Although in many parts of the Costa del Sol there is still an oversupply of homes - both resale and key ready - this is not the case in prime markets of Marbella, where a lack of high-end property is putting vendors in the enviable position that they can hold out for higher bidders. For the lesser "exulted" segment of the market the picture looks rather differently.
Where housing permits had been granted previously, development has been proceeding nicely, but these developments tend not to be in the prime locations. Still, those marketing these properties are confident that the lack of housing in prime parts of town will eventually send buyers their way, because the Marbella name is too glamorous to resist for long.
At an average rate per square metre of 3,067 recorded for the final quarter of the year 2017, Marbella is considerably more expensive than, say Granada, Alicante or Murcia, but the average rate had actually fallen a little, compared to Q3 of last year, an indication that the high-end segment of the market had been driving up prices, and now the lack of available luxury housing is making its presence felt. Resale properties with clear legal planning permits and in prime locations are still in high demand, which means prices will go up gradually in the near future and provide investors with good capital returns in the medium to long-term.
Costa del Sol East and "Inland Andalucia"
Here estate agents are always warning that issues over planning might arise and also problems with ground conditions. Building surveys have shown above-average problems for rural and inland parts of Southern Spain and the Eastern Costa del Sol.
As a result, valuations tend to be lower than for properties in the West of the Costa del Sol, and "also the differential between asking price and actual sale price can be significant", according to Survey Spain, an organisation of surveyors working across Spain. Demand in rural areas continues to be high though, as scenic whitewashed hill towns are still very much the dream of living in "the real Spain". Prices are also lower than at the coast, which tends to drive buyers with limited budgets into rural areas.
"Gradually, properties there are being regularised, which effectively brings them within planning approval, but does not make them fully legal. As that happens, values are likely to increase, always assuming, of course, that the property is in good physical condition", stated Survey Spain in their most recent report.
Manilva, Estepona and Benahavís
Planning problems in Marbella make these three areas the beneficiaries. Here developers are able to carry out projects on the land that is available rather than the best plots available along the Costa del Sol, which tends to be in Marbella. However, Estepona is rapidly becoming the "new Marbella", as a result, and prices have been rising sharply.
The rate per square metre of asking price in Benahavís stood at 3,235€ euro per square metre at the end of Q4 2017, and the average difference between that and the actual selling price is approximately 10.22%. The average valuation within Estepona and Manilva stands at around 1,843€ per square metre at the present time.
Mijas, Fuengirola and Benalmádena
Favoured especially by Scandinavians, these areas have seen continued high demand, according to local estate agents and it is therefore likely that property values will continue as they are now, no matter what the Brexit outcome will be. At present, British buyers have continued to come to the Costa del Sol for their house hunt, undeterred by what problems might arise after March 2019 and the UK's exit from the EU bloc. Nordic buyers have been picking up the shortfall of Brits in some areas.
Difference between Asking Prices & actual Purchase Prices
The percentage difference between asking prices and actual buying prices looked like this in the last two years, according to Survey Spain:
- 1st Quarter 2016 – 11.68%
- 2nd Quarter 2016 – 5.69%
- 3rd Quarter 2016 – 11.97%
- 4th Quarter 2016 – 13.48%
- 1st Quarter 2017 – 6.94%
- 2nd Quarter 2017 – 6.76%
- 3rd Quarter 2017 – 12.01%
- 4th Quarter 2017 – 10.76%
Marbella was home to the highest valuation for an apartment, which boasted a staggering price per square metre of 5,951€. The lowest valuation per square metre was, however, just 852€ for a 2-bed country property that offered buyers the chance of rebuilding a 200 square metre villa from scratch, as it had to be demolished "due to structural defects".
Reading between Estate Agents' Lines
Although the recovery of the housing market at the Costa del Sol is definitely under way, it is still patchy in some parts. However, estate agents are confident that 2018 will pick up where Q4 of last year left off: on a positive note. But the most enthusiastic reports often come from specialist international real estate agents, whose lists include the cr�me de la cr�me of luxury properties in prime markets, where demand is highest and fluctuations in property values far less pronounced.
It is always important to read between the lines of estate agents' promotional literature and sales talk, for some can get carried away by small, but significant successes, which they then see as indicative for a whole market segment. Survey Spain quoted an interesting example of an agent working in the prestigious La Zagaleta segment of Marbella's real estate market.
La Zagaleta is arguably Marbella's prime market. When he sold four villas, each fetching around 4 million euros in 2017, he subsequently stated that if the one hundred Saudi princes who have recently been arrested were banished from that country and had to find a home elsewhere, they would surely also head to La Zagaleta, provided they'd be allowed to keep their Saudi assets to buy such luxurious properties.
This, the estate agents was quoted as saying, would surely create a property boom in luxury real estate at the Costa del Sol, and he was sure that La Zagaleta, as the prime market, would benefit hugely as a result of this boom. Maybe it's just wishful thinking, but then again, one never knows what's around the next property market corner...