Kategora Communications Dept.
7 min read

Discover the key insights to make informed decisions and understand what makes a city particularly attractive for real estate investment in today’s market

Spain’s property market has established itself as one of the most attractive destinations for investment in Europe and worldwide. In an international economic context still marked by uncertainty after years of instability, Spain stands out for its ability to offer high-yield real estate assets, strong legal security, and robust rental demand in the short, medium, and long term. ⁣⁣

Added to this are factors such as the urban transformation of many cities, a firm commitment to sustainability, and a lifestyle that continues to rank the country among the most valued places to live and invest. This combination of elements has turned Spain into a magnet for investors seeking to diversify their portfolios with solid, sustainable assets that offer strong growth potential.

⁣⁣According to data from Global Commercial Real Estate Services (CBRE), real estate investment in Spain reached €14 billion in 2024, representing a 20% increase compared to the previous year. Domestic capital led the way with 55% of total investment, followed by the United States (13%) and the United Kingdom (6%). Locations outside of the traditional markets of Madrid and Barcelona are gaining increasing prominence, already accounting for 52% of total investment — well above the 36% recorded in 2019, prior to the pandemic. Still, Madrid leads with 32% of transactions, followed by Barcelona with 16%. ⁣⁣

Based on recent reports from Idealista, The Simple Rent, and Reental, this article highlights the six most profitable cities in Spain for real estate investment in 2025. We have compiled updated market data, profitability projections, and key factors such as economic stability, growth potential, and rental demand that make these cities true investment hubs.

Key Factors to Consider When Investing in Real Estate in 2025 ⁣⁣

Choosing the right city is a crucial step to ensure that a property investment is not only profitable but also resilient and aligned with new market trends. To achieve this, it is essential to: ⁣⁣

  • Evaluate the investment: Before making any decision, it is vital to analyze both the specific property and its surrounding environment. This includes understanding real demand in the area, tenant profiles (students, professionals, tourists), property condition, initial investment cost, expected returns, and financing options. A thorough evaluation allows investors to anticipate risks and calculate long-term profitability. ⁣⁣
  • Review taxation: Taxation varies between autonomous regions and can significantly impact final returns. It is advisable to calculate not only acquisition taxes (ITP, VAT) but also recurring costs such as property tax (IBI), capital gains tax, municipal fees, and maintenance or renovation expenses. Calculating net rental yield will help determine how soon the investment can be recouped. ⁣⁣
  • Location and services: Beyond the city itself, the micro-location of the property is critical. Investing in areas with good connectivity, access to public services, green spaces, leisure facilities, local commerce, and educational centers increases the asset’s attractiveness. Neighborhoods undergoing urban regeneration often offer the greatest appreciation potential. ⁣⁣
  • City’s economic outlook: Cities with strong economic growth plans, public and private infrastructure investment, and technological development are more likely to experience rising housing demand, driving both rental and sales prices upward. ⁣⁣
  • Job market: A dynamic job market attracts active populations. The presence of tech hubs, innovation centers, universities, or expanding industrial sectors ensures a steady flow of new residents, maintaining strong and growing demand for real estate.

Real Estate Investment in Madrid

Madrid is undeniably Spain’s economic, cultural, and business epicenter. Its status as the capital and business hub, combined with excellent national and international connectivity, makes it a priority destination for major investors. The city also boasts a large student population and a growing tech ecosystem.

⁣⁣In 2025, average prices in Madrid hover around €4,500–€4,600/m², with wide variations depending on the district (Salamanca exceeds €6,100/m², while Central areas surpass €7,000/m²). Neighborhoods such as Chamberí, Salamanca, and Tetuán offer strong appreciation potential, while districts like the Tech District, Usera, and Carabanchel stand out for growth and profitability. ⁣⁣

Average gross rental yields in Madrid range between 4% and 5%, depending on the district, with certain areas offering yields above 6% or even 7%. Annual price variations have been positive, with growth of 4.2%. The city is also home to leading institutions like Complutense University, Polytechnic University of Madrid, IE Business School, and innovation hubs such as Castellana Norte. ⁣⁣

Kategora has entered Madrid with Kora Lumen, a 4-star hotel complex aligned with the company’s “Flex” model. Scheduled to open in 2027, it projects a net annual return of 7%. Located in Madrid’s tech district — MADBIT —, it has been designed as a hybrid solution for new travel trends, offering flexible, sustainable accommodations adapted to diverse user profiles.

Real Estate Investment in Barcelona ⁣⁣

Barcelona stands out as one of Southern Europe’s most coveted cities. Its blend of tourism appeal, diversified economy, quality of life, and global outlook make it a consolidated bet for investors. The city also boasts increasingly sustainability-oriented urban planning. ⁣⁣

The average property price in Barcelona is around €4,943/m², with average yields at 5.9%, according to Idealista. The most profitable investment areas include L’Hospitalet, Sant Martí, Nou Barris, and Sants-Montjuïc. The city is home to top academic and tech hubs such as the University of Barcelona, Polytechnic University of Catalonia, and the 22@ Innovation District.

⁣⁣Kategora has launched Kora Mostra in L’Hospitalet, a growing district and new hotspot for cultural and business investment. Featuring 253 apartments and more than 2,000 m² of communal areas, this flex-living complex integrates art, culture, and design into its concept, reflecting Barcelona’s identity. Its proximity to Fira Barcelona and excellent connectivity enhance its appeal. The project is expected to open in 2028, with an estimated 7% return.

Real Estate Investment in Valencia ⁣⁣

Valencia has emerged as an ideal city to live, work, and invest. Its urban model —combining high quality of life with a thriving local economy— makes it a strategic destination for real estate investors. ⁣⁣

Average property prices in Valencia are around €1,790/m², with yields close to 7%. Key neighborhoods include El Cabanyal, Ruzafa, Benimaclet, and Patraix. Valencia is also a strong academic and tech hub, with institutions such as the University of Valencia, Polytechnic University of Valencia, and the UPV Science Park. ⁣⁣

In El Cabanyal-Canyamelar, one of Valencia’s most dynamic districts, Kora Lluna is under development as the city’s largest flex-living complex. Featuring 428 apartments and over 2,000 m² of communal space, the project holds a BREEAM “Very Good” certification and integrates renewable energy, bicycle parking, EV charging stations, and native vegetation. Already 100% sold, it is set to open in early 2026.

Real Estate Investment in Navarra⁣⁣

Navarra is known for institutional stability, high quality of life, efficient public services, and a differentiated tax framework. Pamplona, its capital, combines a vibrant student scene, business activity, and cultural tourism.

⁣⁣Average property prices in Pamplona are around €2,806/m², with yields of 4.8%. The most attractive neighborhoods include Lezkairu, Iturrama, Rochapea, and San Jorge. The city hosts institutions such as the University of Navarra and the Public University of Navarra, alongside a growing tech ecosystem. ⁣⁣

Located in Lezkairu, Pamplona’s most promising neighborhood, Kora Kiliki features 167 apartments and 1,400 m² of communal space. Its design incorporates triple thermal insulation, high-efficiency carpentry, geothermal and aerothermal systems, plus 80 solar panels covering 50% of energy needs. Nearing completion, the project is set to open by the end of 2025 and is already fully sold.

Real Estate Investment in Seville

Seville is undergoing progressive modernization thanks to urban regeneration projects and new infrastructure such as its metro system and green corridors. Combined with its cultural richness, tourism appeal, and strong academic environment, this is fueling rising demand for rental housing. ⁣⁣

Average property prices in Seville are around €2,681/m², with yields averaging 6.2%. Popular investment areas include Nervión, Triana, La Cartuja Los Remedios, and the historic center. The city is also home to the University of Seville, Pablo de Olavide University, and the Cartuja Science and Technology Park — one of Southern Europe’s leading innovation hubs.

Real Estate Investment in Málaga⁣⁣

Málaga has transformed into one of Southern Europe’s most dynamic cities. Its ambition to become a tech hub (with initiatives like Málaga Valley), excellent air connectivity, and Mediterranean climate make it a standout investment destination. Average property prices in Málaga are around €3,794/m², with yields of 5.4%. ⁣⁣

Neighborhoods such as Teatinos, Soho, El Limonar, and Carretera de Cádiz are among the most attractive for investors. The city also hosts the University of Málaga and the Málaga TechPark (PTA), consolidating its reputation as a hub for talent and innovation. Districts like Teatinos and El Limonar are expanding rapidly, with property prices expected to continue rising.

Kategora is also expanding in Southern Spain, with upcoming projects in Seville and Málaga, marking a milestone in its growth plan. This expansion aligns with Spain’s dynamic real estate sector: in 2024, the Living segment led investments, accounting for 31% of the total with over €4.3 billion. In Q4 alone, this share rose to 38%, with €1.9 billion invested —nearly triple the figure of the same quarter in 2023 (CBRE).

⁣⁣Meanwhile, the hotel sector attracted more than €3.2 billion in 2024, consolidating its position as one of the market’s strategic pillars, despite a slight 21% correction compared to the previous year. ⁣⁣

All Kategora projects are operated by Kora Living, the company’s in-house hospitality operator. This integration ensures expert, efficient, and sustainable management, maximizing asset performance while enhancing the guest experience. ⁣⁣

Want to know more about Kategora’s hotel investment opportunities? Discover our projects here.

Frequently asked questions

  • Can I invest in Spanish real estate without being a resident?
    Yes. Spanish legislation allows foreign citizens to invest in property. Moreover, those investing more than €500,000 may apply for the Golden Visa, which grants legal residency in Spain.
  • How long does it take to recover a real estate investment?
    It depends on factors such as net yield, operating expenses, and asset appreciation. In high-demand urban areas, the average timeframe ranges between 8 and 12 years.
  • Can I deduct taxes when investing in real estate?
    Yes. Certain expenses can be deducted from personal income tax (IRPF) or corporate tax, such as mortgage interest, property tax (IBI), insurance, community fees, and depreciation.

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