9 August 2018
Housing on the Costa del Sol has become synonymous with rehabilitation, new construction and luxury. Both Málaga and the coast have experienced continual and growing demand for housing since 2015. The trend has been fuelled by the influx of foreign tourists, who are spending increasingly longer periods of time in Spain, along with the boom in tourist flats as an investment in the short and medium terms. This demand, in turn, has resulted in steep price increases, which in some cases have returned to pre-crisis levels. However, experts say that opportunities can still be found.
“The Costa del Sol is a reference for the coastal market and Malaga is the focus of interest for investors since it has all the necessary services: AVE (high-speed rail), airport, seaport, cultural and gastronomic facilities… It meets all the requirements so that Spaniards and foreigners can enjoy their old age,” says Jesús Gil, CEO of the luxury real estate brokerage agency, Gilmar.
With these characteristics, the Costa del Sol has once again become a reference for investors, of which there are currently three types: institutional, small investors and local investors, who buy homes as a means of saving.
Despite the boom in the market, “the outlook is still very attractive, mainly due to the capital gains that people who bought during the crisis achieved,” explains Ivan Rodríguez, CEO of iKasa, who believes that the market will continue its growth during another three to four years.
The executive also highlighted the residential rental market, since most international buyers rent before buying. Finally, for tourist rentals, “where profitability can reach 10 to 12% and where there is as much interest as in the main capitals of Madrid and Barcelona,” Mr Rodriguez said.
Álvaro Marcos, head of sales for Aedas Homes, believes that this is one of the great attractions of this market, since “the new coastal market offers clients the opportunity to rent their second home, combining the enjoyment of [the home] with a good investment. It is something that we see a lot of at Aedas Homes.”
The British are still the biggest property buyers, but clients from Sweden, Belgium, Germany and France are also highlighted
The coast was, according to experts, the first market whose appeal to foreigners began to recover after the crisis. “It is a market dominated by international customers, who are increasingly stable and more diversified in origin. While the British continue to lead, other buyers, especially from Sweden, Belgium, Germany and France, are appearing. It is a destination that covers the desires and needs of these customers, who are looking for good weather, the beach, golf courses, good infrastructure and services. This has given the market new life, growing by double digits,” says Ignacio Peinado, the director of Eastern Andalusia for Neinor Homes.
Strong demand has caused price increases in some specific areas, such as “Marbella, Estepona and Benahavís, where currently there is nothing for less than 300,000 euros, as average prices range from this base to half a million euros, along with multi-family homes that go for sale a million euros,” says Susana de la Riva, director of marketing and communication for Tinsa. She added that ” flats costing 120,000 euros can only be found in more degraded areas.”
Ms de la Riva stated that “the coast of Mijas, Fuengirola and Estepona is the most dynamic area after Benalmádena and Torremolinos, where new construction is more contained and the prices, after the change in trend seen in 2016, have stabilised.”
The principal challenge for the Costa del Sol is providing greater legal security to investors and developers
Estepona is the most dynamic area in the Costa del Sol’s real estate development market since it combines a strategic location with all the services that tourists seek and an agile administration that grants certainty to projects. Also, there are two clear markets in the city, one for first homes, and the other, which is aimed at an international clientele.
On the other hand, Álvaro Marcos, from Aedas Homes, points out that the most significant challenge facing the Costa del Sol is providing greater legal security for investors and developers. “The governments need to give legal certainty and confidence regarding the deadlines for land development processes. Otherwise, we as developers are unable to do our jobs, since buyers don’t know if the project will be cancelled or stopped.”
Biggest developers buying land
The boom has not failed to attract the attention of Spain’s biggest developers, who have worked to position themselves on the Costa del Sol since late 2015 and early 2016, buying land. “In the city of Malaga, there is no more development-ready land available. Whatever there was has already been added to the portfolios of the main developers. For example, the largest number of developers is concentrated in the Teatinos area, and there, Neinor Homes has two projects that will add more than 400 homes,” Ignacio Peinado affirmed. In the rest of the province of Malaga, “this market is returning to normal and most of the consolidated vacant and developing land (including paralyzed developments) belongs to financial entities, which are already marketing them to developers in the area (for the quick start of medium-small developments) or investment groups that focus on acquisitions from the financial institutions,” a report on the coast by Tinsa stated, highlighting the increase in prices.
Original Story: ElEconomista.es – Luzmelia Torres
Translation: Richard Turner