IPE: Málaga’s Land Shortage Will Drive Up House Prices

29 March 2017 – La Opinión de Málaga

During 2017, the Malagan real estate market is expected to continue along the path to recovery that it began two years ago, however, the lack of available buildable land along the Costa del Sol to meet current demand from developers and investors looks set to limit the growth of the sector. That is according to the

That is according to the Institute of Business Practice (IPE), which presented the 24th edition of its Real Estate Pulsimeter for Málaga last week. It warned that this lack of available buildable land in certain municipalities could result in the future effect of a rise in house prices in certain enclaves. In fact, the Director of the IPE’s Real Estate Practice, José Antonio Pérez (pictured above), said that this “new bubble” is already being seen in some parts of the Costa del Sol.

“There is more demand than available supply and if we do not resolve that mismatch, we will see prices rise again. The main problem is the lack of buildable land, understood as land that is suitable for the presentation of plans and for obtaining a licence. (…)”, he said.

In his opinion, the lack of available supply is due, on the one hand, to the “restrictions” imposed by the PGOU and the slowness of the urban planning procedure in certain towns compared to others, and, on the other hand, to the fact that some of these plots of land are owned by individuals and investment funds that are not interested in developing them, for the time being at least. Pérez pointed out that Sareb still owns lots of plots of land that it took over from financial entities, which are “clogging up the market”, despite the fact that the bad bank is working as fast as it can to find an exit from those assets.

As part of this trend, the IPE made reference to the special role being played by the so-called “golden triangle” of the Costa del Sol, which comprises the areas of Marbella west, Benahavís south and Estepona east. There, “the price of buildable land is doubling, products that suit the needs of solvent clients are running out and financial competition between landowners is becoming speculative and monopolistic”. Pérez also explained that, given the lack of available land along the west coast, investors are also starting to look for sites to develop along the east coast.

Málaga leads the way

The figures from the Real Estate Pulsimeter (….) confirm (…) that Málaga is one of the most important areas in terms of the recovery of the sector. (…).

House sales grew by 6% (in Málaga) in 2016 to reach a total of almost 26,200; and the IPE forecasts a similar increase for 2017, which would take the figure to around 27,700. Currently, c. 50% of purchases are paid for in cash and the other half are financed through mortgages, which gives us an idea of the importance of foreign buyers and investors here, as they are the main people who can acquire properties without having to resort to financing.

“Malaga’s position of leadership in the real estate sector is also reflected when we draw comparisons between Spain, Andalucía and Málaga with respect to the growth in the number of housing permits granted in 2016 vs. 2015 – the figure grew by 35% in Málaga, and by 20% and 16.9% in Spain and Andalucía, respectively. Something similar happened with the growth in the number of new homes started – Spain, with growth of 33% in 2016 vs 2015, was a long way below the rate of growth in Málaga (54%)”, says the IPE. (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake