Is the real estate crisis in Germany likely to impact the Spanish property market? As insolvencies plague the German real estate sector, it’s noteworthy that German buyers rank as the second-largest foreign group investing in Spanish property, just after the British.
The crisis in Germany, driven by falling property prices, reduced demand, and credit constraints, could affect sales to German buyers.
In Q2 2023 Germans bought 1,619 Spanish properties, representing 7,25% of all purchased by foreigners in Spain.
While in Malaga Province/Costa del Sol, German buyers aren’t in the top 3 foreign buyer nationalities, in regions such as the Balearic Islands and Mallorca in particular, this is likely to affect the market there significantly.
In the Balearics Germans are by far the leading foreign buyer nationality and foreign buyers typically represent a third or more of all real estate transactions.
This is likely made worse by the pre-election political scaremongering of possible bans on non-resident buyers in the Balearics.
Mallorca-based, Marc Pritchard, the veteran Sales and Marketing Director of Taylor Wimpey Spain says: “We are well aware that every nationality has its cycles in our market. We (that’s Taylor Wimpey) have seen several years of an extremely buoyant German market with steadily increasing sales year by year since 2015 peaking, as with possibly all markets in 2022. We did have a dent in 2019 where Germans did buy considerably less compared to 2018. 2023 is going to be another good year for us and the German market not reaching 2021 & 2022 figures but still well over 2018 & 2019. The vast majority of our German customers have always been on Mallorca but we have recently seen budget driven customers moving to the mainland too.”
“I don’t think that we will see a massive drop in German demand for properties here in Spain as it would already have happened with less leads and visits and this is something we can’t see happening right now. However I do believe that the German could become more challenging in 2024.”
German-born Sebastian Boelger, a Mallorca realtor for more than a decade, and current Business Development Manager for leading international property portal Kyero says his take “on the German cut back is that this country´s industry is deliberately being run against a very hard wall and that, as in all crisis, hits the lower to middle class first.
“With regards to the Balearics however, I don´t think this will have a massive impact as that region, over the last few years has established itself as a hub for luxury living and high 6 digit earners, who are the actual winners from the crisis. The good news that I hear through all of this is, that finally there might be some movement in that stagnant vendor´s market and the lack of stock.”
Meanwhile, on the Costa del Sol the top 3 buyer nationalities typically are the British, Belgians and the Swedish, and although both the British and Swedish domestic markets have been troublesome, there are some who think the Swedish are through the worst and will gradually return.
Nationally, however, in terms of the foreign buyers of Spanish property we’ve seen the top 3 (British, Germans and French) lose their overall weight/share of the market giving way to a wider spread among many other emerging nationalities such as the Polish and Americans.