Marbella Real Estate still represents value for Money

Despite a sharp rise in international demand for Costa del Sol property, Marbella residential real estate remains good value for money. The market may have actually benefited from the high prices charged per metre in other European city destinations.

According to Humphrey White, business director for real estate experts Knight Frank, “Spain is the country that has undertaken the largest correction of prices in the EU, with cuts of up to 65%” since the market saw its peak in 2007. In a recent survey conducted by Knight Frank among international investors, more than 50% suggested that former investment hot spots like Paris or London had “lost their interest due to the low profitability currently provided – below 4% in many cases”.

Many investors are now looking to start portfolios in Spanish cities like Barcelona, Marbella and Madrid instead, which present far better investment opportunities.

Second-hand property versus newly built

The second-hand property sector has fared better than the newly built property market across most parts of Spain and prices are beginning to stabilise. Like elsewhere in Spain, there are still many signs of the recession in and around Marbella – golf and seafront developers have gone bust, their apartment and town house projects were repossessed by banks now desperate to sell off their unwanted property portfolios.

Expat homeowners had to undergo a considerable readjustment in their asking price expectations which eventually translated into more realistic prices for second-hand homes and a more active market. With an average price per square metre of EUR 1,762 recorded at the end of quarter 3 this year – the same value as the previous quarter - the chain of 24 consecutive months of price falls had finally been broken.

In Marbella, the resurgence of the second-hand homes market has meant that newly built properties are selling at around 50% of their original value. Luxury 2-bed apartments located further inland sell at around EUR 225,000, often presenting new owners with a whole range of fantastic extras, such as a 24-hour concierge service, gym, onsite Spa and sauna, swimming pools and access to golf courses.
 
Taylor Wimpey España, one of the country’s leading house builders, reported recently that their Los Arqueros Beach complex of 114 apartments sold out in just 11 months – with buyers purchasing off-plan for the first time in years. Prices averaged around EUR 250,000 per property and buyers were fairly evenly distributed between Britain, northern Europe, the Middle East and Russia.

This compares to second-hand homes of similar size entering the market for around EUR 120,000 to EUR 200,000, depending on proximity to the beach and nearby amenities.

Demand rises in line with a surge in tourism?

At the end of August Spain had recorded record numbers of visitors and this has also influenced the property market at the Costa del Sol. Foreign demand for real estate located in coastal regions of Spain has increased by 29% in the last year. The Malaga province, with its easy accessibility, amazing amenities and upmarket resorts such as Marbella, Benehavis, Fuengirola and Estepona, has seen a rise of 61% in foreign demand for residential property.
 
Now that Marbella’s Mayor Angeles Muñoz has restarted discussions on subjects like Marbella’s connection to the high speed AVE network railway line from Malaga to Marbella and the temporarily halted development of the Bajadilla port into one of Europe’s most prestigious marinas, many local estate agents believe that cruise ship companies will cast their eye into Marbella’s direction again.
 
With cruise ships come large numbers of affluent visitors and, as the past 12 months have shown, with affluent holidaymakers come new market opportunities. China, Russia and the Middle East are emerging markets for the Costa del Sol’s property sector, but so are India and to some extent the USA. Many who came on a short holiday simply fell in love with the Costa del Sol and decided to look around for property on a second visit.

With resale flats priced below EUR 150,000 and luxury detached villas costing less that EUR 1m, Marbella property is great value for money, and comes with the added bonus of boasting a track record that spans some 50 years of investment opportunity.