Real estate experts signal towards a moderation in the rhythm of sales on the Costa del Sol


Real estate transactions in Marbella and its surrounding sphere of influence, specifically Estepona and Benahavis, more commonly known as the “Golden Triangle,” have stabilised after eight years of sustained growth. Without a doubt, there has been a series of factors such as an over-supply of properties all aimed at the same client profile, the uncertainty being generated by Brexit and the global economic slowdown. These contributing factors have led the experts to foresee in the coming months a moderation in the rhythm of sales and property prices. The Real Estate Market Report for the Costa del Sol is from Diana Morales Properties|Knight Frank, one of the most prestigious agencies in the area.  The report suggests the necessity to take all of these factors into account and calls all the players in this sector to “work at being creative, offering quality and value, and hope that price levels even out in the near future.”

Even though there has been an enormous increase in the number of sales in Estepona and Benahavis, Marbella still tops the charts in the number of transactions completed. It’s also a national indicator, often ahead of the curve economically, partly due to the fact that it is so dependent upon and in tune with the broader European economies. The economic uncertainty in Catalonia combined with the recent tax reforms, virtually abolishing inheritance tax in the Autonomous Region of Andalusia, has had a positive knock-on-effect on these shores.

In an international context, the uncertainty being generated by Brexit has resulted in a slowing down of the British market, although it is still the biggest in Spain and especially here on the coast; in 2018 they represented 15% of the market compared to 21% in 2015. This decrease has been compensated by an increase in the domestic market as well as a marked increase in the Norwegian, Swedish, Dutch, French, Belgium as well as Middle Eastern markets. All of these regions continue to show strong economic growth and have high income levels, which makes the Costa del Sol relatively affordable. Easter week is one of the busiest times, witnessing a large increase in the number of possible buyers coming to the coast to view properties.

However, the adjustments being made by most economies in their downward output forecasts for 2019-2020 to just below 2%, as well as the fact that some American and European funds are not as active as they were a few years ago, makes experts think that there is a cooling down of economic fortunes in the near future. The report furthermore highlights the point that developers are suffering due to the effects of trying to compensate for the increased costs of construction and in land value which has forced them to raise their prices.

For this reason, the Real Estate Market Report by Diana Morales Properties | Knight Frank considers that these signs indicate that there should be “a cooling off of land and construction costs as well as an easing of property prices if the market is to regain its dynamism, as well as a resolution of the Brexit impasse.” According to their estimates, it will be the top end of the market which will be more resilient to these changes and will best maintain its value.

Benahavis, Estepona, Ojen, Mijas, as well as Casares and Manilva, have absorbed a large part of the recent growth in the real estate market in the past five years, largely in part due to the planning issues that have been plaguing Marbella, which has seen an increase in prices from 3%- 7% depending on the area and type of property during 2018.  However, “we’re witnessing a cooling off of demand in the new areas, as they too see prices rise perhaps more quickly that the market can carry right now.”

The report has furthermore detected two important phenomena.  On one side, there is a scarcity of new projects being developed in Marbella, being a direct consequence of the lack of land available for development and the problems arising from the delay in urbanistic planning licences.  This, and the lack of offer, has ensured that the Golden Mile has maintained its status as being the most exclusive address available, with prices reaching as much as €20,000 per meter squared on frontline beach properties.  Urbanisations such as Sierra Blanca or Guadalmina maintain their prestige over the areas of Estepona or the Cala de Mijas, where there is more availability of land and building licences are readily attained.  The report also highlights the worrying lack of variety, with the majority of projects on the market focusing on the same mix of design, amenities and price range.  The oversupply and over-competition in this sector has resulted in it being the victim to the greatest drop in sales from the lower–to-mid range bracket. But that’s not to say that original and truly luxurious initiatives can’t be successful.

New styles of properties

The report states that the majority of buyers in Marbella do not need mortgages and tend to be cash buyers. The younger generations (35-44) rank first in property searches followed then by those in the 45-54 age bracket.

Demand is being centred on modern and newly constructed properties, with an increased interest in those promotions offering all the comforts and open spaces that can be found in a house but are in an apartment.  A change has also been noted in the style, going from the white minimalistic look of recent years to a fusion of classic-contemporary style.  Environmental credentials and energy-efficient homes are also more important than before.  The market for renovating and modernising older properties is one that remains solid and is gaining in popularity again. This is especially noticeable in Marbella, the Golden Mile and in Nueva Andalucía.  This formula allows for buyers to have the best of both worlds, a property in the best location combined with the best design, quality and technology.

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