Foreign investment in Spanish real estate increased 17pc in 2012, to the highest level since 2004, according to the latest figures from the Bank of Spain.

In a clear sign of improving confidence in Spanish property as an asset class, foreigners spent 5.54 billion Euros on Spanish property last year, up from 4.7 billion in 2011, and a 52pc increase compared to the total of 3.6 billion in 2009.

In the final quarter of last year alone, foreign investors spent 1.8 billion Euros on Spanish property, up 56pc on 2011, and 92pc on 2010. So foreign investor confidence increased dramatically as the year went on.

That said, we are still some way off the the high of 7 billion Euros spent by foreign investors in 2003.

Foreign demand has been growing in response to lower Spanish property prices and political unrest in competitor destinations in North Africa, making Spain look like a safe bet.

Spanish investors stay at home

Whilst foreign investment in Spanish property is growing, the opposite is true of Spanish investment in foreign property.

Spanish investment in foreign real estate fell for the fifth consecutive year in 2012, to 596 million
Euros, the lowest level in 10 years, and 82pc lower than the peak in 2007, when Spaniards spent 3.3 billion on foreign property.