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New tourism figures covering January-July of this year reveal that Spain is on target for an outstanding year in tourism, a crucial sector to the Spanish economy and vital for its recovery.
According to the data, spending by international tourists travelling to Spain between January and July set a new record by reaching €34.5m, 7% more than the same period last year.
In July alone tourist expenditure amounted to €8.1m, representing an increase of 4.5% and breaking all records since the report series began.
The Tourist Expenditure Survey (EGATUR), conducted by the Knowledge and General Division of Tourism Studies have yet to factor in the final figures for the entire summer season which has seen Spain swamped with holidaymakers, particularly from Britain.
Marbella and other prime resort areas are enjoying the bulk of tourist traffic in 2014
Andalucia had a particularly successful first six months of the year with tourist spending at €5.2m, representing 15.1% of the total revenue for Spain's tourist market. In July alone holidaymakers spent €1.2m in Andalucia – principally the Costa del Sol – an increase of 6.7% over the same month of the previous year, representing 14.6% of the total.
The statistics show a clear shift from hotel accommodation to self-catering, holiday rentals with tourists spending just over €12m, an increase of 8.8% in the first six months of 2014 compared with the same period in 2013, 35.1% of the total tourist expenditure on holiday accommodation.
Hotel occupancy figures remained at impressive levels despite a growing preference for holiday villas and apartments. Tourists spent a total of €22.4m on hotel accommodation in Spain from January through to July, up 6% on the previous year and representing 64.9% of the total expenditure.
An abundance of exclusive and luxurious homes in Puerto Banus offer glamourous getaways for tourists
Budget airlines have committed to ensuring better availability for flights to Spain for 2015 after this summer's burgeoning passenger traffic. Ryanair have announced more flights from all UK airports to Malaga for next year's summer season, anticipating a continued popularity for Europe's top tourist destination.
EGATUR report that most visitors to Spain have been from the UK, spending €6.9m in the first seven months of the year and 7.1% more than in the same period in 2013. Germany follows closely behind spending €5.4m from January to July, an increase of 6% with Scandinavian visitors paying up €3.6m, up 6.8% on the same period last year.
Owners of holiday rentals have reported a sharp increase in occupancy levels this summer although the final figures for the season will not be revealed until the next EGATUR report in a few weeks. The data suggests a trend towards self-catering as spending in restaurants and bars has not increased in line with the increase in tourist traffic.
Spain is home to some of the finest golf courses in the world which drives year-round golf tourism
Tourism contributes around 10% to Spain's GDP although the sector's economic influence is much wider. With increasing volumes of holidaymakers comes improvement in the labour market and Spain's unemployment level has just fallen below 25%, the first decline in jobless numbers in several years.
In terms of the wider property market in Spain, increased tourism continues to attract foreign investors, particularly from non-EU countries such as China and Russia. Prime locations in Andalucia enjoy the most tourist traffic during peak times, something that is reflected in a small but nevertheless notable increase in property prices in areas such as Marbella and Sotogrande.
Foreign investors in Spanish property are predominantly non-resident, seeking income generating property investments. As popularity for Spain as a tourist destination continues in a high-growth phase, it is anticipated that property prices will correct rapidly to reflect increased value.
For some years Spanish property has been heavily discounted due to the economic crisis and despite property bubbles forming in many other European countries, the nation's housing in certain regions has been considered to be under-valued for some time.
Spain has the most 'Blue Flag' beaches in the world, attracting millions of tourists each year
Property price to rent ratios are used to determine the value of property. With tourism becoming a more competitive market in Spain due to increased demand, accommodation costs are likely to increase significantly, boosting rental yields and capital appreciation for owners of holiday homes in the country.
With a glut of distressed housing stock, the only concern in the property market is the potential lack of availability of homes people actually want to buy to meet their specific needs. As is the case throughout Europe, construction of new homes is priority and Spain has already recorded growth in coastal construction of around 11% for the year to date.
Spain remains not only a top destination for tourists from all over the world its property market holds a great deal of value compared with other countries in Europe. As buyers in the UK, France and Germany face affordability issues in their own property markets, they are increasingly seeking opportunities in Spain, considering the country's assets to be a solid safe-haven for their hard-earned investment capital.
Investment from non-EU buyers has also increased on the back of encouraging economic data emerging from Spain in the last few quarters. Russian and Chinese buyers in particularly have been encouraged by Spain's 'Golden Visa' scheme – created to provide Spanish residency for a qualifying real estate investment - against a backdrop of restrictive economic policy in their respective countries.
All-in-all, the outlook for Spain is extremely positive. Not only is there clear sight of the green shoots of economic recovery, growth is set to be sustainable for the long term, ultimately propelling the country back to its position of strength in the Eurozone.
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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.