Major Shifts in the Market
Directimo’s comparative report uncovers substantial changes in South West Europe’s vacation home market in the last year.
Due to the change in our behaviour after Covid, economic uncertainty, inflation and military conflicts, many investors have found a refuge in properties in European holiday destinations.
Demand is fuelled by high ROIs, but also a growing preference for the new remote lifestyle in relaxing destinations.
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Investment Spotlight: Costa del Sol
Spain's Costa del Sol saw the highest growth in foreign investment in 2023, outpacing established real estate markets such as the Cote d'Azur or Portugal's neighbouring Algarve.
Investing in holiday properties in Europe to beat inflation
Out of a total value of residential assets valued at €122.20 trillion in Europe, the holiday home market accounts for no more than 10%.
Some of Europe's holiday regions have seen average annual increases of up to 12-13% in the market value of properties over the past five years, in addition to net rental yields of up to 5%.
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Current Scenario in Spain: Costa del Sol, Spain is a highly popular destination for vacation properties.
Price Evolution Insights:
- Malaga: 40.54% growth over the last five years (8.11% annually), while the growth has reached 11.7% in the past year (as seen in August 2023).
- Marbella: An average annual growth of 12.6%, solidifying the 12% average growth over the past five years.
- Benahavis: the highly attractive area for golf enthusiasts has experienced a 9.4% growth, sustaining the 9.38% average of the last five years.
The largest relevant price increases
- Mijas: 14.1% YoY and an average of 8.27% over the last five years.
- Estepona: 13.8% YoY growth, closer to the 10.82% last five years average.
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Developments in Portugal:
Although the withdrawal of the Golden Visa was strongly felt in Portugal that slowing down to 5.6% growth in the last year vs. over 12% average of the last five years, in Algarve, the main destination for vacation properties, significant demand has underpinned further price increases.
In contrast to the southern holiday destination, prices in the Greater Lisbon region reached the same level in August 2023 as 12 months ago, after a slight decrease of 0.7% in the last quarter.
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State of the Vacation Property Sector in France and Italy
If South West Europe has experienced a consolidation of existing demand, this does not apply to other European destinations such as France or Italy.
France, Côte d'Azur
According to a market analysis published by Century 21, one of the most active real estate agency networks in France, between July 2022 and June 2023, the average capital growth in the PACA region (Provence Côte d'Azur) was 3.75%, amid an 18.8% decrease in transaction volume.
Italy
In Italy, even though the average EU inflation eroded the value of residential assets by 10% in 2022 and another 5% in 2023, Tuscany or Como have seen minor appreciation of 1-3% over the last five years, while other regions, such as Sicily, have witnessed depreciation.
One of the few regions where investors have enjoyed significant capital growth is Sassari, in the northern area of Sardinia, which has generated an average of 12.58% over the last five years. However, the last year also brought fluctuations ranging from a 4.3% quarterly increase to just 3.8% annually in August.
Spotlight on Island Areas
Both Portugal and Spain's island areas are highly sought after, experiencing considerable growth.
Canary Islands: the average growth was 33.9%, doubling the average in the last year to 13%, with peaks of up to 30% in Adeje, the upscale area of Tenerife.
Balearic Islands: the average growth was 42%, with 12.4% in the last year and a representative up to 12% increase in the luxury region of Cavia in Mallorca, close to the last 5 years average.
In Sant Josep de Sa Talaia, a similar luxury area in Ibiza, there was a growth of over 17% last year, half of the growth over the last five years.
Madeira Islands: have seen the most significant increases, with an average of over 85% over the last five years, nearly 16% of which was this year across the entire archipelago.
Funchal: in the capital city, the annual growth exceeded 18% in August.
The full analysis is available upon request.
The above data is sourced from publicly available statistics on Idealista, one of the main real estate listing websites in Spain, Italy, and Portugal, representing the prices demanded by sellers. The information is cross-validated with other local websites such as Fotocasa (Spain), Seloger(France), as well as data published by representative local agencies (Century 21 France).
The study was conducted by Directimo, the European proptech start-up pioneering data-driven insights and buyer-centric guidance into vacation home markets.
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