Despite COVID-19, house prices in most advanced economies rebounded in 2020, largely thanks to the expansionary fiscal and monetary policies introduced to revive economic activity.

Activity in Spain’s agrifood sector is increasing at a faster rate than across the economy as a whole and the outlook for the 2024-2025 campaign is encouraging. Exports are holding up well in the adverse environment of recent years and the food price rally has begun to slow, although the cumulative increase since 2019 remains significant.

The wine sector plays a fundamental role in Spain, not only in economic terms due to its contribution to activity, employment and exports but also because of how extensively vines are grown and its regional importance, making it a driving force for environmental conservation and rural development. Spain is the world’s second largest exporter of wine in volume and third in value, although in recent years we have seen greater penetration in North America and Asia, markets that tend to buy wine of higher value. After the COVID-19 crisis, wineries and cooperatives must tackle important medium-term challenges and adapt to the new consumption habits of a younger, more digital and environmentally aware public. This strategy includes a commitment to organic farming, online sales and wine tourism.

The problem of housing affordability, both rental and ownership, has worsened in recent years and is particularly affecting certain groups such as young people. Solving this issue is no easy task and requires action to be taken on multiple fronts and over an extended time horizon. Public-private collaboration is essential for boosting the supply of affordable housing, and industrialised construction shows promise as a new way to help overcome the major challenges that the sector is facing, such as attracting skilled and female labour, while promoting more digital and sustainable construction methods.

The outbreak of war in Ukraine has overshadowed the positive outlook we were forecasting for the Spanish economy in 2022. While, at the end of last year, some factors had already appeared on the scene that hindered the economic recovery, the armed conflict in Ukraine has become the main focus of attention and the major conditioning factor for short-term economic developments.

The outlook for the Spanish economy and its sectors is positive. We expect to see a higher growth rate in sectors linked to the digital transition, such as ICT and professional services, as well as in sectors where the Spanish economy is highly competitive, such as the pharmaceutical and tourism sectors.

Climate change represents a key challenge for the real estate sector and for the entire Spanish economy. In this article, we analyse the risks associated with extreme weather events and the transition risks which the sector must address, as well as the role of public policies.

The most recent real estate market data show that the upward trend in demand and house prices has been accentuated in the early stages of 2022, in line with the positive inertia that the Spanish economy has maintained despite the adverse context. However, in the medium term the outlook is that the real estate market will tend to slow down.

After a year in which demand for housing exceeded all expectations, in 2023 we predict that the number of sales will adjust significantly, mainly due to the impact of higher interest rates. House prices, which tend to respond rather slowly to any fall in demand, will slow markedly although we expect them to maintain a slightly positive growth rate in 2023 (albeit adjusting in real terms due to high inflation). The supply of housing, which is insufficient to meet structural demand due to the creation of new households, will remain very limited as a result of the economic slowdown, high construction costs and waning demand.

Valuations of commercial real estate assets recovered significantly during 2024, driven by the shift in monetary policy and the reduction of market interest rates. Investment in the sector grew at an annual rate of around 20% and the living, hotel and retail segments were particularly dynamic. For 2025, it appears that most of the revaluations will have already taken place, as interest rates are already at levels close to the new equilibrium. Still, the sector will continue to attract investment opportunities. Spain is positioning itself among the most attractive destinations for international investment in commercial real estate, thanks to solid macroeconomic fundamentals that will remain attractive throughout this year.

The COVID-19 pandemic is severely impacting economic activity and the real estate sector is also feeling the effects, albeit not as much as other sectors. Specifically, at CaixaBank Research we expect GDP to fall by between 13% and 15% in 2020 and not to return to pre-crisis levels until the end of 2023. However, despite the seriousness of the situation and the high uncertainty regarding how the pandemic will develop, it is important to note that the sector is supported by a much stronger foundation than in the previous crisis of 2008.

The citrus fruit sector is one of the most important in the Spanish agrifood system and a leading player in international export markets. Its production structure is typically atomised, making it more difficult to modernise the farms, and the sector has some important challenges to tackle. In particular, strong competition from non-EU countries at a time when production costs are rising sharply, accentuated by a prolonged drought and the war in Ukraine. In any case, the figures suggest that Spain’s citrus production continues to be the most competitive in the world, thanks to its hard-won reputation as a product of the highest quality produced under the strictest health standards.

Disruptions in global supply chains, present in markets since the end of 2020 due to the reactivation of demand after the worst phases of the pandemic, and later due to the effects of the war in Ukraine and the persistence of COVID-19 in Asia, affected activity in some manufacturing branches throughout the second half of 2021 and, above all, in 2022. In some sectors, the most intense episodes of difficulties for international trade forced production to be cut back on an ad hoc basis, or even to come to a halt. Logically, those industries most dependent on imports of raw materials and/or intermediate goods for their production processes, as well as those with greater complexity in their value chains, suffered the most.

This winter’s drought has highlighted one of the most important challenges facing Spain’s agrifood sector: improving how water resources are used given the prospect of their availability becoming more limited.