Confidence is returning to Spain’s real estate investment market, with 73% of institutional investors expecting transaction volumes to increase. Recovery in property values, solid residential demand, and a growing focus on infrastructure and ESG factors are behind this positive outlook.
Spain’s Real Estate Investment Outlook Brightens as 73% of Institutional Investors Predict More Transactions
Investor confidence in Spanish real estate is at a multi-year high, with 73% of institutional investors anticipating an increase in property transactions over the next two years, according to Patrizia’s fifth annual customer survey. This figure, up from 64% in 2024, signals renewed faith in the market as valuations recover, the residential segment thrives, and ESG-based strategies attract capital.
Stable Valuations and Higher Profitability Fuel Investor Optimism
Patrizia’s survey, which gathered insights from over 110 institutional investors managing nearly a trillion euros in capital, reveals a decisive shift from the caution that followed recent market uncertainties. Among respondents, 39% now foresee an increase in property valuations, a notable surge from last year’s 27%. Furthermore, 80% expect total profitability in real estate investments to either rise or remain stable through the next cycle.
“After more than two years of caution, valuations are stabilizing or climbing, sparking interest in new strategies tied to trends like digitalization, urbanization, energy, and housing,” Patrizia noted.
Residential and Modern Living Lead the Way
Spain’s residential real estate sector stands out as the preferred asset class, with 47% of investors selecting it as their top choice. Modern living strategies—including student housing, senior living, and co-living spaces—are also gaining favor, garnering 21% of the vote.
Other segments remain on the radar:
- Logistics: 16%
- Offices: 9%
- Hospitality: 5%
- Retail: 3%
Importantly, the focus isn’t just on new assets. Three out of four investors highlight the importance of operational improvements, particularly “brown-to-green” transitions and refurbishments, confirming that sustainability and asset renewal are at the heart of long-term value creation.
Infrastructure Sector Shines in the New Investment Cycle
The survey underscores the growing allure of infrastructure investments:
- 35% of investors aim to increase their exposure to infrastructure
- 57% plan to maintain current allocations
- 44% expect sector valuations to deliver growth
Energy transition assets (40%) and digital infrastructure (37%) are considered particularly attractive, far ahead of traditional utilities and transport (each at 10%). More than 86% of respondents see promise in integrated real estate-infrastructure strategies, where co-investments and public-private partnerships widen the opportunity set for all risk profiles.
“This is the decade of infrastructure, with investor attention pivoting to smart, sustainable assets and innovation-driven co-investments,” notes the Patrizia report.
ESG Moves to the Forefront of Investment Strategy
Environmental, Social, and Governance (ESG) criteria are no longer a secondary consideration for institutional investors. According to the survey:
- 69% of investors will reinforce ESG principles in their strategies
- 45% see ESG’s relevance growing over time
- 37% expect its influence to stabilize, not diminish
Despite ongoing regulatory challenges and the need for standardized data, ESG is now regarded as essential to assessing long-term risk, value, and returns. The focus on brown-to-green transitions and sustainable refurbishments, in particular, is seen as central to future-proofing portfolios.
Spain: A Prime Market for Real Estate Investment Growth
Patrizia’s latest survey confirms Spain’s real estate and infrastructure market is transitioning into a new era marked by stability, sustainability, and structural growth. Surging demand for residential rental properties, the rise of modern living concepts, robust interest in infrastructure, and a deep commitment to ESG factors are all driving optimism for increased transactions and profitability.
Key Takeaways for Investors:
- Strong Transaction Growth: 73% foresee more deals over the next two years
- Stable or Rising Valuations: Momentum is building after years of market correction
- Residential and Modern Living In Focus: Housing-related assets lead investment preferences
- Infrastructure Integrated Strategies: Co-investments and public-private partnerships are expanding opportunities
- ESG as Core Strategy: Sustainability, refurbishments, and brown-to-green transitions are top priorities
As Spain continues to lead European markets in institutionalization, adaptation, and innovation, investors are well-positioned to capitalize on its next cycle of real estate and infrastructure growth.
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