Spain’s real estate development sector is on track for unprecedented growth, with total investment expected to exceed €50 billion by 2030, according to the first edition of the Observatory of Financing for the Developer Sector, prepared by Urbanitae and KPMG. This milestone reflects a significant leap from the €35 billion investment projected for 2024, highlighting the fast-paced momentum within the country’s property market.
Alternative Financing Takes Center Stage
One of the most notable trends revealed in the Observatory is the rise of alternative financing. By 2030, alternative finance—including equity, debt, and crowdfunding—is projected to constitute between 37% and 40% of total real estate development funding, equivalent to €18.5 to €20 billion. Notably, crowdfunding platforms alone are expected to account for as much as €1 billion.
This shift will reduce the dominance of traditional bank financing, which currently holds about 58% of the market share but is anticipated to drop to between 51% and 53% by 2030. In contrast, 2024 figures show that about 22%-24% of investments come from capital injections by developers and alternative financiers, while the rest—76%-78%—is financed through bank debt or institutional sources such as family offices, funds, and crowdfunding.
Alternative financing provides critical flexibility and resilience to the market. By bringing in external partners, developers diversify their capital sources, reduce initial financial burdens, and share project risks. This model is especially attractive amid tightening regulatory policies and evolving credit risk landscapes. However, the added risk for non-traditional lenders typically results in expected returns of 12%–15%, notably higher than traditional bank rates.
Challenges and Opportunities Ahead
Despite the promising investment outlook, Spain’s real estate sector faces several persistent challenges. The report highlights how geopolitical uncertainty, rising construction costs, slow urban planning procedures (which can exceed 24 months), labor shortages, and tightening environmental regulations all impact the pace of new developments.
The persistent imbalance between supply and demand, combined with Spain’s limited stock of affordable housing—currently just 3.3% compared to the EU average of 8%—could mean property prices rise by up to 3% annually unless supply increases and red tape is reduced. With Spain’s population projected to grow by more than two million households by 2030, boosting new housing is essential to curb further price hikes and meet demand.
A Comparative Global Perspective
Spain’s transition toward alternative financing mirrors trends seen in other major global real estate markets, but there is still room for further diversification. In the UK, alternative finance already accounts for 40% of development projects and in the US, about 50%. Continental Europe, especially Spain, still relies heavily on banks, but the growth of debt funds and other alternative vehicles signals a shift toward a more balanced and resilient financial model.
A Forward-Looking Sector
The Observatory of Financing for the Developer Sector aims to offer ongoing insight into Spain’s evolving real estate funding landscape, providing key data on capital flows, profit margins, and long-term projections. The consensus among industry players is clear: alternative financing complements traditional approaches and will play an increasingly vital role in supporting Spain’s property sector ambitions.
As Spain moves toward a new era in real estate development, the country’s growing reliance on alternative financing, coupled with robust investor appetite, positions it for strong, sustained growth. Overcoming challenges in affordable housing, labor, and planning will be crucial, but with more than €50 billion in investment expected by 2030, the outlook for Spain’s property market is brighter than ever.
