In 2020’s second half, the Spanish Golden Visa’s approval rates hit rock bottom.

The staggering drop comes from a bi-annual report issued by Spain’s Ministry of Inclusion, Social Security, and Migration.

It’s an all-time low for the program. This comes with just 162 main applicants from June to December, which is 76% less than the preceding first half.

Spain Golden Visa Program’s Demographics

Currently, Chinese and Russian investors make up the bulk of approvals. Chinese investors account for 34%, and Russians at 24%.

Both nationalities seem to maintain a huge share of approvals, regardless of the increase in approval rates.

In the second half of 2020, Chinese investors accounted for 55, while Russians accounted for 39 of the total 168.

What’s to Blame for the Drop?

COVID-19 seems to be the main culprit here.

Oddly enough, Spain’s migration business endured one of the world’s worst breakouts, and quite well.

Spain’s COVID-19 breakout led to confinement rules and shut down of public bureaus, and for multiple months.

Regardless, the first half of 2020 saw high levels of acceptance, and they were even higher than latter 2019 (which were pandemic-free).

Spain’s 20-Day Rule

A reason for Spain’s previous high approval rates can be attributed to its 20-day rule.

It’s a Spanish law that forces firms to either approve or reject a migration application in a 20-day timespan. This means fast processing times. But in many cases, it may lead to silent approval without proper revision.

Combined with the high-demand that Spain receives in application numbers, this may have led to its resilient immigration numbers.

This has changed in recent times. Spain’s government has indicated that in 2020’s second half, residency approvals went through stricter approval procedures.

This was done by reducing the processing time of reviewing residency application files. In-tandem with rejecting “silent approval” procedures, there seems to be a 55% reduction in authorizations.

Spain’s Crashing Housing Market

COVID-19 did heavily impact how foreigners approached Spain’s property market.

The rapid spread of the pandemic has forced travel limitations. This is especially visible in holiday places like Alicante, Costa de Sol, Canary Islands, and the Balearic (where a large share of property is owned by foreigners).

Compared to 2019, it’s estimated that 26.5% less homes were bought by foreign investors than in 2020. This makes it the lowest transaction value in 10 years.

There was also a slight drop in foreigner home acquisitions. In 2019, foreigners were behind 12.45% of transactions. In 2020, that value was at 11.32%.

A Surprising Rise in Expensive Property Acquisition

The more expensive markets tell a different story. Foreign buyers were behind 7% of home sales in Spain that were valued over EUR 500,000.

That would be the highest rate since 2013.

Regardless, most of those were EU citizens, who didn’t need special visas to enter and live in Spain.

Their share in that EUR 500,000+ property is also high. However, the total acquisitions dropped from 3858 to 3330 between 2019 and 2020. This represents a 13.7% drop.

Spaniards themselves are acquiring property at reduced rates, with a 17% drop. This may explain the prominence of foreigners in that market. Regardless, third-country investors seem to have the greatest drop in acquisitions, being at 18%.