Analysis of surging German demand for property in Spain

For the first time since records began, German buyers are now the biggest group of foreign property investors in Spain, according to the latest data from the Association of Spanish Land Registrars. 

German buyers were involved in 1,730 Spanish home sales in the third quarter of the year (chart above), up 79% on the same period last year, 70% on 2019, and 58% compared to 2018, meaning that there are many more German buyers now than before the pandemic.

The 79% increase in German demand in Q3 was so strong (second only to the 105% increase in the much smaller Irish market) that it lifted German buyers into the number spot ahead of the British with 1,642 purchases (+8% YoY) for the first time since records began. The following chart compares German and British demand since 2014, and clearly illustrates the recent surge in German demand compared to a sustained decline in British demand.

As a result German buyers are now 10.5% of the foreign market, ahead of the British at 9.9%.

The Association of Spanish Notaries also publishes data on foreign demand, but in their case it is half yearly, not quarterly. Figures for the first half of the year show the big growth in German demand came from non-residents buying second-homes and investments, up 85% compared to last year, and 15% compared to 2019. German residents in Spain buying homes or second homes were up 59% compared to last year, and 6% compared to 2019.

German demand for Spanish property by autonomous region

Where do Germans buy? According to the notaries, German buyers are responsible for 58% non-resident foreign purchases in the Balearics, and 32% in the Canaries. They are also responsible for 28% of home purchases by foreign residents in the Balearics. Back in 2015 40% of all German buyers went to the Balearics, mainly Mallorca, and although there is no more recent data giving the breakdown of foreign demand by region, it is reasonable to assume that at least 40% of German buyers still head for the Balearics, if not more.

How much do they spend? German buyers spend an average of 2,676€/m2 in Spain, meaning a property of 100m2 would cost 267,600€, behind only the Swedes on 2,768€/m2 and the Danes on 2,680. German buyers spend far more than British buyers, who fork out just 1,801€/m2 on average.

Mallorcan heimat

When it comes to overseas property investment, German buyers are mad about Mallorca, so estate agents Engel & Völkers in Mallorca understand the German market well. 

Commenting on the fact that German buyers have overtaken the British in Spain, and are now the biggest group, Florian Hofer, the MD of Engel & Völkers in the Balearic Islands tells me that “it’s no surprise to us that Germans are the largest buying group.  They have been our principal overseas buyers in Mallorca for many years.  Generally speaking the German investor is quite conservative – even more so in a crisis – and these investors are looking for a stable safe-haven for their money, and Mallorca undoubtedly has that reputation with German investors.  They believe in the location, they see the quality here and they come to the island for the climate, the modern infrastructure, the easy access with daily direct flights from Germany year-round.”

Much of German demand in Mallorca is the result of family tradition. “German buyers here are second and third generation, often they have already had a long-standing relationship with the island; they might have come here on holiday as children, and the island feels familiar to them and is associated with happy times in the sunshine,” says Florian.

Engel & Völkers report that German enquiries for Mallorca have more than doubled in the year to November compared to the same period last year, with buyers “making decisions faster, and taking less time to commit,” says Florian. “Often we have found that there are several buyers for the same house and the pressure is on to sign the deal.” Last year German buyers were involved in 63% of their sales, followed by the British with 12%.

The latest sales figures from both the notaries, registrars, and agents like Engel & Völkers show that German demand for property in Spain is going through a boom period, perhaps encouraged by a pandemic that has led wealthy buyers from Northern EU countries led by the Germans to seek open space, sunshine, sea views and safety in islands like Mallorca.