Alicante: leader of the luxury real estate market in Spain, despite the recession.

In Spain, the traditional housing market is in recession. In 2023, the number of buy-to-let sales has fallen by 12%. Among the reasons are inflation, reduced purchasing power of families and rising interest rates.

However, this decline does not concern the parallel luxury housing market that is booming: the luxury market. All 50 Spanish provinces have at least one home worth more than one million euros advertised on the Idealista website, but the distribution of listings is very uneven. The provinces of Malaga, Balearic Islands, Madrid and Barcelona concentrate 70% of all available dwellings above this amount. But now they have a serious competitor: the province of Alicante.

Research

Spain has become the fourth global destination and the first place to invest in luxury real estate. And in Alicante, this market has been growing at a rate of 25% annually over the past three years, according to a study on luxury residential properties in Spain conducted by the Tecnitasa Group.

Yes, Alicante is blossoming as a new destination for the wealthiest buyers, who are increasingly purchasing luxury, ultra-luxury and premium housing on the Costa Blanca. In particular, the average cost of premium housing in the province of Alicante already exceeds 2 million euros. This is an important fact considering that ten years ago a deal of this value was a rarity in the province.

Why. Some of its attractive features are obvious: the Mediterranean area offers good connections, sun and beaches, more affordable prices compared to cities such as Madrid or Barcelona, and spectacular views of the mountainous landscape. In addition, the area is also known for its safety, quality of life and aviation connections.

In addition, another phenomenon that seems to support this type of luxury business is the proliferation of foreignreal estate agencies in the area that are highlighting these homes outside of Spain. "They have the opportunity to build homes with spectacular sea and mountain views, which is highly sought after by a certain segment of the foreign market," explained José Joaquín Gómez Campos, representative of Tecnitasa in Alicante and one of the authors of the study.

Prices?

This is the question we are most interested in. Appraiser Research divides its reports into the premium segment, where property prices are between 1.5 and 3 million euros; luxury, between 3 and 10 million; and ultra-luxury, for those that exceed that amount.

In the first case, the average price paid for premium housing in the province is 3,913 euros per square meter and an average property size of 2,016,716 euros.

However, the highest cost of housing is found in Había with an average price of 2,666,278 euros. The reason is that the houses in this area have a larger area than in larger cities such as Alicante. In the case of Finestrat, the average price is around 2,298,159 euros, which is 4,835 euros per square meter. And the price exceeds 2 million euros also in Teulada (2,095,254, 4,686 euros per square meter) and Calpe (2,015,861, 4,980).

Who buys them?

The most popular product in the province of Alicante is a country house with a good view. The interested buyers are usually Europeans (Germans, British, Swedes, Russians, and Swiss) aged 40 to 60. They are typically high-ranking executives holding important positions in companies from their home countries, looking for a second home for vacation.

“85% or more of the deals we close are done without a mortgage, and the small number that are financed are not as affected by rising interest rates as middle-class families,” points out Juan Torregrosa, responsible for Costa Blanca Sotheby's International Realty, in this article from La Informacion.

As we also reported on Xataka, most real estate transactions in Spain typically involve investment funds or millionaires who buy these homes not for living, but for investment purposes. In other words, this is speculative construction. Luxury operates in contrast to the overall trend.

On the other hand, there is a trend that stems from this phenomenon. The luxury housing market is being positioned as a driving force for the rest of the overall market. As mentioned earlier, while transactions in the traditional market decreased by 12.1% last year, they increased by 55% in the luxury market. Investment in Spain continues, yes, but not by the Spanish. And certainly not by the middle class.