Highlights from the recent ACI congress: Insights into Spain’s hotel sector, tax dynamics, and immigration law

Malaga, Spain. Multi-storey residential house in Malaga Spain

Q: How did the ACI mark its tenth anniversary?

A: The Real Estate Consulting Association (ACI) celebrated its tenth anniversary with a congress exploring current and future trends across various sectors, including residential properties, hotels, and offices.

Q: How is the Spanish hotel market performing compared to the rest of Europe?

A: Spain’s hotel market is rapidly emerging as Europe’s prime investment destination, with an estimated investment volume of nearly €3 billion for the year. This stands in contrast to countries like Germany, which traditionally invests around €5 billion annually in hotels but has only reached €400 million by the end of this year’s third quarter.

Q: What factors are driving Spain’s position in the hotel sector?

A: Spain’s hotel sector has a strong focus on vacation properties. Post-COVID-19, there has been a notable shift in consumer preferences, with many prioritizing leisure experiences, even at the expense of other needs.

Q: How have hotels in Spain demonstrated resilience amid the current economic environment?

A: Spain’s hotels have shown their resilience through substantial investment volumes, robust transaction rates, and ability to weather macroeconomic uncertainties and sudden interest rate increases.

Q: Who are the major players in the Spanish hotel transaction scene?

A: Large investment funds play a significant role, but family offices and hoteliers themselves are also prominent participants, with family offices contributing to approximately 20% of current investments.

Q: Is there a specific segment within the hotel industry experiencing significant growth?

A: Yes, there is a growing trend in asset repositioning within the luxury or ultra-luxury segment. Destinations like Mallorca are desirable for upscale hotel investments.

Q: What are ‘branded residences,’ and what potential do they hold in the market?

A: ‘Branded residences’ are a promising asset for the future. While their volume may not be high, their financial impact is significant. For instance, the Costa del Sol anticipates nearly 800 residences, potentially revolutionizing hotel developments.

Q: Beyond hotels, were other alternative assets discussed?

A: Indeed, the congress also addressed alternative assets. Some experts expressed optimism about private education-related assets, while others foresee a promising future for private healthcare, with private clinics and hospitals emerging as potentially secure long-term investments.

Q: How are investments in Spain’s hotel sector affected by recent tax changes?

A: Recent interpretations by the Directorate-General for Taxation (DGT) regarding the scope of new laws on indirect investment in listed real estate companies have exempted these shares from the Wealth Tax and the new tax on large fortunes. This means that direct investments by overseas investors in publicly-listed hotel companies or investments in non-resident companies with significant hotel real estate assets in Spain are not considered based in Spain. As a result, they are exempt from the Wealth Tax or the new Solidarity Tax on Large Fortunes.

Q: How does taxation work for the purchase and operation of hotels in Spain?

A: Typically, purchasing a hotel in Spain incurs the Property Transfer Tax (PTT) for second-hand properties or VAT for new builds. Operating a hotel subjects you to Corporate Income Tax (CIT), local property taxes, and potentially VAT on the services provided. Deductions and incentives may apply, especially for those promoting sustainable tourism or operating in specific regions.

Q: How do the new regulations regarding investment visas impact the hotel sector?

A: Spain’s Golden Visa program allows non-EU investors who invest a substantial amount in Spanish real estate, including hotels, to obtain residency. This has made Spain an appealing destination for foreign investors seeking entry into the European market, boosting the hotel sector.

At Costaluz Lawyers, we take pride in our specialized team that can provide comprehensive assistance for hotel acquisitions in Spain. Our real estate, commercial, and tax law experts collaborate to offer tailored legal solutions for our clients. Contact us today.

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