Is Buying a Property in Spain a Good Investment? The Definitive 2025/26 Guide for Foreign Investors

Introduction

The question of whether buying property in Spain is a good investment is more nuanced than ever. Online, you’ll find a confusing mix of travel-blog enthusiasm and cautionary tales of bureaucratic nightmares.

For a discerning UK or US investor in 2025, a clear-eyed, data-driven perspective is essential. This is not a tourism guide; it is a professional analysis designed to answer one question: does a Spanish property investment make financial sense for you?

This guide moves beyond the national averages to focus on the prime investment corridor of the Costa del Sol. We will dissect the market performance, uncover the real costs and tax obligations, and address the specific challenges and opportunities facing non-EU buyers today.

We will provide the practical steps and expert insights needed to turn a complex foreign purchase into a secure and profitable asset.

Table of Contents

What You Will Learn

  • The data-backed financial reasons why the Costa del Sol continues to be a strong investment, including realistic capital appreciation and rental yield expectations.

  • A strategic breakdown of the key investment zones, comparing the pros and cons of prime locations like Marbella, Estepona, and Mijas.

  • How to navigate the common pitfalls for foreign buyers, including a clear breakdown of taxes, bureaucracy, and post-Brexit realities.

  • The critical visa and residency options available to non-EU investors, including the Golden Visa and Non-Lucrative Visa.

  • A practical 7-step guide that demystifies the entire property purchasing process, from securing your finances to signing at the notary.

The 2025 Verdict: Why the Costa del Sol is a Prime Investment Hub

To be direct: yes, Spanish property continues to be an excellent investment, if you approach it with the right strategy and expertise.

While the frantic post-pandemic boom has cooled, the market has entered a phase of stable, sustainable growth. For savvy investors, this stability presents a prime opportunity.

The key drivers for 2025 and beyond remain robust: sustained demand from international buyers, strong rental yields fuelled by tourism and a growing “work-from-anywhere” population, and an unbeatable lifestyle that underpins the long-term value of any asset.

The focus, however, has sharpened.

The greatest returns are now found not just anywhere in Spain, but in resilient, high-demand enclaves like the Costa del Sol.

The Financial Case: 5 Data-Backed Reasons to Invest in Spanish Property

Stable Property Appreciation and Market Dynamics

The era of speculative double-digit growth has been replaced by healthy, predictable appreciation. According to the latest data from Spain’s National Statistics Institute (INE), property prices in the Málaga province saw a year-on-year increase of 6.2% in Q2 2025, outpacing the national average.

Read more here.

This is underpinned by a classic supply-and-demand imbalance: the demand for high-quality, modern properties from international buyers continues to outstrip the available supply, putting consistent upward pressure on prices.

A Detailed Look at Rental Yields

For buy-to-let investors, the Costa del Sol is a powerhouse. It is crucial, however, to distinguish between two models:

  • Long-Term Rentals: Driven by the region’s growing expatriate community and local population. Investors can expect gross rental yields of 4-6% annually. These offer stable, predictable income with lower management overheads.

  • Short-Term Holiday Lets: Capitalising on the millions of tourists who visit each year. While more management-intensive, gross yields can reach 8-12% or higher during the peak April-October season. However, investors must be aware of the need for a tourist licence (licencia de primera ocupación) and regional regulations. For example you can find out more about The Impact of Airbnb Bans on Spain’s Property Market.

A Gateway to Europe: Visas & Residency

For non-EU citizens, a property purchase has long been a strategic component of a residency plan. However, it is crucial for investors to be aware of a major policy change in 2024/2025.

The Discontinuation of the Golden Visa for Property Investment

The well-known “Golden Visa” programme, which granted residency for a €500,000 property investment, has been discontinued by the Spanish government to curb property speculation. This means that property purchase alone is no longer a direct route to residency via this specific scheme. Any advice suggesting otherwise is now outdated.

This policy shift has simply refocused attention on other excellent residency pathways that align with modern work and lifestyles. For many of our UK and US clients, these are now the primary, most effective options:

The Digital Nomad Visa (DNV): This is an increasingly popular route for non-EU citizens who can work remotely. If you own a business (e.g., in the UK) or are employed by a company outside of Spain, this visa allows you to live in the country while earning your income from abroad. It’s a perfect fit for today’s flexible work culture. Owning a property here can significantly strengthen your application by demonstrating your commitment and stability in Spain.

The Non-Lucrative Visa (NLV): This remains the ideal pathway for retirees or individuals with sufficient passive income (from pensions, dividends, investments, etc.). While it doesn’t permit you to work in Spain, it is a straightforward route to long-term residency. As with the DNV, proving you have a stable home, such as a property you own, is a major advantage for a successful application

A Resilient Economy & Unbeatable Lifestyle

Investment in the Costa del Sol is about more than bricks and mortar.

You are buying into a region with a thriving economy, world-class infrastructure including Málaga International Airport, and a lifestyle that is second to none.

This “lifestyle ROI” ensures your property remains in high demand from a global audience, protecting its value for years to come.

Read more about this lifestyle ROI here.

The Rise of Niche Markets: Wellness & Work

Beyond traditional lets, the Costa del Sol is becoming a hub for high-value niche markets.

The demand for wellness retreats and luxury properties catering to the growing digital nomad community is surging.

An investment in a property that serves these markets can offer exceptional returns.

Read our Digital Nomad’s Guide to Costa del Sol and see how the Costa del Sol is the perfect investment for Wellness & work.

Concerns about investing in property?

Where to Invest on the Costa del Sol: A Strategic Overview

Not all locations are created equal. Choosing the right area is critical for maximising your return on investment.

  • Marbella: The Epicentre of Luxury Known globally for glamour, Marbella (including Puerto Banús and the Golden Mile) commands the highest prices but also offers the most robust rental demand and liquidity. It is a blue-chip investment for high-net-worth individuals seeking prestige and strong capital preservation.

    View our Properties in Marbella

  • Estepona: The Rising Star Often called “the new Marbella,” Estepona has undergone a stunning transformation. It offers a beautiful old town, new luxury developments, and slightly more accessible prices than its neighbour. It represents a superb opportunity for growth and is increasingly popular with discerning foreign buyers.

    You can read more about Why Estepona Is the New Marbella for Foreign Buyers or view all the properties for Sale in Estepona that we have on or website

  • Mijas & Fuengirola: Authentic Charm and Family Value These areas offer a more traditional Spanish feel while still providing excellent amenities. Mijas Costa is particularly attractive for its golf courses and family-friendly villas, representing excellent value and strong rental potential for the family holiday market.

    Read our top 5 Investment properties for sale in Mijas Costa or you can view all listing in Mijas

A Reality Check: Navigating the Pitfalls of the Spanish Property Market

A smart investment requires a clear understanding of the risks. Here are the realities of the Spanish market and how to navigate them.

Navigating Spain's Notorious Bureaucracy

The process is undeniably complex.

From securing your NIE number to dealing with the notary and land registry, each step is governed by strict procedures.

A small mistake in paperwork can cause lengthy delays or legal issues.

This is not a process to be attempted without expert legal guidance.

A Breakdown of Buyer's Taxes and Fees

It’s critical to budget for costs beyond the property’s ticket price. Expect to pay an additional 10-13% on top. This is comprised of:

  • Property Transfer Tax (ITP): In Andalusia, this is a sliding scale but is typically around 7%.

  • Stamp Duty (AJD): 1.2% on new builds.

  • Notary and Land Registry Fees: Roughly 1-2.5%.

  • Legal Fees: Typically 1% (+VAT).

Understanding the Post-Brexit Landscape

UK citizens are now non-EU residents and subject to the 90/180-day rule for stays in the Schengen Area.

Living in Spain full-time requires a residency visa.

Furthermore, non-residents face different tax implications on rental income and capital gains. 

Read our special article on selling a house in Spain after Brexit or buying a house in Spain after Brexit.

The Reality of Property Management and Maintenance

Your investment requires ongoing management.

This includes community fees (comunidad), local property taxes (IBI), utility bills, and insurance.

For rental properties, a professional management company is essential for handling bookings, maintenance, and guest services, typically charging 15-20% of the rental income.

These challenges are precisely why you need an expert team on the ground. Our legal partners at PCC Legal handle the entire administrative process, from tax calculations to contract reviews, ensuring a transparent and secure transaction.

How to Buy Property on the Costa del Sol: The 7-Step Guide

  1. Getting Your Finances in Order: Secure your budget, accounting for the 10-13% in taxes and fees. If you need financing, we can connect you with mortgage brokers who specialise in non-resident applications. Non-residents can typically borrow up to 60-70% of the property value. Read more here: How to Get a Mortgage in Spain as a Non-Resident

  2. Obtaining Your NIE Number: The Número de Identificación de Extranjero is a foreigner’s tax identification number. It is mandatory for any financial transaction and can be arranged by your legal representative at a Spanish police station or consulate.

  3. Finding the Right Property & Agent: A good agent understands your investment goals and only presents properties that meet your financial criteria in high-demand locations. This saves you time and ensures you are looking at viable assets.

  4. Making an Offer & The Reservation Contract: Once you find a property, you make an offer. If accepted, you sign a reservation contract (contrato de reserva) and pay a small deposit (typically €6,000 – €10,000) to take it off the market while your lawyer begins due diligence.

  5. The Crucial Role of Your Lawyer: Due Diligence: This is the most critical stage. Your lawyer will obtain a nota simple from the Land Registry, which details the legal status of the property, its owner, and any outstanding debts. They will also confirm planning permissions are in order.

  6. Signing the Private Purchase Contract: Once due diligence is clear, you sign a private purchase contract (contrato de arras penitenciales) and pay a larger deposit, typically 10% of the purchase price. This is a legally binding contract.

  7. Signing at the Notary (Completion): All parties meet at a public notary to sign the final deeds (Escritura de Compraventa). You pay the remaining balance, and the keys are yours. The notary system provides a high level of legal security for the transaction.

FAQ: Your Questions About Investing in Spain Answered

How much tax do you pay when buying a property in Spain?

Expect to pay between 10% and 13% of the purchase price in total taxes and fees. The largest component is the Property Transfer Tax (ITP), which is a regional tax.

No, buying a property does not automatically grant residency for non-EU citizens.

However, it is a key requirement for applying for residency visas like the olden Golden Visa or the current Non-Lucrative Visa.

Absolutely.

British buyers remain one of the largest groups of foreign investors in Spain. The process is now different due to Brexit, but with the right legal and financial advice, it remains a very popular and achievable goal.

Properties in prime coastal locations like the Costa del Sol that cater to both the luxury long-term rental market and high-season tourism offer the best balance of capital appreciation and strong rental income.

Your Partner for a Confident Investment

So, is property in Spain a good investment? The data for 2025 indicates a clear yes, but with a critical condition: success is determined not just by what you buy, but by how you buy it. The potential for strong rental yields and capital appreciation on the Costa del Sol is undeniable, yet the path is laden with administrative complexities that can erode returns if not managed by experts.

The process might seem daunting, but this is precisely where our integrated expertise becomes your greatest asset. Navigating this landscape successfully requires a synchronised approach:

  • PCC Property identifies the prime investment opportunities that align with your portfolio goals.
  • PCC Legal provides the essential diligence, ensuring your purchase is secure, compliant, and free from any hidden liabilities. Read more about buying property in Spain from our legal team.
  • PCC Wealth structures the acquisition and ownership for maximum tax efficiency and long-term wealth preservation, turning the property into a cornerstone of your financial future. Discover what The Wealth Management Blueprint for Expats would be if you are considering investing in Spain.

A Spanish property is more than just an asset; it’s an entry into a new regulatory and financial system. By engaging with us, you are not just hiring a real estate agent; you are retaining a dedicated team of property, legal, and wealth management professionals committed to safeguarding your investment from start to finish.

If you are ready to explore what a secure and profitable property investment on the Costa del Sol looks like, contact us today for a no-obligation strategic consultation.

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