Spain Expat And Tourism Boom Set To Wane Post Brexit

Increased demand due to terrorism in competitor destinations has caused a hike in Spanish property prices, but the trend is set to end.

From 2015 to 2017, the surge in terrorist attacks in Turkey, Egypt and Tunisia took its toll on formerly popular holiday and retirement destinations, with Spain’s Mediterranean coastal cities the main benefactors. Retirees as well as visitors flocked to rent holiday villas, buy second homes or take up residence on a permanent basis. Tourist numbers saw double-digit growth, accounting for 11 per cent of Spain’s GDP, and 250,000 jobs were created.

Until 2013, house prices had fallen by more than 30 per cent, but over the past four years the market has recovered by 21 per cent on average, with coastal areas seeing the strongest growth. Price increases are estimated to continue due to positive demand as well as interest from foreign investors. However, since its peak in 2016, the growth in tourism has slowed and is expected to continue on a downward path, caused mainly by a surge in visitor confidence in Egypt, Tunisia and Turkey due to increased security measures and a lowering of prices.

For Spain, tourism’s contribution to the GDP in 2019 may well fall to an all-time low of 0.1 per cent, according to experts who’ve also factored in the effect of Brexit and sterling's weakness on Britons heading for the country either as visitors or long-term residents. At present, the British make up 23 per cent of all foreigners arriving in the country, with the possibility of lower spending, shorter stays and a drastic fall in expatriation all spelling bad news for the Spanish economy and its real estate sector.

Although average house prices across Spain are still increasing, the benefits are mostly being felt in the well-known Mediterranean tourism and expat hotspots around the coast as well as in major cities and Spain’s offshore islands. The present recovery is expected to continue to be disproportionate, leaving the rest of the country to lag behind as regards house prices. Should free movement still be permitted post-Brexit, British expats may well find real estate bargains in areas ignored up until now.