How important are foreign second homeowners to Spain?
A new study has reported that foreigners with second homes in Spain contribute a massive amount to Spain's GDP, at a time when some regions are considering limiting the number of overseas property buyers.
The extent to which foreign second homeowners contribute to the Spanish economy has been made clear in a recent report, but it doesn't come without drawbacks.
In 2022 foreigners with a second home in Spain contributed €6.35 billion to Spanish GDP and generated more than 105,000 jobs in the tourism sector, according to the study "The economic impact of residential tourism in Spain" done for the Spanish Association of Developers and Builders (APCE) by PricewaterhouseCoopers (PwC).
According to the study's definition: "A residential tourist is considered to be a foreigner who buys a property in Spain to enjoy it during the year."
Though there's no time duration specified, we can take it to mean a second homeowner who spends some of the year in Spain.
READ ALSO: Where in Spain are rent prices rising the most?
In 2022, the foreign purchase and sale of property in Spain reached a historic high with 88,858 acquisitions. Of those homes, almost a third (32.8 percent) were bought by a handful of nationalities, all long-established second home owning communities in Spain.
Despite Brexit limiting the amount of time second homeowners can spend at their Spanish homes, Britons still lead the pack (11.1 percent of purchases in 2022), followed by the Germans (9.5 percent), French nationals (7 percent) and Belgians (5.2 percent).
Overall, 71.5 percent of so-called 'residential tourists' who visited Spain in 2022, to use the vocabulary in the study, came from the UK, Nordic countries, Germany or France.
The financial contribution made by these second-home owners in Spain is clearly significant. In fact, experts point out that the money brought into the Spanish coffers by foreign homeowners even outstrips some major industries.
"The contribution of residential tourism to GDP is triple that of the textile industry, double that of the timber industry and the same as the manufacture of pharmaceutical products in Spain," Anna Merino, director of the Economics team at PwC, said when presenting the study.
Every euro spent by 'residential tourists' adds €2.34 to Spanish GDP. On top of this direct contribution to the Spanish economy, the surrounding economic activity associated with the spending generated 105,600 full-time jobs in 2022.
According to Merino, that is a similar number to that of the chemical industry and double that in furniture manufacturing or beverage production.
The report comes at a time when there's some uncertainty about the status of foreign homeowners and their impact on the property market in Spain. The report was requested by the APCE amid the possibility that some Spanish regions, namely ones traditionally oversaturated by tourism more generally, might make moves to limit the purchase of homes by foreigners.
"With this study we want to demonstrate the negative impact that a measure such as the one proposed by some regions would have on the Spanish economy,” says Juan Antonio Gómez-Pintado, president of the APCE.
“The impact of the real estate sector on other sectors, such as tourism, is enormous. Knowing the GDP and employment data is very important to convey it to the regions and to society.”
Regional administrations and political parties in the Balearic and Canary Islands, as well as the Valencian Community, all areas long popular with foreign second homeowners, have floated plans to limit or even ban property purchases by foreigners in recent years.
READ ALSO:
- EXPLAINED: The plans to limit foreign property buyers in Spain's Balearics
- Political party calls for ban on property sales to foreigners in Spain
- Will Spain's Canary Islands limit sale of properties to foreigners?
For British homeowners in particular, the 90/180 day Schengen rule has been a source of frustration and limited the time they can enjoy at their second properties.
At the end of 2023, there was excitement when rumours began circulating that Spain could change the rules to allow British second homeowners to spend periods of 3+ months at a time in the country.
This came following the French Senate voting in favour of the country's new Immigration Bill in December - including an amendment that would "ease the conditions of entry into France for British citizens who own second homes in France."
Following the misattribution of a quote to Spain's former Tourism Minister, Héctor Gómez, in support of a similar move in Spain, the British press went into something of a media frenzy. LBC, Daily Mail, GB News and several regional English-language sites in Spain wrongly attributed quotes to Gómez, without providing a source, date or location, suggesting that Spain could follow France's lead.
The Local debunked this rumour, and therefore, as things stand there is no specific, attributable or new evidence to suggest there have been any advances on the 90 out of 180 days question for British second homeowners in Spain.
READ MORE: Can Spain legally offer more than 90 days to Britons?
Of course, for all the financial benefits foreign homeowners bring to the Spanish economy, there are negatives too. A post-pandemic surge in foreigners buying properties in cash has contributed to price inflation, worsened the wider supply shortage in the Spanish property market, and, in many cases, gentrified what were once traditionally Spanish, often working class areas.
This feeling is compounded by short-term residential tourism too, particularly the explosion of the number of short-term tourism rentals (referred to as pisos turisticos in Spanish) used by digital nomads and remote workers in cities such as Málaga, Valencia, Barcelona and Madrid.
This has contributed to the price spiral in major Spanish cities and priced locals out of their own neighbourhoods. For landlords, short-term lets are far more lucrative than long-term rental deals, leading to the proliferation of tourist apartments rented out on platforms such as Airbnb and Booking.
As a result, several cities, including Seville, Valencia, Palma de Mallorca, San Sebastián, Madrid and Barcelona, have all attempted to introduce restrictions on tourist rentals, though many landlords rent their properties under the table, bypassing regulation.
READ ALSO: Which cities in Spain have new restrictions on tourist rentals?
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The extent to which foreign second homeowners contribute to the Spanish economy has been made clear in a recent report, but it doesn't come without drawbacks.
In 2022 foreigners with a second home in Spain contributed €6.35 billion to Spanish GDP and generated more than 105,000 jobs in the tourism sector, according to the study "The economic impact of residential tourism in Spain" done for the Spanish Association of Developers and Builders (APCE) by PricewaterhouseCoopers (PwC).
According to the study's definition: "A residential tourist is considered to be a foreigner who buys a property in Spain to enjoy it during the year."
Though there's no time duration specified, we can take it to mean a second homeowner who spends some of the year in Spain.
READ ALSO: Where in Spain are rent prices rising the most?
In 2022, the foreign purchase and sale of property in Spain reached a historic high with 88,858 acquisitions. Of those homes, almost a third (32.8 percent) were bought by a handful of nationalities, all long-established second home owning communities in Spain.
Despite Brexit limiting the amount of time second homeowners can spend at their Spanish homes, Britons still lead the pack (11.1 percent of purchases in 2022), followed by the Germans (9.5 percent), French nationals (7 percent) and Belgians (5.2 percent).
Overall, 71.5 percent of so-called 'residential tourists' who visited Spain in 2022, to use the vocabulary in the study, came from the UK, Nordic countries, Germany or France.
The financial contribution made by these second-home owners in Spain is clearly significant. In fact, experts point out that the money brought into the Spanish coffers by foreign homeowners even outstrips some major industries.
"The contribution of residential tourism to GDP is triple that of the textile industry, double that of the timber industry and the same as the manufacture of pharmaceutical products in Spain," Anna Merino, director of the Economics team at PwC, said when presenting the study.
Every euro spent by 'residential tourists' adds €2.34 to Spanish GDP. On top of this direct contribution to the Spanish economy, the surrounding economic activity associated with the spending generated 105,600 full-time jobs in 2022.
According to Merino, that is a similar number to that of the chemical industry and double that in furniture manufacturing or beverage production.
The report comes at a time when there's some uncertainty about the status of foreign homeowners and their impact on the property market in Spain. The report was requested by the APCE amid the possibility that some Spanish regions, namely ones traditionally oversaturated by tourism more generally, might make moves to limit the purchase of homes by foreigners.
"With this study we want to demonstrate the negative impact that a measure such as the one proposed by some regions would have on the Spanish economy,” says Juan Antonio Gómez-Pintado, president of the APCE.
“The impact of the real estate sector on other sectors, such as tourism, is enormous. Knowing the GDP and employment data is very important to convey it to the regions and to society.”
Regional administrations and political parties in the Balearic and Canary Islands, as well as the Valencian Community, all areas long popular with foreign second homeowners, have floated plans to limit or even ban property purchases by foreigners in recent years.
READ ALSO:
- EXPLAINED: The plans to limit foreign property buyers in Spain's Balearics
- Political party calls for ban on property sales to foreigners in Spain
- Will Spain's Canary Islands limit sale of properties to foreigners?
For British homeowners in particular, the 90/180 day Schengen rule has been a source of frustration and limited the time they can enjoy at their second properties.
At the end of 2023, there was excitement when rumours began circulating that Spain could change the rules to allow British second homeowners to spend periods of 3+ months at a time in the country.
This came following the French Senate voting in favour of the country's new Immigration Bill in December - including an amendment that would "ease the conditions of entry into France for British citizens who own second homes in France."
Following the misattribution of a quote to Spain's former Tourism Minister, Héctor Gómez, in support of a similar move in Spain, the British press went into something of a media frenzy. LBC, Daily Mail, GB News and several regional English-language sites in Spain wrongly attributed quotes to Gómez, without providing a source, date or location, suggesting that Spain could follow France's lead.
The Local debunked this rumour, and therefore, as things stand there is no specific, attributable or new evidence to suggest there have been any advances on the 90 out of 180 days question for British second homeowners in Spain.
READ MORE: Can Spain legally offer more than 90 days to Britons?
Of course, for all the financial benefits foreign homeowners bring to the Spanish economy, there are negatives too. A post-pandemic surge in foreigners buying properties in cash has contributed to price inflation, worsened the wider supply shortage in the Spanish property market, and, in many cases, gentrified what were once traditionally Spanish, often working class areas.
This feeling is compounded by short-term residential tourism too, particularly the explosion of the number of short-term tourism rentals (referred to as pisos turisticos in Spanish) used by digital nomads and remote workers in cities such as Málaga, Valencia, Barcelona and Madrid.
This has contributed to the price spiral in major Spanish cities and priced locals out of their own neighbourhoods. For landlords, short-term lets are far more lucrative than long-term rental deals, leading to the proliferation of tourist apartments rented out on platforms such as Airbnb and Booking.
As a result, several cities, including Seville, Valencia, Palma de Mallorca, San Sebastián, Madrid and Barcelona, have all attempted to introduce restrictions on tourist rentals, though many landlords rent their properties under the table, bypassing regulation.
READ ALSO: Which cities in Spain have new restrictions on tourist rentals?
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