Luxury real estate in Spain is experiencing a remarkable surge, characterized by increasing prices and a growing demand that has solidified the market’s strength. However, certain regions are grappling with a shortage of available properties, creating a unique dynamic in the luxury sector.
During the recent presentation of the real estate market report by Engel & Völkers, Juan-Galo Macià, the company’s president for Iberia and South America, revealed that there are currently over 80,000 clients interested in purchasing luxury homes in Spain, while the available portfolio consists of only 8,000 properties.
“Demand is skyrocketing. We are facing a scenario where the scarce supply is keeping prices up in the most exclusive areas, but within a more mature, more segmented and, above all, more selective cycle,” Macià elaborated during the presentation.
Key Markets: Madrid, Costa del Sol, and the San Sebastián Gateway
Engel & Völkers highlights that Madrid has emerged as one of the most dynamic and robust property markets in Europe, driven by a blend of economic growth, international appeal, and quality of life.
The limited housing supply in both the city and its surrounding metropolitan area continues to fuel high demand. However, trends vary significantly by neighborhood and property type, mirroring the polarization observed within the cities themselves.
According to Engel & Völkers, the average price in Madrid has reached €7,145/m², reflecting a year-on-year increase of 15.5%.
- The highest closing prices were recorded in the most expensive neighborhood in Spain, the Salamanca district, exceeding €18,000/m².
- Chamartín, Chamberí, and Retiro also exhibit a high turnover of properties, alongside newer areas like Sanchinarro, where the average price has surpassed €6,000/m².
The Costa del Sol continues to demonstrate robust momentum across nearly all its markets, with particularly sharp growth noted in Estepona and Benalmádena. In these regions, up to 84% of home purchases are now completed without financing, rising to 95% in western Marbella.
This trend towards cash purchases is also evident in other areas.
- In San Sebastián, 38% of transactions in 2025 were closed without a mortgage, a significant increase from 19% the previous year.
- A similar pattern has emerged in Valencia, particularly in the new-build segment, where 65% of sales are now made with buyers’ own funds.
- Exclusive municipalities on the Costa Blanca, such as Orihuela, have also seen an increase in cash purchases, rising from 75% to 85%.
A More International and Focused Profile
Engel & Völkers reports that approximately half of the buyers of Spain’s most exclusive homes are foreign, a figure that escalates to between 70% and 90% in prime coastal areas like the Costa Blanca and the Costa del Sol.
“We can no longer speak of the Spanish market as a whole, but rather of markets, specifically micro-markets between regions, and even within cities themselves,” explained the Engel & Völkers executive.
This growing polarization is evident in a price gap of more than 70% between regions with the highest and lowest average values, with Madrid leading the pack and Extremadura at the lower end.
According to the agency’s analysis, prices are expected to remain under pressure, although they are unlikely to match the strong growth seen this year. In Macià’s words, “2024 was the year of recovery, 2025 the year of acceleration, and 2026 will be the year of transformation“.
