2024 Tourism and Rental Roundup for Spain and Costa del Sol

‍Tourism in Spain and the Costa del Sol: A Record-Breaking Year

‍2024 Highlights:

• Spain welcomed nearly 100 million international air passengers in the first eleven months of 2024, marking an 11.3% increase over 2023.
• Low-cost carriers (LCCs) dominated the market, with 58.3% of arrivals.
• The UK remained Spain's largest market, contributing 1.3 million passengers in November alone, followed by Germany, Italy, and France.
• Coastal regions like Costa del Sol saw unprecedented growth, driven by an 8.9% increase in holiday rental prices and an 80% rise in tourist properties since 2019.

Costa del Sol: The Standout Region

• Accommodation capacity reached 600,000 beds, reflecting a massive 84% increase in holiday rental properties since 2019.
• Malaga Airport processed over 20 million passengers, making it one of Europe's busiest.
• Luxury tourism expanded significantly, with over half of new beds added in 2024 falling within the four- and five-star category.

Economic Impact:

• Tourism is projected to generate €200 billion in revenue by the end of 2024, contributing over 13% to Spain’s GDP.
• Employment in tourism is set to surpass three million workers by 2025.

Projections for 2025:

• Spain is expected to solidify its position as a top global destination, potentially welcoming 105 million visitors.
• Growth in high-end tourism will continue, particularly in Costa del Sol, with significant developments in luxury accommodations and services.

Real Estate Market Trends in Costa del Sol

2024 Observations:

• Holiday rental prices surged by 8.9% year on year, driven by demand from international tourists and limited supply.
• Luxury villas dominated new construction, particularly in coastal areas like Marbella and Benahavís.
• Average rental prices in Málaga province rose by 10.1%, with Málaga city reaching €14.50 per square meter.

Impact of Tourism on Property Prices:

• The rise in short-term holiday rentals has pushed property values higher, making it increasingly difficult for locals to afford homes.
• Coastal towns experienced price hikes of up to 30%, according to Tinsa.

2025 Outlook:

• Short-term rental demand will continue to outpace supply, further driving up prices in tourist-heavy areas.
• Local governments may introduce stricter regulations to balance holiday rentals with long-term housing needs.
• Developers are expected to shift focus towards mixed-use projects, combining affordable housing and luxury properties.

Affordable Housing and Regulatory Developments

Challenges:

• A growing emphasis on luxury properties has exacerbated the shortage of affordable housing.
• Local residents are increasingly priced out, especially in prime tourist areas.
• Landlords are hesitant to offer long-term rentals due to fears of "okupas" (squatters) exploiting legal loopholes.

Government Initiatives in 2024:

• New Rental Laws: Measures introduced to expedite eviction processes for delinquent tenants and unauthorised occupants.
• Affordable Housing Projects: Increased funding for developments catering to middle- and lower-income residents.
• Tourism Regulations: The Junta de Andalucía implemented policies to modernise the holiday rental market, granting local councils greater control.

2025 Predictions:

• Improved landlord protections will likely encourage long-term rentals, gradually stabilising the market.
• A potential shift in investment strategies, with developers focusing more on affordable housing projects to meet public demand.
• Enhanced monitoring of holiday rentals to ensure compliance with regulations and reduce pressure on the housing market.

Long-Term Impacts and Strategic Recommendations

Tourism and Real Estate Interplay:

• The booming tourism sector is a double-edged sword, driving economic growth while straining local housing markets.
• Collaboration between policymakers and developers is crucial to ensuring sustainable growth.

Strategic Recommendations:

1. Diversify Accommodation Offerings: Encourage the development of mid-tier accommodations to cater to a broader audience.
2. Incentivise Long-Term Rentals: Introduce tax breaks or subsidies for landlords offering long-term leases.
3. Promote Sustainable Tourism: Implement measures to balance visitor numbers with environmental and local community needs.

Conclusion

2024 marked a transformative year for Spain's tourism and real estate markets, with record-breaking visitor numbers and continued growth in the Costa del Sol. However, these developments have underscored pressing issues like affordable housing shortages and investor hesitancy towards long-term rentals. As Spain moves into 2025, balancing the benefits of its tourism boom with sustainable urban and housing policies will be essential for long-term prosperity.