Investing in Spain: ETF's, Real Estate Crowdfunding & P2P Lending

August 17th, 2023
6 minutes read

Rich in unique culture, situated in the beating center of commercial Europe, and with a thriving, diversified economy; Spain is becoming increasingly popular as a target for international investment. Hit hard by the financial crash of 2008, Spain’s top-tier tourist attractions and its geographical ideality sparked a strong resurgence. With an attractive GDP of $1.2B,[1] Spain is not just the 4th greatest economy in the EU but sits as the 13th largest recipient of foreign investment in the world.[2]

Tourism has always been a prime pillar in the Spanish economy, but now, a soaring property market and a healthy financial backbone are breeding new reasons to welcome international investors and foreign business. So much so, that around 20,000 foreign companies are present in the spanish market.[3] Fluid trade through unhampered networks provides unprecedented access to a 500M strong European consumer base.

Intrigued about Investing in Spain? Learn here about the best methods of investing; ETFs, real estate crowdfunding, and P2P Lending.

Spanish Economy and Investment Landscape

In the last 10 years especially, Spain has bounced back from a bit of a tricky patch after being hit hard by a recession. An increase in housing prices and a substantial rise in employment and overall wealth allowed the Spanish market to breathe. As a result, the Spanish business sector became thoroughly internationalized as partnerships between local companies created opportunities to penetrate other markets.

International investment can be an issue for some countries in Europe. Too much red tape and clearcut restrictions can ward off foreign interest, but Spain’s openness in global trade or FDI explains why it ranks as the 9th country in the world with the least restrictive regulations for international investment.[4] This economic outlook has created a strong export sector; the second largest exporter of goods and services in Europe after Germany, and the 11th largest globally.[5]

Domestically, Spanish investment culture could be about to gain some real traction. The pandemic ingrained ‘savings fever’ into Spanish homes across the country. Reduced consumer spending and a greater weight on the need for savings created a growing pool of spare capital. In just March-April 2020, the volume of bank deposits increased by €20 billion.[6] An increase in savings is more than likely to lead to further investment as Spanish citizens look for ways to diversify and make the most out of their spare capital.

Investing in Spain with ETFs

ETFs, or Exchange Traded Funds, are becoming the most viable way of investing in whole economies. By tracking collective stock indexes, investors can gain immediate exposure to Spain’s largest-cap companies, creating a diversified portfolio from a single transaction. The largest beacon of Spanish stocks is the Bolsa de Madrid - the most influential out of Spain’s four regional stock markets - offering a comprehensive range of companies stretching across critical industries.

Investors might want to look at the IBEX 35, an index consisting of Spain’s 35 most liquid companies in the Madrid Stock Exchange General Index, a broader index measuring the performance of over 2,500 tradeable stocks. Or, the MSCI Spain index features a wide range of large and mid-cap market segments, covering around 85% of Spain’s total equity.

One of the most popular and best-performing ETFs is the iShares MSCI Spain ETF. Other options include:

Exposure to a diversified slice of the Spanish economy is easy enough. ETFs can be traded through - typically - any online broker, but fees and any assorted costs involved in trading might vary.

Property & Real Estate Crowdfunding in Spain

Real estate can be one of the most overly-romanticized avenues for foreign investors. It’s often laden with paperwork and various conditions only applicable to international buyers. In Spain’s case, residency can be difficult to obtain and is tied to high levels of wealth. Foreign buyers can obtain property and gain residency via the Golden Visa, requiring a minimum investment of EUR500,000 in Spanish real estate.[7]

For investors that don’t necessarily have access to large amounts of capital, there is another avenue that provides exposure to the resurging Spanish property market - Real Estate Crowdfunding. 

Still, an emerging trend, real estate crowdfunding platforms act as a banking intermediary for property projects, sourcing funds from individual investors from around the globe and connecting capital to developments requiring funding. In Spain, the real estate crowdfunding market has been gaining serious momentum. The movement isn’t likely to slow as Spanish house prices continue to tick upward, rising around 2.59% from 2020 to 2021. Alongside price growth, sales are skyrocketing; home sales were soaring 35.9% in the first 10 months of 2021.[8]

There are currently 6 real estate crowdfunding platforms registered in Spain. Housers is one of the most popular, offering a range of projects stretching real estate, green, and business projects from €300. Wecity is a more recently launched platform that offers real estate projects starting at as little as a €100 investment.

Spain’s Peer-to-Peer Lending Market

The alternative investment sector hums beyond the noise of the booming property market. Just in 2016, Spain’s alternative finance sector grew by 162% to €131 million.[9] Peer-To-Peer Lending platforms offer debt notes and loan agreements from everything to personal loans, small businesses, environmental projects, and more, with the country boasting an impressive total of 10 Spanish Peer-to-Peer Lending platforms.

For those seeking something with a little more reward than traditional banking interest rates, sites like Colectual offer investment into a variety of SMEs, whereas more ethical-facing Microwd focuses on loans for empowering women in struggling economies.

The Bottom Line

Investing in Spain seems much more viable as the country bounces back from a period of economic difficulty. ETFs like the IBEX 35 are a good way of tracking the economy through its leading-equity performers, but the wave of crowdfunding and debt investing that is surging across Europe might be more attractive, with sites claiming returns upwards of 10% annually with investments as low as EUR50.

Article Sources

  1. World Bank: “GDP Growth (annual %) Spain
  2. Altios: “Foreing Direct Investment in Spain
  3. Business Sweden: “Spain Business Climate Survey 2023
  4. OECD Going Digital Toolkit: “OECD Foreign Direct Investment Regulatory Restrictiveness Index
  5. ICEX Invest in Spain: “Spain, a major European economy
  6. European Banking Federation: “Banking in Europe: Facts and Figures 2021
  7. The Ministry of Foreign Affairs, European Union and Cooperation (MAEUEC): “Investor Visa
  8. GlobalPropertyGuide: “Spain's housing market improvement
  9. BBVA: “Spain, the fifth largest European country in alternative finance