Singular Bank anticipates that the upward phase of the Spanish real estate market will extend through 2026 and 2027, with an accumulated increase of close to 10% in the average housing price. This advance would be supported by economic dynamism and population growth, although the entity anticipates a gradual slowdown in the pace of increases.
In its report "Real Estate Outlook in Spain 2026," the bank describes a scenario of more contained increases in both prices and rents. It explains that the effort ratios for assuming mortgages and rental income are approaching difficult-to-sustain thresholds in numerous areas, which excludes part of the potential demand from the market.
Likewise, it warns that this scenario could be conditioned by a potential decision by the European Central Bank (ECB) to raise interest rates, given the inflationary pressures derived from the energy crisis, and by forecasts of a decline in international tourism.
Prices rising between 4% and 6% and insufficient supply
According to the document, the expected increase in housing prices for 2026 is 6% and for 2027, 4%, "with smaller territorial disparities" and with prices closer to the average in medium-sized cities and secondary locations.
Despite the increase in financing and property costs, the report considers that demand will continue to show strength, in a context marked by a supply that remains scarce. The entity calculates that in 2027 there will still be a deficit of 850,000 homes, as the creation of new households will far exceed the delivery of new construction, estimated at 125,000 units for that year. This "structural gap" would be the main factor maintaining upward pressure on prices and rents in the coming years.
In the commercial real estate sector, the analysis points to a moderate revaluation, resulting from the combination of a "slight compression" of benchmark yields and rent increases only slightly above inflation.
For the office segment, Singular Bank forecasts that Prime yields in business districts (CBD) will stand at 4.5% in Madrid and 4.75% in Barcelona, with low levels of availability in certain enclaves.
In logistics, the entity highlights that Catalonia and Valencia "stand out for their rising rents and valuations, as well as for minimum availability rates."
The 'retail' sector maintains its recovery, especially in 'High Street' locations, while hotel activity consolidates Spain as one of the most attractive investment destinations in Europe, with a record volume of transactions. However, a stabilization of occupancy rates and more moderate increases in rates and revenues are expected.
Investment Keys and Market Challenges
Given this scenario, Singular Bank formulates five guidelines for investors, including prioritizing those assets and areas where "structural imbalances in supply and demand persist even after significant price increases."
The entity also advises directing capital towards value-added operations, such as rehabilitation projects or changes of use, and maintaining a preference for quality assets, both for their location and their technical characteristics, as the largest part of demand is concentrated there.
The report emphasizes that the greatest scope for growth in residential is found in development and alternative assets, while, within commercial real estate, the potential is evenly distributed among offices, retail, logistics, and hotels.
Likewise, it recommends avoiding high levels of debt in the current geoeconomic context and opting for "flexible and prudent" financial structures that help to face possible adverse scenarios.
The entity concludes that the real estate market in Spain will maintain robust performance, at least until 2027, although the intensity of increases "will moderate under the effect of interest rates and the deterioration of affordability metrics." In its opinion, the great challenge will continue to be increasing housing supply and streamlining the regulatory and urban planning framework.
The head of strategy at Singular Bank, Roberto Scholtes, maintains that the market is prolonging its positive trends due to the imbalance between supply and demand, and adds that "the best opportunities will continue to be in alternative assets and in value-added operations such as development or rehabilitation."