Recent times have been turbulent enough – lockdowns in 2020, a booming luxury property market on the Costa del Sol in 2021. Now we have a property market with not enough properties in it. Here’s a look at what the near future has in stall for us.
In a little more than a decade we have had the impact of a financial crisis and the Covid-19 pandemic. But the Costa del Sol’s property market always comes out on top. This holds true also when looking further back into the past, and when one analyses the reason for this remarkable ability to bounce back from what are mostly global situations. We see the clear conclusion is that it is this region’s quality of life that gives it true and enduring desirability.
In other words, the Costa del Sol and Marbella in particular have something to offer that doesn’t diminish in value, but appears very much to grow with each passing year – and crisis that seems to inevitably come with said year.
Welcome to the mid-year market analysis by ILove Andalucia – real estate
Huge surge in demand for properties
The Costa del Sol’s property market had been in solid recovery growth mode for several years. Driven by strong demand for newly-built modern villas and apartments, when the Covid-crisis arrived in the spring of 2020. What followed was not caused by a financial or macroeconomic crisis, nor was there any lack of demand.
Rather an enforced closure of the economy and travel routes that directly affected the market.
Not only were sectors such as tourism, hospitality and retail strongly affected by these closures, but while online enquiries for Costa del Sol property soared virtually no-one was in a position to travel for property viewings or completion at the notary.
The result was a significant drop in business. But while most of us expected a strong recovery in 2021 and into 2022, the actual force of demand, especially in the mid to upper segments of the property market, set new records. This points to the undiminished demand for this region mentioned above. But this was also the product of:
- The release of unsatisfied demand from 2020
- The Covid confinement experience – causing many to want to take the leap and opt for lifestyle-driven choices such as buying a property in Marbella
- Rapid growth of remote working
New trends
Trends seen before were therefore accelerated in the past two years, and they have also resulted in strong renewed tourism and property growth on the Costa del Sol. But also a series of new trends, such as a growing number of buyers are 30s to 50s families, often with school-age children.
This has impacted not only schools and overall services as the year-round population grows, but it is also gradually changing the kind of properties now most in demand:
- A relative shift from apartments to villas – and from holiday homes to permanent or semi-permanent residences, with the accompanying focus on quality, technology and comfort
- A desire for work, leisure, workout and garden spaces
- Clear preference for modern and new-built homes. But as these are now scarce, greater acceptance of off-plan buying and delivery times
- Renovated and modernised properties in good locations are also popular
- Limited stock in Marbella is drawing buyers to newly upcoming areas in Benahávis, Estepona, Marbella East and Mijas Costa
- Most activity is €500k up for apartments and €1 million up to €15 million for villas, with the epicentre around €3-€6 million.
A battle of supply and demand
Demand is resilient, and strongest for the following areas. The Golden Mile, Sierra Blanca, La Zagaleta, Nueva Andalucia, New Golden Mile.
As there is little supply in these areas, with the exception of Marbella East and the New Golden Mile, buyers are also looking for modern homes in Mijas Costa, Ojén, Benahávis and west of Estepona. This is where many new developments are currently concentrated. The competition for top properties in top locations is driving prices up to new heights in areas such as Puente Romano (Golden Mile). Here, m2 values of up to €30.000 are not uncommon.
On the New Golden Mile and the beachside area just east of Estepona, by comparison, they have risen from €5.000/m2 up to €10.000 and beyond in a relatively short period of time. This is especially true for modern or fully renovated properties.
In general, the appetite for resale properties is not as big. However good resales, especially in attractive locations, are still in demand. Especially if they are easy to modernise/renovate. But the price must be realistic and reflect the cost of this. New projects are being developed, but they can’t keep up with demand, so owners of resale homes can sell well if they price and present the property in keeping with market trends.
So what happens now?
Marbella and the Costa del Sol are thriving because this remains a great area. Not just in lifestyle terms, but also in terms of cost of living and investment. Prices have risen in recent years, but there is no property bubble right now. Also, both properties and goods/services are below the levels seen in most of the countries buyers are coming from.
Other favourable factors include:
- Lower interest rates. Even though most current buyers have the cash, many are opting for 50% loans
- Large-scale investment. Luxurious resort hotels like the new Four Seasons near Rio Real add confidence and value to the market
- In times of uncertainty and low stock market performance, property is an attractive alternative asset class
- Marbella is an increasingly globally recognised luxury lifestyle destination
- The growing desirability of Marbella’s quality of life makes it an increasingly attractive investment
Of the potentially negative factors, most but not all are more global and therefore generic in nature:
- Inflation, though here too good property is a good hedge
- Geopolitical instability is another two-sided coin. It creates global reverberations but actually emphasises the peace and security of this region
- Global debt and potential about the money markets, or indeed fears of a pandemic return
- More local in nature is the need for an effective new PGOU and updated/expanded infrastructure. Including roads/parking, that can deal with a growing Marbella and Costa del Sol
Buy properties now or later?
At the time of writing and publishing this report, many thought that the conflict in Ukraine would affect life or property sales in Marbella, but this doesn’t seem to be the case. One cannot predict the future, however what we do know is Marbella is as close to recession proof as you can find. Properties here are rising in value, and whilst prices are not at pre-2008 levels, our advice would be to get in on the action whilst you can.
We love Marbella, and we know you will too. So why not take the plunge? The team at ILove Andalucia – real estate are here to guide you every step of the way.
