Property markets where foreign buyers had the biggest share in 2022

In 2022, 2.4% of properties in Europe were purchased by a buyer living in another country. These are made up of holiday home buyers, retirees, expats returning home, and property investors. Based on the Homevest cross-border mortgage survey conducted in July 2023, we estimate that 25% of the property turnover in 2022 was financed with a mortgage.

In this article, we have picked out the countries where international buyers have been the most active in 2022.

While Spain is one of the most popular destinations for foreign buyers, there is a lot of activity all around Europe. We’ll take a look at the pros and cons of buying property in each.

Cyprus

The country with the largest share of non-resident buyers in 2022 was Cyprus, with almost half the properties being bought by foreigners. The Cypriot property market grew by 30% year-over-year, rebounding after the pandemic. The cross-border market also saw a strong recovery after pandemic restrictions were lifted. A staggering 44% of purchases in 2022 were by non-resident buyers. 

One big reason behind the interest is the expiration of the most favorable version of Cyprus' golden visa program. Property buyers that made their purchase before 28 April 2023 were eligible for easy access to an EU passport, along with their family members. Cyprus will continue to offer an easy route to EU residency and visa-free travel in the Schengen area.

We estimate that 18% of the purchase volume in 2022 were financed with a mortgage.

Pros

• Citizenship and residency programs: Cyprus offers appealing options for residency and even citizenship through investment in real estate. These programs have attracted many foreign investors and might be considered more accessible than Spain's Golden Visa program.
• Tourist destination: With its beautiful beaches and attractive climate, Cyprus has a strong tourism industry. This creates potential for rental income, similar to Spain, but often with less competition in certain areas.
• Growing market: Cyprus has been experiencing growth in its real estate market, particularly in cities like Limassol and Nicosia. This might offer investment opportunities that could be considered fresher or less saturated compared to some Spanish markets.
• EU membership: As a member of the European Union, buying property in Cyprus provides access to the European market, similar to Spain, but with a different cultural and geographical landscape.

Cons

• Economic instability: Cyprus's economy has seen significant fluctuations in the past, and its smaller size might make it more vulnerable compared to Spain's more diversified economy. This can pose a risk to property values.
• Limited market diversity: The Cypriot property market is smaller and less diverse than Spain's, with fewer options across different price ranges and property types.
• Regulatory complexity: Buying property in Cyprus involves legal and bureaucratic hurdles that might be considered as complex as those in Spain. It usually requires engaging local legal experts, adding to the cost.

Croatia

Croatia has the second-highest share of non-resident property buyers after Cyprus. One-third of property purchases in 2022 went to non-residents. That's 12,518 properties, twice as many as were sold to non-residents in Cyprus. Mortgage financing is less prevalent for these transactions in Croatia. Buyers are drawn to Croatia's long Adriatic coast. Germans are the biggest buyer group, purchasing 3,500 properties, followed by Slovenians that bought 3,100 properties in 2022.

One of the banks that offer mortgages to non-residents in Croatia is Erste Bank. Based on our survey to Croatian banks, we estimate that 7% of the transaction volume in 2022 was financed with a mortgage. 

Pros

• Emerging market: Croatia's real estate market is seen as an emerging opportunity, particularly in tourist areas like Dubrovnik and Split. This can be an attractive alternative for those seeking less competitive and potentially more rewarding investments compared to established markets like Spain and Cyprus.
• Attractive prices: Croatia often provides more budget-friendly options in real estate compared to many regions in Cyprus and Spain. This affordability can make it more accessible for foreign buyers.
• Tourism and rental opportunities: With its beautiful Adriatic coast and historical sites, Croatia offers robust opportunities for holiday rentals, similar to Spain and Cyprus but with its unique appeal
• EU membership: Like Spain and Cyprus, Croatia's EU membership facilitates certain legal aspects and provides broader market access. Croatia recently joined the Schengen area for visa-free travel.

Cons

• Bureaucratic challenges: The property-buying process in Croatia can be complex and time-consuming.
• Smaller market: While offering unique opportunities, Croatia's real estate market is smaller and less diverse than Spain's and may also lack some of the investment incentives found in Cyprus.
• Economic stability: Although growing, Croatia's economy may be perceived as less stable compared to Spain's, and similarly vulnerable to fluctuations like Cyprus, potentially affecting property values.

Romania

Romania scores the third place on our list, with 25% of properties being purchased by non-residents. The main buyers in Romania are Romanian expats living in the UK or in the EU. While many Romanians continued emigrating in 2022, the pandemic has also prompted many to return. Investing in Romanian real estate is an attractive way for many to maintain their bond to their home country.

Mortgages for Romanian expats are easy to access, and available even for smaller amounts. Banks like Credit Europe Bank and Libra Bank are the go-to banks for Romanians living abroad, and Banca Transilvania offers the attractive Noua Casă mortgage to Romanians living abroad. 

Unicredit can be a good option too. Libra Bank is the only bank that serves non-Romanian buyers. Based on a survey we have conducted amongst Romanian banks, we estimate that 19% of mortgage volumes to non-residents were financed with a mortgage in 2022.

Pros

• Growing economy: Romania has experienced significant economic growth, particularly in urban areas like Bucharest and Cluj-Napoca. This has created appealing investment opportunities that might be seen as less explored compared to Cyprus and Croatia.
• Affordable property market: Romania offers some of the most affordable real estate prices in the EU, presenting opportunities for both first-time buyers and seasoned investors. Compared to both Cyprus and Croatia, Romania's market might offer greater accessibility.
• Potential rental yields: In major cities and burgeoning tech hubs, Romania has a growing rental market, potentially offering substantial returns on investment.
• EU membership: Like Cyprus and Croatia, Romania's EU membership provides access to the European market. However, Romania is not part of the Schengen Area.

Cons

• Complex legal system: The process of buying property in Romania can be bureaucratic and complex. While all three countries present legal hurdles, Romania's system may be perceived as particularly intricate and might require specialized local knowledge.
• Economic disparities: Romania's real estate market can vary widely between urban and rural areas, and the overall economic stability might be perceived as less robust compared to Cyprus and similar to Croatia.

Portugal

13% of homes were bought by non-residents in 2022, or 19656 properties, up from 8.9% in 2021. The impact on property prices in Portugal of foreign buyers has been hotly debated, and property prices ended 2022 60% above their previous peak in 2010. Portugal is a popular destination amongst Americans, Brazilians, British, Germans, and the French, in that order and foreigners bought properties that were on average 95% more expensive than average.

Portugal offers visa programs both for investors and digital nomads, which makes it an attractive destination for non-EU buyers.

Portugal has excellent access to mortgages for non-residents, and at 25%, also the second largest share of mortgage financing for cross-border property transactions. Banks like UCI, BPI, and Millennium BCP all offer mortgages to non-residents.

Pros

• Golden visa program: Like Spain, Portugal offers a Golden Visa program, granting residency rights to significant property investors. This program has attracted many foreign buyers and is considered more straightforward to navigate than Spain's equivalent.
• Affordable property market: In comparison to many European countries, including some regions of Spain, Portugal's real estate market is often more affordable. Cities like Porto and Lisbon offer appealing investment opportunities, as well as regions like the Algarve.
• Strong rental yields: Tourist destinations in Portugal offer the opportunity for short-term rentals, often at attractive returns. The demand for holiday rentals is robust, similar to the Spanish market.
• Lifestyle and climate: Portugal shares the Mediterranean climate with a relaxed lifestyle, stunning landscapes, and rich culture. Many consider the quality of life to be on par with Spain.

Cons

• Legal complexities: While Portugal's property buying process is generally considered more streamlined than Spain's, it can still be complex for foreigners, possibly necessitating local legal help.
• Limited market diversity: Compared to Spain, Portugal's real estate market is smaller, with fewer diverse investment opportunities. While there are still many attractive options, it may be considered less varied.
• Economic sensitivity: Like Spain, Portugal's economy can be sensitive to global economic changes, which may impact property values.

Spain

10% of properties in Spain were bought by non-residents, and with 94,460 properties bought it's the largest market for foreign buyers in Europe in 2022. The Spanish cross-border property market jumped from 60,397 transactions in 2021, putting it ahead of France, the second largest market for foreign buyers. France remains larger in terms of transaction volume.

Similar to Portugal, Spain offers a golden visa program and a new digital nomad visa, which makes it an attractive destination for property buyers from around the world.

Spain has the most well-developed lender ecosystem for cross-border property transactions in Europe, with both domestic and international banks offering mortgages on Spanish properties. Banks like UCI, Santander, BankInter, Unicaja, Cajasur, Caixa Bank, and Sabadell all offer mortgages to foreign buyers, and many provide service in several languages.

Pros

• Attractive prices: Compared to other Western European countries, Spain often offers attractive real estate prices, particularly in certain regions. This has led to a surge in interest from foreign buyers.
• Strong rental market: In cities like Barcelona and Madrid, as well as coastal areas, there's a robust rental market, particularly with tourists. This can make investment properties potentially lucrative.
• Quality of life: Spain's warm climate, rich culture, and world-renowned cuisine draw people from around the globe. Owning property here allows for personal enjoyment or retirement in a highly desirable location.
• Residency opportunities: Spain offers a Golden Visa program, where significant investment in real estate can lead to residency rights. This is particularly appealing to non-EU citizens looking for easier access to the European Union.

Cons

• Regulatory complexity: The property-buying process in Spain is known to be bureaucratic and often requires local legal expertise to navigate. This can add both time and expense to the process.
• Economic volatility: Spain's economy has faced challenges in the past, and economic fluctuations can impact property values. It's essential to understand the local market trends and potential risks.
• Property taxes and costs: There can be hidden costs in buying and owning property in Spain, including various taxes, fees, and potentially expensive property maintenance, especially if you're not residing locally.

Greece

10% of properties in Greece were bought by non-residents in 2022, or 7800 transactions, making it similar in size to Cyprus. Besides the Adriatic sea and a rich history, Greece's golden visa program is one of the attractions.

Euro Bank is the most active bank in lending to non-residents, and has a digital application process that makes it easy to apply from abroad.

Pros

• Golden Visa program: Similar to Cyprus, Greece offers a residency program through real estate investment, providing an appealing route for non-EU citizens to gain access to the Schengen Area.
• Tourism opportunities: Greece's numerous islands and rich historical sites create a vibrant tourism industry, offering lucrative short-term rental opportunities. This aligns with similar possibilities in Cyprus and Spain but within Greece's unique cultural context.
• Diverse market: From bustling Athens to idyllic islands, Greece's property market is diverse and can cater to various preferences and budgets, with opportunities both similar to and distinct from Cyprus and Spain.
• Economic recovery and growth: Greece's real estate market has been on a recovery path, potentially offering investment opportunities at attractive prices, especially compared to certain regions in Spain.

Cons

• Economic sensitivity: While recovering, Greece's economy has been historically volatile and may still be considered riskier compared to Spain and Cyprus. This could affect property values.
• Bureaucratic challenges: Greece's property-buying process is known for its bureaucracy and may be as complex, if not more so, than both Cyprus and Spain. Engaging local legal help is often necessary.
• Property taxes: Greece has a complex property tax regime, and there are additional fees on property transactions, which are high compared to other countries in the EU.

France

While France is near the bottom of this list, with 6% of properties purchased by non-residents, they are the largest market in terms of transaction volume for cross-border property purchases. An estimated 66,847 properties were bought by non-residents in 2022, with a transaction volume of €23 Billion.

Because of strict interest rate ceilings in France, French banks are less interested in offering mortgages to non-residents than elsewhere. Especially during times of increasing interest rates, banks tend to be reluctant to offer mortgages to new clients. You might still be able to score a mortgage from an international bank. Handelsbanken is a great option for Swedish or Norwegian residents.

Pros

• Stable and mature narket: France's real estate market is considered one of the most stable and mature in Europe, which might be appealing for investors seeking a safer investment compared to the more volatile market in Greece and the fluctuating market in some regions of Spain.
• Enjoy city or countryside: From vibrant cities like Paris to picturesque regions like Provence, France offers diverse investment opportunities. This diversity is comparable to Spain and Greece but within the unique cultural and geographical context of France.
• Rental market: France's robust rental market, particularly in urban areas, offers opportunities for both long-term and vacation rentals, aligning with similar possibilities in Greece and Spain.
• Quality of life: France is renowned for its quality of life, healthcare, education, and cultural richness, which may be attractive for those looking to relocate, offering a different lifestyle experience compared to Greece and Spain.

Cons

• High transaction costs: France's property transaction costs, including notary fees and taxes, can be quite high, usually higher than in Greece and Spain, adding to the overall investment burden.
• High property taxes: France has various property-related taxes that can add to ongoing costs. The Taxe d’Habitation applies to second homes and ranges from 1.2% and 1.7%, which is among the highest in Europe.

Italy

The last country on our list is Italy, where 5% of properties were bought by non-residents in 2022. That's 25,481 cross-border transactions in 2022. In 2019, Italy introduced a flat tax for pensioners moving to Italy for retirement.

At least two banks offer mortgages to non-residents: Intesa Sanpaolo and Unicredit.

Pros

• Diverse real estate market: Italy offers a wide variety of properties, ranging from urban apartments in Rome or Milan to countryside villas in Tuscany. The diverse landscape means there's something to fit every taste and budget.
• Potential investment growth: With popular tourist destinations and rich cultural heritage, properties in some regions can be a good investment. Historical centers and coastal areas may offer significant appreciation over time.
• Lifestyle and climate: Many foreigners are drawn to Italy's Mediterranean climate, rich culinary traditions, and artistic heritage. Owning property can be a gateway to enjoying this lifestyle firsthand.
• Encouragement for foreign buyers: Some regions in Italy offer incentives to foreign buyers, especially in less populated areas where revitalization is desired. Programs may include tax benefits and reduced purchase prices for those willing to renovate.

Cons

• Complex legal process: Buying property in Italy involves a complicated legal process, and without familiarity with the local laws and regulations, foreign buyers can find this overwhelming. Hiring a local attorney or specialist is often necessary, adding to the cost.
• Maintenance and management: Especially for those not residing in Italy full-time, managing and maintaining a property can be a challenge. This might require hiring a local property manager.
• Economic fluctuations and property taxes: Economic instability and variations in property taxes can impact the real estate market, potentially affecting property value and investment returns.
• Language barrier: Navigating the buying process, integrating into the local community, and managing a property can be more challenging without proficiency in Italian. While many people speak English, particularly in tourist areas, it may not be sufficient in more rural or less-visited regions.

Summary

The European cross-border property market is developing rapidly, and with it, mortgage lending to non-residents. 

Estimates based on Homevest research

Sources used in August 2023:

1. Real Estate in Cyprus
2. Real Estate in Croatia
3. Cyprus property sales
4. Real Estate in Portugal
5. Foreign buyers in Portugal
6. Real Estate in France
7. Home purchases by foreigners in Spain
8. Foreign buyers in Italy