Why Spain is becoming a hotspot for branded residences

High-net-worth buyers are flocking to Spain snapping up branded residences offered by luxury hotel chains and resort property developers in a search for a safe investment environment blessed by stability and with the added attraction of a sunny climate, industry sources say.

The Spanish branded residence market “is currently experiencing a significant boom and is poised for exponential growth over the next four years, surpassing 1,200 units” up from 300 units currently, Colliers Spain explained in a recent report.

Spain’s first branded residence, Las Terrazas de Abama Suites, opened in 2017 on the Canary Island of Tenerife and the next major opening was the 22-apartment Four Seasons Residences incorporated in the company’s five-star hotel in central Madrid in 2020.

Another sector milestone is the opening this year of the Mandarin Oriental Residences in Barcelona.

Five branded residences are open with another 12 scheduled between now and 2027 under such familiar high-end brands as W and Angsana, with Four Seasons and Mandarin Oriental each planning new properties.

 In addition, a number of standalone residences scheduled over the next several years will carry luxury fashion marques.

Colliers Spain notes that the branded residence market is expanding globally as wealth increases among a significant portion of the population and Spain, one of the world’s top tourist destinations, is no exception.

“Spain has witnessed a robust economic recovery in recent years, supported by significant figures indicating an increase in wealth creation (with) the real estate sector one of the primary drivers of this recovery with a noticeable surge in the demand for luxury properties”, the report said.

That demand experienced 45% growth in 2022 compared to the previous year with more than 1,000 transactions exceeding 2 million euros, doubling the pre-pandemic record.

“Additionally, political stability and foreign investment-friendly policies have been key factors that have attracted the attention of international investors to the Spanish real estate market.”

Madrid, Barcelona and the Canary Islands are among the cities and regions hosting existing and planned developments but some two-thirds are situated on Malaga province’s Costa del Sol and in the glitzy resort city of Marbella in particular, according to the report.

“They are the preferred destinations of high-net-worth buyers in Spain where their vibrant urban fabric and sophisticated infrastructure provide an ideal context that enhances the luxury residential experience”, Colliers Spain’s Managing Director Residential Sales Advisory Luis Valdés told Hospitality Investor.

And Malaga province, he adds, “has all the ingredients to become one of the main magnets for investors and the next port from where branded residences will set sail in Spain.

“The main reason for the rise of branded residences in Spain is primarily due to the level of services they offer their owners ranging from the most basic and common services like concierge services, maintenance of common areas, 24-hour security, etc., to other more á-la-carte’ services that cover all the needs of the buyer profile,” Valdés says.

“Not to mention the exclusive benefits enjoyed by owners of these homes such as becoming part of the hotel brands’ loyalty programs.”

The executive explains that the purchased properties are largely a combination of permanent residences and vacation getaway homes, with some 10% of total buyers having a purely investor profile. 

The majority of foreign buyers purchasing units in the Spanish capital are from Latin America.

“These buyers are fleeing from their governments and seeking a country with a greater legal security to preserve their capital. Spain, and specifically Madrid, has positioned itself as the second option worldwide behind the United States” for the Latin Americans.

A major player in Spain’s standalone, luxury branded sector is Sierra Blanca Estates, a Marbella-based residential developer and real estate brokerage established in 1986.

The firm currently has three branded residence projects slated to open over the next two years, each carrying the name of a high-end fashion house: Epic Marbella by Fendi, Karl Lagerfeld Villas and Design Hills Dolce & Gabbana.

“We saw what was happening with branded residences in Miami and with Marbella growing as a luxury resort we thought we could take on a brand,” recalls Chief Operating Officer Luis Rodriguez.

“So we approached Fendi and we think we’ve done an excellent job on this and our other projects. Your typical developer tries to cut costs but we go the extra mile in quality and we’re in for the long haul.”

Rodriguez says the company also distinguishes itself from competitors by having top executives greet each new resident, providing hands-on management of the property and delivering in-house, hotel-style hospitality.

“A lot of developers hand over the keys and walk away while we carry through all the way with our buyers who know our company by reputation. Our client base is a combination of those seeking a solid investment and those who want to enjoy themselves in a wonderful environment.”  

Investors in the new projects include several family offices and there is strong demand from the Netherlands, Belgium and the Nordic countries. Canadians and Chinese are also showing a lot of interest.

“After the Russian invasion of Ukraine we saw a lot of high-net-worth Ukrainian and Polish buyers, and Latin Americans are coming here from countries which have leftist governments. They know Marbella is a secure place to invest with guaranteed returns,” the executive says.

Although still in the early construction stage, Design Hills Dolce & Gabbana has just opened its “family and friends” sales stage and a third of the 92 residences are already purchased.

“We’re now in advanced talks with other luxury brands which I can’t yet mention but at some point next year we could be announcing one or two new projects,”