Marbella Spain Housing Market Update
Europeanproperty.com interview Spanish real estate agent John Jessen the partner in charge of the agency business at La Costa Marbella. La Costa has been active in Marbella property development, property sales and rentals, as well as property maintenance – since 1968. They are well positioned to give a live update on the Marbella property market and to help overseas buyers understand the housing market in Marbella. We asked the following questions:
What is unique about Marbella prioperty market?
With 320 days of sunshine a year, Marbella’s micro-climate has probably the best weather in Europe. With tourists and investors visiting Marbella since the 1960s, this is today a developed, secondary real estate market – and it is undergoing a revival and transformation. The financial crisis resulted in a +/- 50% price erosion over 8 years. Construction came to a complete halt. 8 years on, the Costa del Sol property market has stabilised in terms of price. Growing buyer demand for a modern product which is in extreme short supply, has resulted in the first visible grass shoots in terms of new developments, a construction revival and off-plan sales. Older, properly priced properties offer good re-development potential, as can be seen in the most desirable and expensive urbanisations in Marbella (the oldest villas are on the best plots…), where older Andalusian villas, make way for the modern white cubes.
“How do buyers benefit from buying in your region?”
Apart from the excellent climate, delicious food, wonderful people, beautiful nature and deep culture???… When the Spanish real estate market falls, Marbella falls less and when it goes back up again, Marbella leads first and appreciates more. After 8 consecutive years of price declines, Marbella property prices have bottomed. From a long term perspective, buying now, at the low, is excellent. The potential for price appreciation far out-weighs further falls from here. Non-Euro based investors have the added advantage that the +/- 25% depreciation of the Euro over just the past 6 months, has just rendered Marbella properties that much cheaper.
How do you think property prices will grow in the next 5 years?
Given the current point of the cycle that we find ourselves in after 8 consecutive years of price declines, the long term price appreciation looks better than it has for a long time. People will always continue to come to Marbella. We do not expect a “hockey-stick style” resurge in prices. That would be unhealthy. We do expect a stable 2-3 years with more appreciation later on. Marbella is not a market driven by yield but rather appreciation. Astute investors who buy at the right price today, with the aim to re-develop, can expect a 30% gross profit, from purchase, to construction, to sale, over 18-24 months. 25-30% for the price of the land/old property, 25-30% for construction and related costs and the balance is a good return.
What is the average property price in Marbella?
Marbella starts at Cabopino and continues westwards down the coast like a sausage, some 40 kilometres ending after Guadalmina (west of San Pedro de Alcantara). This is a large and diverse area. It is difficult to find properties below Euros 200.000 – for that, go slightly further east to Fuengirola and Torremolinos. At the other end of the scale, you will find some of the most expensive properties in the world +/- Euros 50 million for mansions along the Golden Mile beach front, or in La Zagaleta, 15 minutes up the hills. +/- Euros 300.000 will buy you a 2 bedroom apartment in Marbella East and West, for the same in the Golden Mile, calculate Euros 750.000 (decent location and condition). For about Euros 1.2 million, you can find a beachfront penthouse in Marbella East – the same will be north of 2.5m on the Golden Mile. For Euros 5 million, you can shop for a villa in Sierra Blanca, La Zagaleta, El Madronal, Los Monteros and the likes. It is a large and opaque market. Malaga province has 7000 agencies. Best work with 1-2 good agencies, than try to juggle the rest.
Spanish property prices
A new market forecast report from Instituto de Practica Empresarial (IPE) business school, in collaboration with property company Mar Real Estate, suggests the market could grow by 10% in the area.It also says that the market is set to grow by between 5% and 7% in major cities such as Madrid and Barcelona and 3% in other cities.The IPE says that home prices on the Costa del Sol are already up 10% this year, and now represent 5% of all sales nationwide and if sales continue growing at their present trend, the property market in Málaga province will increase to 20% of the overall Spanish market.
Marbella Old Town
A tourist view of Marbella Spain filmed by traveller Vic Stefan who is travelling the world