The Spanish city of Marbella, on the country's southern coast, is popular with foreign buyers.
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According to Kate Everett-Allen, partner at real estate firm Knight Frank, there are three European countries that are “perennial favorites” for buying a holiday home.
France, Italy and Spain all have political stability, good governance and easy access to the mortgage market – factors that have helped make these countries popular with foreign buyers, she said.
It's also easy for buyers to understand the real estate market through land records that show how much properties sold for, and they also provide “soft” factors like attractive scenery, good food and attractive cities, Everett-Allen told CNBC via video call .
What to look for
Before you begin your search, consider what you want from the property, Everett-Allen said. Do you plan to own your home for five to ten years for family vacations and extended stays? It is also important to take into account the desired or required rental income.
The ability to rent a home is crucial. “With higher mortgage costs, we’re seeing a lot more people wanting to rent the property easily,” Everett-Allen said. Some countries have introduced “digital nomad” visas after the pandemic, which are attractive because travelers who rent homes often want to stay for two or three months.
Also, make sure you can get there when you want. “There are certain markets you actually can't fly to in the winter months, so… will you be able to access them easily from your home base?” Everett-Allen said. There's also the lock-in-and-leave factor when you stay out of the house. So consider what contacts you have locally who can help you with maintenance or security when the house is empty.
People are spending more time in their vacation homes than before, Everett-Allen said. “Before, [people] wanted to be able to drive from the airport to her home within an hour. Now we're finding that they're willing to travel a little further because they're going to spend a week at a time in their home, not just a weekend,” she told CNBC.
It's worth checking the rules for renting through sites like Airbnb. The Italian city of Florence, for example, banned new short-term rentals through such platforms in October, while Paris has a 120-day limit on property rentals.
For Brits in particular, Brexit means they can only spend 90 days out of 180 in countries in the Schengen area (which includes France, Italy and Spain), otherwise a visa is likely to be required.
France
France is the most visited country in the world, according to the United Nations World Tourism Organization, and Provence and the Alps, with their stunning landscapes and ample space, are popular investment spots for buyers from northern Europe, Everett-Allen said.
Post-pandemic, the Alpine region is popular for its outdoor lifestyle. “It just [ticks] “Everything in terms of views, nature, space, ability to keep fit…time with family and friends,” she said.
The resort of Courchevel 1850 recorded the highest prices for prime properties in the second quarter of 2023 at 27,250 euros ($29,866) per square meter, while the resort of Morzine had the lowest at 9,700 euros per square meter, according to Knight Frank's research.
Vendors sell products at the open-air market in Toulon, a city in the French region of Provence.
Owen Franken | Corbis documentary | Getty Images
According to France's Olivier Becht, there are steps to make France an easier place for U.S. citizens to do business. There is a plan in place that will see French entrepreneurs in the US gain access to extended visa periods and American business owners benefit from a simplified visa process, according to France's Olivier Becht, the Minister Delegate for Foreign Trade, who posted about the deal on X in November.
France is also encouraging people to buy newly built second homes in the country through an incentive that reimburses the standard tax rate (TVA) of 20% if they make the property available to rent for around 14 weeks a year. A new-build two-bedroom, two-bathroom apartment in the town of Meribel-les-Allues, close to ski lifts, is listed on Knight Frank's website for around $605,000.
Italy
Everett-Allen says Tuscany, with its vineyards, farmhouses and towns such as Florence, Siena and Lucca, is always popular, as are the towns and villages surrounding the lakes in the north of the country, both with mountains and easy access to the city. A six-bedroom villa on Lake Como – where George Clooney reportedly has a home – is for sale on Knight Frank's website for around $2.3 million.
To get more bang for your buck, Puglia, at the heel of Italy, offers a “stunning coastline and charming historic towns.” [and] delicious cuisine,” said agent Sara Traverso, co-founder of real estate firm Nest Seekers International, in an email to CNBC. A four-bedroom, two-bathroom rural Puglian home with a pool is listed by Nest Seekers for about $497,000.
Traverso, who worked in her family's Italian real estate business for several years before moving to New York City, said the central region of Umbria is also popular for its medieval hill towns and laid-back lifestyle.
“The preservation of its cultural heritage attracts people seeking a quieter, more authentic Italian experience,” she said. The island of Sicily is also enjoying increasing popularity for holiday properties. And 2024 could be a good time to buy, as Traverso expects a decline in prices and an increase in supply nationwide, favoring foreign buyers.
Traditional white houses are characteristic of Ostuni in the Puglia region of Italy.
Istvan Kadar Photography | moment | Getty Images
Italy has become popular with wealthy foreign buyers setting up shop in the country due to a tax rate introduced in 2017 that allows people to pay a flat fee of 100,000 euros a year on income earned abroad, regardless of how much that income is .
This “flat tax” program extends to family members paying a fixed amount of 25,000 euros a year on foreign income, and has found “strong” traction for Knight Frank's clients in Europe and beyond, Everett-Allen said .
Spain
Spain is a popular shopping destination for French, British and Germans, with the Balearic Islands and the glamorous southern coastal town of Marbella among their favorite areas, according to Knight Frank.
And with the introduction of a new digital nomad visa launching this year, it's set to become even more popular with foreign buyers, This allows people from outside the European Union to live and work in Spain for up to five years. “If you own a home and have a digital nomad there for two or three months, that’s pretty useful,” Everett-Allen said.
Property prices in Madrid, Spain's capital, will rise faster than other European cities in 2024, according to real estate company Knight Frank.
Sylvain Sonnet | The image database | Getty Images
The capital Madrid, which has been “under the radar” with foreign buyers, is becoming increasingly popular because it is a “value play” compared to London or Paris, Everett-Allen said.
“It's a city that's small enough to have a really strong identity, good culture and good accessibility. [as] “There are so many flights to Madrid now,” she said.
Luxury properties cost about 8,000 to 9,000 euros per square meter in Madrid, compared to about 19,000 to 20,000 euros per square meter in Paris, Everett-Allen said. But property prices in Madrid are expected to rise by about 5% in 2024, according to Knight Frank's forecast, making it the fastest-growing city in the European real estate market – Paris luxury properties are expected to rise by 2%, while the agency said London prices stay unchanged.