Trends in Tourism in Spain

Tourism numbers are related to the Spanish property market for the simple reason that just about 100% of overseas property buyers in Spain start out as tourists. Occasionally, over the years, I have come across foreigners buying for investment, usually linked to rental income, without any prior knowledge of the country, but they represent a tiny minority. And where people go as tourists usually influences the locations they choose when they start to search for a property. 

Pre-Covid, Spain’s tourism industry was continuing its seemingly unstoppable upward trajectory and 2019 finished with an all time record of 83.7m overseas visitors. A decade earlier, just as the effects of the 2008 meltdown were starting to kick in, the number was 59m. An additional 25m tourists in a 10 year period is remarkable. Tourism contributed about 14.5% to Spain’s GDP in 2019 although in some regions it was much higher than the national average. Unsurprisingly, Mediterranean regions and the islands depend even more on a healthy tourism sector. For example, the approximately 45% of GDP generated by tourism in the Balearics makes it the most dependent region, followed by the Canary Islands, Andalucía, Murcia, the Comunidad Valenciana and Cataluña.

In line with my approach to recent statistics quoted in my Spanish Market Report I think it makes more sense to compare 2023 tourism statistics to those for 2019. The quirky results from the years most affected by the pandemic, 2020 - 2022, don’t really mean much over the longer term. 

We now know that 2023 resulted in another record level with a provisional final total of 85,056,528 tourists counted, way better than predicted. I thought the 84m barrier would be surpassed but not 85m. What seems to be happening is that while visitor numbers are similar or slightly higher than pre-Covid in high season summer months there are many more visitors in the mid and low seasons. It’s almost like a 12 month season is becoming the norm, not just sun ’n sand focused but includes cultural tourism, short city breaks, sports activities, wellness retreats and gastronomy. Two of the top three restaurants in the world in 2023 were in Spain.

Looking at mid season growth, the December 2023 total of 5.2m was 21% higher than the same month in 2019 which, at the time, was the highest December total on record. Another factor behind the big numbers is the wider spread of nationalities, with strong growth from newer markets while the traditional, long-established markets, such as the British, Scandinavian and German markets remain the leaders. Once these provisional figures are finalised we’ll get more detail about nationality breakdown and I expect to see evidence of strong growth from outside Europe.

Another link between the strong tourism figures and the property market is the short term rental sector. Ministry of Tourism statistics suggest that about 35% of tourists from overseas don’t stay in hotels and many domestic tourists also rent privately. As a result of these visitor numbers, rental yields make letting a property in Spain an interesting option.  Although not all foreign owners are part-time landlords many are, if only to cover essential maintenance and running costs and taxes. Obviously there are many variables but the best gross yields can be as high as 10% and sometimes even higher for a large, top quality detached house in a prime location. Apartments and townhouses near the beach can return 6% - 8% gross, assuming a luxury interior.  Typically, a quality property in a prime location will generate a higher yield in the short term holiday market than the same property let long- erm, in the region of 3% - 5% better.  

However, there are always exceptions to the rule and growing demand for long term rentals at the top end of the market, coupled with a lack of supply, can produce a gross yield similar to the short term yield. A client of The Property Finders is seeing a 2020 purchase generating a gross yield of 8% for a one year let. Just as the highest activity levels are at the top end of the property market so it is in the rental sector. Properties priced at €10,000 - €20,000 and up per week had no trouble finding takers in 2023 and high season weeks were fully occupied. 

If rental income is part of your buying strategy it is essential to familiarise yourself with the rules & regulations that apply in the region you are looking at. Legislative powers regarding short term holiday lets are devolved to the autonomous regions and some are increasingly limiting the availability of the licences for short term holiday lets. Do it without a licence and you risk prosecution and probably a massive fine, In contrast, no licence is needed for lets to the same person for period in excess of two months as these fall under the standard Spanish rental contract.

Tourism in 2023 contributed 12.8% to GDP (PIB) and represented 70% of the growth seen in the Spanish economy. Without it, annual growth would have been around 0.8% instead of which it was 2.4%, according to Bank of Spain estimates. The total spent by tourists during 2023 was €108.662m, up 17.7% from the 2019 total of  €92.278m. Not surprising given higher costs all round but it’s clear from the record numbers of 2023 tourists that higher prices are not a deterrent.  Are the numbers likely to go on rising? I think so, given the growth trend in low and mid seasons, the strength of the traditional high season months  and the growth coming from new markets, all of which will impact Spain’s property market over time.

^{©Barbara Wood}

For more property market information please take a look at our Market Reports. And in our Blog section there are several covering the regulations and regional differences.