Throughout its evolution from a sleepy backwater to a leading international resort area, the Costa del Sol has known many ups and downs, following the cycles of fortune and recession in a succession of roller coaster rides. When the most recent of several booms to hit the region came to an end a year or two ago, many feared an equally intense recession. The fact that this hasn’t materialised is an indication that this part of Spain has reached a degree of economic maturity that makes it more resistant to the big highs and bad lows of the past. What does this mean to property buyers and owners?
Greater maturity means the market is more stable, and therefore safer, than before. The degree of economic diversity – contributed to greatly by foreign residents – and the scale of the property market itself are now such that they tend to level the effects of ‘boom and bust’, which for so long characterised economic development in this region. It means that you will be able to buy a property on the Costa del Sol with greater peace of mind, knowing that the chances of a severe drop in prices such as seen at the beginning of the nineties is increasingly unlikely.
For the time being, the rapid rise in property prices that spurred returns on investment of at times 30 to 40 percent is behind us. The Costa del Sol remained popular with investors and speculators even after normal demand for property here started to slow down around 2002, driven by an off-plan boom that relied more on speculative buying than a real desire to own the property in question. In other words, buying and selling off-plan property became a form of speculative trading not unlike the stock market, but the Spanish authorities wisely limited the ‘turning over’ of properties in this way – thus taking the steam out of what could have been a market ripe for a crash.
Today’s market is more of an end-user one, with investment no longer a primary motivation for those buying homes on the Costa del Sol. Prices have levelled off as the previously overheated market relaxes. It’s bad news for short-term investors looking for a quick kill – their attentions have moved from southern Spain to newly emerging markets such as Bulgaria, Dubai, Morocco and Brazil – but good news for people who are searching for a good property in Marbella and surroundings. With prices levelled and in segments such as two-bedroom apartments even dropping due to oversupply, the Costa del Sol is, for the first time in years, once again a buyer’s market.
Those who shop around will not only find more attentive estate agents and lawyers (they simply have more time now), but will also be able to get a better deal than in the boom years. This is reflected in the fact that re-sales have once again replaced newly built and off-plan properties as the mainstay of the market, and with this investors and speculators have been largely replaced by people who want a holiday home or are thinking of moving to the sunny Costa del Sol on a more permanent basis. The market may have slowed down a bit and the strict measures taken by government against fraudulent developers and town planners may have produced its share of panic and bad publicity, but for those attracted by the climate, beauty, outdoor lifestyle, facilities, career opportunities, quality properties and indeed, security, that the Costa del Sol offers, the region’s familiar virtues and close proximity to Northern Europe remain as powerful as ever.
For these end-users, Marbella and its surroundings is still one of the safest and most attractive destinations around, particularly when it comes to settling abroad. For them, the greater value to be had is a primary driver, ensuring a good deal now and a solid long-term investment. Attracting only the most sophisticated of investors, the Costa del Sol has lost most speculators to Morocco, Bulgaria and the Cape Verde Islands, but equally these countries do not attract end-user residents. The market has therefore become self-selecting, and not surprisingly for an area with so many beautiful homes the higher end of the market remains strong.
By Michel Cruz
Copyright of Diana Morales Properties, February 2007