s seafront is in development along the Playa de Palma by Arup, a global leader in sustainable development. Arup has a long list of developments in Spain in the tourism sector including the Sagrada Familia Towers, in Barcelona. The founder of Affordable Mallorca has worked with them on real estate and infrastructure and major real estate development projects in the United States, the U.K., and Spain. If you are interested in learning more about investment opportunities, contact us.

Agricultural Sector #

According to the European Commission, Spanish agriculture is characterised by a high contribution to the country’s economy, with the primary sector accounting for 2.9% of the country’s economy (total GVA). Spanish agriculture is highly varied, with significant diversity in climate, topography, and soil conditions. This results in significant differences in types of farming between territories. Vegetables and horticulture, fruit and pigmeat are the most important sectors in terms of production value. Spain is responsible for half of the EU’s production of olives and for one third of fruit.

Spain is a BIG exporter of produce for the European Community. According to Fepex, in 2023, imports increased by 7 percent in volume and 19 percent in value, totaling 4.1m tonnes and €4.473bn respectively. In the last five years imports have grown 28 per cent in volume and 51 per cent in value.

Fepex said the concentration of sales within the EU “reflects the importance of the European Commission’s policies for the future development of the sector, policies that must be in line with the productive reality of the Member States and clearly support the community preference”.

Discover more facts and figures > Agricultural Data and Fact Sheet for Spain

International Fashion #

Spain is a leading international exporter of global fashion and trends. Spanish fashion brands like Zara, Mango, and Loewe have also made a significant impact in the industry. These brands prioritize quality, affordability, and accessibility, making Spanish fashion accessible to a global audience.

The fashion industry in Spain is known for its attention to detail and craftsmanship. From the traditional techniques employed in flamenco dresses to the modern interpretations of streetwear, Spanish fashion combines heritage and innovation, resulting in unique and captivating designs. The island of Mallorca, now known more for the most stunning coves in Spain and some of the best hiking in Spain, is also home to a historic shoe industry. To learn about how the shoe industry developed in Mallorca and the latest factories, check out >> Mallorca Shoes in and around Inca.

For more on Spain's impact on the international fashion scene, check out this article >> Discover Fashion Brands and Trends in Spain.

Furniture Industry #

Spain's furniture industry has experienced steady growth, driven by urbanization, a rising middle-class, and a growing focus on home aestetics. The industry showcases a diverse range of furniture products for contemporary, traditional and custom designs. Both domestic and international players are vying for market share in this highly competitive market.

For more, check out this article >> Spain's Furniture Market.

Infrastructure Projects #

Ongoing infrastructure projects, including high-speed rail networks and airport expansions, contribute to Spain's connectivity and competitiveness. Infrastructure investments can offer stable returns and contribute to the country's economic growth.

Spain's plan includes €6.1 billion to invest in clean technologies and accelerate the development and use of renewables. The plan envisages €7.8 billion to improve the energy efficiency of public and private buildings. Other measures support the European Flagship Recharge and Refuel by investing in recharging and boosting electric vehicle infrastructure and promoting sustainable mobility.

Spain would need over 183,900 electric vehicle chargers to meet the European Union’s AFIR objectives by 2030. While its 30,345 public charging points available at the end of the fourth quarter of 2023 would already meet the 2024 target, Spain faces hurdles meeting the AFIR Objectives. The country must contend with specific strategic and demographic hurdles on top of the obstacles typically associated with public charging build-up, which creates a complex ecosystem for market expansion. . For more, read >> Electric vehicles in Spain.

Financial Services Sector #

Spain's financial services sector is robust and well-regulated. Investing in established banks, fintech startups, or participating in the growing digital banking trend can be avenues for diversification and potential returns. Spain attracted 31 projects in 2022, and Madrid continues to hold third place in the city ranking with 22 of these projects.

Spain attracted 11% of foreign direct investment (FDI) projects in Europe in 2022 in the financial services sector, according to the latest EY Attractiveness Report published by Invest in Spain. "A total of 31 FDI projects in this industry were awarded to Spain last year," according to them.

Spain's business banking is poised for a digital transformation. According to Fintech News, "Ley Crea y Crece”, which was approved by the Congress of Deputies in September 2022, is a new regulation designed to facilitate the creation of companies, reduce regulatory obstacles and promote business growth and expansion. Among its key provisions, the law generalizes the use of electronic invoices, establishes measures to combat late payments in commercial operations, and promotes alternative financing by encouraging mechanisms such as crowdfunding, collective investment or venture capital (VC)."

Currently, digital innovation in the business sector is underdeveloped and provides significant opportunities.

Strategic Location #

Spain's strategic location as a gateway between Europe, Africa, and the Americas positions it favorably for international trade. Investors looking to capitalize on global business opportunities can leverage Spain's connectivity and logistics infrastructure.

The number of passengers travelling through Spanish airports last year (2023) rose 16% from 2022 to 283 million, according to the state-controlled airport operator Aena.

Navigating the Regulatory Landscape #

Before diving into investments, understanding Spain's regulatory environment is crucial. Seek professional advice, comprehend tax implications, and stay updated on any regulatory changes that might impact your investment strategy.

Affordable Mallorca has a relationship with Hanowa Capital, a strategic economic development group, focused on connecting the financial sector to global opportunities. Through their team of legal, financial and immigration advisers in Spain, the U.K. and the U.S., the principals and advisors have proven experience to create significant value.

Other Affordable Mallorca service providers include:

• Maria Garcia, Lawyer, Tax Specialist
• Bryan Gimenez, Partner at Izeta Abogados, Immigration and Visa Specialist
  
• Xavier Jaume, Lawyer, Property and Investment

If you have general inquiries, please Contact Us and we will direct your questions to someone who can assist you with your needs.

Diversification Strategies #

As with any investment portfolio, diversification is key. Consider a mix of asset classes and sectors to spread risk and maximize potential returns. Affordable Mallorca accesses investments in Spain with exciting opportunities being presented monthly.

Whether you are a yachtie looking for a good retirement plan or a family looking to settle into a higher-quality of life, Spain offers a selection of complimentary assets.

You may think you want to buy a finca or a small boutique hotel to qualify for a Golden Visa. However, opening your mind to other options can increase your net worth and lifestyle.

Summary #

Spain is a country with a stable economy and a democratic political system, which is important for long-term investment, as it provides a secure environment for investors. Spain is one of the most popular touristic destinations in the world.

Investing in Spain offers a compelling blend of stability, growth potential, and diversification. Whether you're drawn to the vibrant real estate market, the renewable energy revolution, or the innovation hubs, Spain provides a canvas for investors to paint their success stories in the heart of Europe.

If you want more time to enjoy your life, invest in opportunities where everyday is a fun place to live!

For more on Spain's Economic Plan #

Spain's Recovery and Resilience Facility - Financing the Future

Sources

• Aena
• EU Renewables Now
• Arup
• Invest in Spain
• Europa.eu
• maps-spain.com
• Fruitnet
  
• https://www.fepex.es/home.aspx
• Stastica.com