Costa del Sol’s Property Market shows Signs of Improvement

Spain’s property market is showing slight improvements but only in some traditional property hot spots like for example the Balearics and Marbella at the Costa del Sol. It’s primarily the holiday homes market but only the segment that can boast a combination of good location and quality built.

According to the General Council of Notaries, who base their reports on actual property sales transactions, the number of residential property sales in February grew by 39.8%, reaching 26,602 sales transactions, compared to February 2013. During that 12 month period, house prices rose by a modest 0.6% across the country.

The Notaries’ press release stated: “The rebound in home sales in recent months (in January they surged by 59.2%) can be explained, in part, by the normalisation of the figures after the end of the income tax deductions for home purchases at the end of 2012, but also reflects a stabilisation in the monthly sales.”

The cost of a dream home in the sun

Time is running out for people still debating whether or not they should start looking for their dream home at the Costa del Sol, for Marbella has already seen an influx of foreign buyers that has driven up demand and caused a shortage of quality homes in the luxury segment of the market.
 
The Notaries stated that the average price for a second hand apartment stood at EUR 1,261 per square meter in February this year, while the price of brand new apartments stood at EUR 1,575 per square meter.

In total, the Notaries summed up the month of February showing another “recovery in terms of year-on-year rates for housing purchases and prices, which could be an indication of a turn-around in the sector or at least the end of the depressive spiral.”

This conclusion echoes results published by international property experts Savills, whose report cited the Balearic Islands, the Caribbean and Tuscany as international property hot spots for buyers looking to purchase a “retreat”. Savills forecast a minimum of 10% price increase for this year in the “retreat” segment of the international holiday homes market. Generally, the second-home and holiday home markets are set to recover more quickly than the residential sector as a whole.

According to Savills’ research chief, Yolande Barnes, “it is like to be the city getaway locations that show the best growth in the next five years”.

Retreat hot spots

This is certainly borne out in places like Marbella, where holiday homes have managed to maintain their price levels far better than elsewhere at the Costas. Buyers from Scandinavia and China are flocking to the Costa del Sol to snap up the final bargains in the luxury apartment and villa market.

Ms Barnes added that, as finance was becoming more freely available again, “some [investors] may find what they want in secondary markets and second tier cities, but others will spot the immense buying opportunities that now exist in the wide variety of locations that we have always called retreat property.”

Savills’ report also highlighted property hot spots Ibiza, Mallorca and Sotogrande, which is located some 60 km distance from Marbella, have benefited from the huge price adjustment that Spanish house prices have undergone since the market crashed at the end of 2007. They believe that investors will look at prime city locations first then move on to secondary cities and towns like Marbella or perhaps Granada in the Sierra Nevada mountain range.

Savills report stated: “British, Russian and French buyers (who are often already familiar with the area) are benefiting from heavily discounted prices to buy second properties, some 30-40 per cent below their former peak values.”
 
Although Savills believe that many of the retreat markets won’t return to their peak price conditions until 2019, there are small pockets like Ibiza and Marbella where prices are already climbing much faster and are rapidly catching up with what they once were before the economic crisis.

Manilva, a half hour drive from Marbella, has already benefited greatly from its close proximity to the Costa del Sol’s glamour resort. More tranquil and upmarket than Benehavis or Mijas, and marginally cheaper than Marbella, Manilva offers luxurious country retreats with spectacular views.