What are the Risks of Real Estate Investment in Spain?

A strategic look at Costa del Sol property investment

Investing in property in Spain can be a brilliant way to secure your financial future. The country, and especially the Costa del Sol, remains a top choice for international buyers looking for a holiday home, a renovation project, or a high-yield rental property. With its beautiful coastline, strong tourism appeal, and exceptional quality of life, the region continues to attract attention year after year. But it’s not all sunshine and sangria. The risks of real estate investment in Spain are real, and understanding them is key before you commit any capital.

At Mojo, we’ve built our reputation on helping investors navigate this landscape with clarity and confidence. A great example is a penthouse apartment we bought, reformed, and sold in Miraflores, Mijas — a lush, green neighbourhood in Mijas Costa with a fascinating history. This project was part of our first capital investment fund, Mojo Capitals I, developed to optimise real estate ROI in Spain through a strategic, risk-aware framework.

In the video below, Mojo’s founders, Per Mønsted and Jacob Johansen, break down the most common risks of real estate investment in Spain, and how to reduce them through a proven, four-phase approach.

Understanding the Investment Landscape

The Costa del Sol continues to stand out as one of Spain’s most attractive and competitive property markets, and for good reason. High demand from tourism, a limited supply of new land, and an enviable lifestyle create strong long-term growth potential. But with popularity comes pressure — and often, inflated price tags. One of the most common risks of real estate investment in Spain is overpaying. Unlike more tightly regulated markets, pricing here is often set by the seller, with listings based more on expectations than market value. Without accurate data, negotiation skills, and local insight, it’s easy for international investors to step in at the wrong price — weakening ROI from day one.

And in a fast-moving market rstanding tlike Costa del Sol property investment, precision matters. Timing your entry, buying at the right price, and underue value are the pillars of a successful strategy. Recent figures from Idealista (May 2025) back this up. The Costa del Sol is no longer just a holiday destination — it’s leading Spain’s property evolution. According to UCI, 84.5% of mortgages granted to foreign buyers in Spain are for second homes, with more than a third located in Andalusia. Even more telling, 19 of the 20 most expensive neighbourhoods in the region are right here on the Costa del Sol — elevating it not just nationally, but into the ranks of Europe’s most desirable markets.

What’s fuelling the shift? It’s more than 300 days of sunshine. The rise of remote work, the flexibility of global mobility, and Málaga’s status as a tech and transport hub have reshaped the buyer profile. The average age is dropping, and demand is shifting from retirees to working professionals, entrepreneurs, and international families looking to blend lifestyle with long-term value. For investors ready to think strategically, the Costa del Sol offers both opportunity — and competition. That’s why getting the fundamentals right from the start is everything.

Phase 1: Buy smart. Don’t overpay

A solid investment starts with a smart purchase. Property prices on the Costa del Sol can be inflated, with asking prices not always reflecting true market value. Many local listings are set based on the seller’s desired figure, not necessarily the property’s real value. That’s why negotiation and expert valuation are non-negotiables.

At Mojo Capitals, we secured a win in Miraflores, negotiating a penthouse originally listed at €295,000 down to €227,000 — a 23% reduction that boosted immediate upside for our investors. This is now part of our alternative investment portfolio and a prime example of how smart buying minimises the risks of real estate investment in Spain.

Phase 2: Manage renovation costs and time

Once you’ve bought a property, the renovation phase begins, where costs and delays can quickly spiral out of control if not tightly managed. This is one of the most underestimated Costa del Sol property investment risks.

We recommend working only with vetted contractors and securing fixed-price quotes to maintain budget discipline. For our Miraflores apartment, we received a renovation quote of €39,555 from a trusted provider. Beyond cost, time is the other critical factor. Every delay eats into your return. For example, if a €50,000 profit takes two years instead of one, your annual ROI is effectively halved.

In Mojo Capitals’ first and second funds, we targeted a post-tax real estate ROI in Spain of 10%. Our latest project, MCI Villa Aurora, is aiming for a 27% total return (~12% annual ROI before Spanish tax).

Phase 3: Invest in Staging and Furnishing

Presentation sells. In a saturated market, staging and furnishing can mean the difference between a quick, profitable sale and a property that lingers. According to Idealista, Spain’s largest property portal, staged homes can sell up to eight times faster than unstaged ones. For Mojo Capitals’ Miraflores apartment, we’ve allocated €24,157 to furnish and stage the 110 m² apartment. This includes tasteful, high-quality interiors designed to appeal to the buyer demographic most active on the Costa del Sol.

This isn’t fluff — it’s a proven strategy to add value and accelerate sale time.

Phase 4: Sell at the Right Time and Price

The final phase is where your strategy either delivers or disappoints. Selling at the right time and at the right price is essential for securing the best return. This is where many investors fall short, often due to a lack of local insight.

Selling a property in Spain comes with its own complexities, from legal requirements to local market dynamics. That’s why professional support is critical. Our expectation for the Miraflores property was a market listing at around €399,000 (excluding furnishings). With careful timing, aiming for peak summer visibility, we planned to deliver strong results aligned with our fund’s ROI targets.

Conclusion: Minimise risk, Maximise Reward

There’s no doubt that Costa del Sol property investment holds promise. But that promise is balanced by risk—pricing traps, renovation challenges, staging missteps, and the complexity of selling in a foreign market. Overpaying, renovation delays, poor presentation, and market missteps can all eat into your return. At Mojo, we help investors avoid these traps through a tested four-phase method:

Buy smart. Renovate with control. Stage for sale. Sell for value.

It’s a model built on experience — and it works. The four-phase method we used in Miraflores via the first Mojo Capitals fund has been developed through real-world experience and tailored for investors looking to reduce the risks of real estate investment in Spain.

Want to Invest with Us?

Mojo Capitals is constantly developing, following the path to the highest possible ROI and the minimal risk investment for our exclusive investors. The newest Mojo Capitals fund is project-based and playing in a higher league. MCI Villa Aurora is an investment project in the highly sought-after area of Nagueles in Marbella. Go to the website to learn more about the latest investment funds and request the prospectus!