As prices pick up from rock bottom, Spanish cities are attracting second-homers who want more than the beaches and golf courses of the costas. Ready to enter the ring?

Cafe society in Palma (Klaus Vedfelt)

When thoughts turn to property in Spain, they usually drift to a sun-bleached villa on the coast, with views of boats bobbing on a sparkling azure sea, or to an identikit flat in a golf complex that has seen its value plummet in the crash — and its pastel-coloured paint start to peel. Until now, the market for second homes in Spanish cities has always been a niche one.

Yet mañana may have come. A growing band of buyers are turning their attention to concrete, rather than costas — attracted by vibrant street life, culture, gastronomy and history. There’s another key reason to consider looking at urban Spain in today’s market: investment potential.

Spain’s GDP was growing at its fastest rate in six years in the final quarter of 2013, and seven of its cities rank in the top 10 in southern Europe in the fDi European Cities of the Future 2014-15 report, based on the continent’smost promising investment locations.

Property prices have fallen dramatically — as they have throughout Spain — but cities offer the highest rental potential, according to Barbara Wood, director of The Property Finders Andalucia, a buying agency. “The market is wide open for cash buyers, and most of those will be foreigners, who head for the coasts,” she says. “So the cities, which still suffer from domestic economic problems such as high unemployment and lack of mortgage availability, are ready to welcome foreign buyers with open arms.”

Edificio Alber - Calle Aragón - Palma

Palma

With the cathedral dominating the skyline, a historic core of narrow streets, trendy bars, fantastic beaches and a glamorous Mediterranean marina scene, the Mallorcan capital tends to attract those who also love Barcelona.

Historic palacios in vibrant areas such as La Lonja and Santa Catalina are popular with British buyers, says Daniel Chavarria Waschke, managing director of Mallorca Sotheby’s International Realty. He is marketing a five-bedroom penthouse in one of these palaces for €2.5m (00 34 971 721000, mallorca-sothebysrealty.com). “Buying here means that you are close to the seafront, yet surrounded by top-class restaurants, cafes, boutiques and indoor markets.”

Also in an impeccable, but pricey, location is beachfront Portixol, where refurbished front-line fishermen’s houses cost €1m or more. For smaller budgets, Taylor Wimpey is selling one-bedroom flats in Edifici Alber, on the city’s main artery, Calle Aragon, from €122,000 (0800 012 1020, taylorwimpeyspain.com).

Mallorca’s property prices didn’t hit the doldrums the way they did on the mainland, so expect to pay €5,000-€6,000 per sq metre (about £500 per sq ft) in the city centre. “Palma is a city on the up — plenty of refurbishment is happening in the old town and super-high-speed fibreoptic internet is being installed, increasing buildings’ quality and price points,” Chavarria Waschke says.

Zoe Dare Hall Published: 11 May 2014