Europe Biannual Construction Market Report 1Q/2Q 2025
Spain
Top opportunities
Data centres: Spain is seeing increased investment in data centres, driven by growing digital transformation, cloud services demand, and the country’s strategic location for connectivity.
Hospitality and stadia: Tourism’s recovery and expansion are spurring opportunities in hotels, resorts, and event venues across Spain’s popular destinations.
Regeneration: Urban renewal projects are revitalising historic districts and enhancing infrastructure to support modern living and tourism demands.
Top trends
Modern methods of construction/modular/offsite manufacture: Spain is increasingly adopting modular and offsite construction techniques to enhance efficiency and reduce project timelines, particularly in the residential and commercial sectors.
Sustainable construction/Net Zero: There is a strong focus on sustainable construction practices in Spain, with an emphasis on energy-efficient designs, renewable materials, and achieving net zero carbon emissions, aligned with EU climate goals.
Local economic indicators
Spain’s gross domestic product (GDP), as reported by The European Commission, grew by 0.8% quarter-over-quarter (QoQ) in 3Q 2024, driven by robust private consumption and a strong tourism sector. Year-over-year (YoY), GDP is projected to have expanded by 3.0%, reflecting dynamic job creation, strong consumer spending, and real income gains for households. However, growth is forecast to slow to 2.3% in 2025 and 2.1% in 2026, as import demand recovers and a potential reduction in tourism arises from weaker economic performance among Spain’s key tourism markets. When viewing GDP compared to the previous period, QoQ, Eurostat reports that Spain experienced an increase of 0.8% between 2Q and 3Q 2024.
Eurostat also reports that in 2024, the construction industry’s gross value added, which measures its contribution to Spain’s overall GDP, remained stable at approximately 5.5% of the total GDP.
Eurostat's Harmonised Index of Consumer Prices (HICP) for 2024 is expected to have averaged 2.8%, reflecting a deceleration in energy and food inflation with service prices in the hospitality and transport sectors having remained resilient. Inflation is expected to decrease further to 2.2% in 2025 and 2.0% in 2026.
Strong immigration flows have positively impacted the labour market, with the unemployment rate forecast to decrease from 11.5% in 2024 to 10.7% by 2026. While still relatively high by European standards, these figures represent a significant improvement compared to the average unemployment rate of 18.2% since the 2008 financial crisis. Nominal wage growth is forecast to outpace inflation in 2024, though it is expected to decelerate slightly in 2025 and 2026.
Construction materials
Eurostat's November data on industrial producer prices reveals relative stability across all sectors apart from electrical distribution which saw a marked increase of 18.4%. When viewing YoY figures there was substantial price recovery in the manufacture of glass, 9.1%, with the latest MoM figures showing a strong increase of 14% in electrical distribution. When indexing for June 2022, when oil prices peaked due to the Russia-Ukraine conflict, we can see substantial price recoveries in both electrical distribution, 22.8%, and steel tubes, 15.6%, a notable increase in concrete of 14.9% and relative stability in all other sectors. It is paramount to regularly update project allowances as market pricing and conditions are changing weekly. See the following table for MoM, YoY and indexed pricing inflation:
Market outlook
Spain’s construction confidence indicator, CCI, experienced a sharp decline in December 2024, falling from 7.7 in November to 0.9. This drop was largely driven by a significant decrease in employment expectations, which fell from 4.1 to -8.8, and a smaller but related decline in order books, which dropped from 11.2 to 10.6.
By far the largest and most persistent problem facing Spain’s construction sector, both in December and throughout 2024, has been insufficient demand, which has averaged a reported figure of 59.2 for the year, 59.3 in 3Q and 4Q, and 61.3 in the latest figure for December. In comparison, the second-largest reported issue is a shortage of labour, with December's figure of 6.6 aligning with the 3Q and 4Q average of 8. These figures indicate that, aside from the enduring challenge of insufficient demand, the Spanish construction sector appears well-positioned to take on more work.
Local office input
In the medium-term, it is expected that the government will introduce measures aimed at reactivating the residential sector, driven by the growing demand for housing. While these measures are still pending, the short-term outlook for the construction market will continue to be shaped by private initiative. As a result, we anticipate that the types of projects currently being pursued, particularly Data Centres and associated infrastructure, along with hotels and other works linked to the tourism sector, will remain at the forefront of construction activity. These sectors are likely to remain the primary drivers of market growth until government intervention in the residential sector begins to take effect.
Gleeds recommends revising previously set project budgets to present-day figures based on local statistical information and our own internal data. Additionally, we advise investors to consider inflation contingencies in their budgets as materials and labour shortages remain unpredictable.
Peugeot Las Tablas, Madrid, Spain — Gleeds provided Project Management and Quantity Surveying/Cost Management services.
