Marbella’s property market is definitely on the up according to a Marbella Property Market Report from Christopher Clover, Managing Director of Panorama Properties. To find out more about where the Marbella property market is heading, read on for a summary of the main points.
The Spanish property market has definitely had its ups and downs over the last decade. Stagnating and dropping to an all-time low in 2011, many wondered at the time how and when the property market would begin to recover. While some regions of Spain are recovering slower than others, Marbella’s property market has recovered well and is continuing to stay strong.
Property market recovery
Despite a short wobble following the Brexit vote mid-2016 when buyers worried no European market would escape the outcome, prices in Marbella are again on the rise. In 2012 and 2013 there was a dramatic increase in sales following the Spanish property market crisis, which lasted from 2007 to 2011. According to Panorama’s Marbella Property Market Report 2017, sales levelled off in 2015 and 2016, with 2016 seeing a decrease in the sales volume of 8.97 per cent over 2015 sales.
This slow in the market in the past two years can easily be explained. An adjustment in sales volume after a deluge of purchases is perfectly normal. The dust has now settled and the volume of sales have readjusted to pre-2007 levels. Purchases off-plan and under construction also increased during this time and such properties are not included in the official residential sales statistics.
The recovery of the Spanish housing market has undoubtedly been driven by more sophisticated buyers who are dominating the market and demanding substantially higher quality properties than in the past.
Brexit has had an impact on UK citizens wishing to buy properties in Spain, even though they will have exactly the same rights to buy properties after Brexit as before. But UK citizens considering Spanish property purchase are concerned about healthcare rights post Brexit, and are put off by the drop in the value of the pound sterling. Those UK buyers who are forging ahead, although able to pay the full price in cash, are now reverting to mortgages to work around the exchange rate issue.
Brexit definitely had an impact on the Spanish property market, but it was actually much less of a knock than anyone originally envisaged. While UK nationals took an understandably cautious approach to Spanish property investment after the unexpected majority Brexit vote on 23rd June 2016, other international buyers more than compensated for the drop. According to the aforementioned Property Market Report, a comparison of property purchases made by citizens of the UK in the fourth quarter of 2015, compared with the fourth quarter of 2016, showed a decrease of 31.52 per cent.
Panorama’s property market report predicts that citizens of the UK will continue to be the largest single nationality purchasing Spanish and Marbella properties, but that Brexit will undoubtedly influence the market and the number of UK buyers, which they expect will diminish in the short and medium term.
On the other side of the sales equation, UK vendors looking to sell Spanish property are more ready to negotiate their sales price as the exchange rate suits them more favourably.
New property developments
Prime development land was snapped up in 2012 and 2013 resulting in many different projects and hundreds of properties being sold off-plan or under construction by early 2017. Panorama surveyed 20 new developments in Marbella and the adjacent municipalities, as well as compiling a list of new developments with properties for sale in Marbella, Estepona, Benahavis, Ojén, Mijas Fuengirola and Benalmádena. These new projects offer properties in the price range of €156,000 to €3,800,000 and represent a total of 77 new developments and 2,626 properties.
The scrapping of the 2010 General Plan has certainly influenced the Marbella property market with a significant reduction of development land available. Though Panorama’s property report highlights the fact that there is still land available for approximately 17,000 living units, so it is unlikely that Marbella will run out of development land in the next 3 or 4 years.
Delays in building licences punishing Marbella developers
Marbella’s planning department is in disarray and long delays in granting building licences continues, with some licences taking more than a year to be processed. As a result buyers are purchasing land in neighbouring municipalities, such as Benahavis and Estepona, where the process is much quicker (around 3-4 months from the submission of the project). The serious delay in Marbella is weighing heavily on investors who purchased development land in good faith.
Tourism breaking records
Tourism in Spain, including Marbella, is on the rise again. A record high of 75.6 million visitors to Spain reflected a 10.3 per cent rise in tourism numbers from 2015. Safety and quality of environment, including luxury property options, are thought to be influencing the influx. Spain is clearly benefitting from security concerns in other parts of the world, especially Middle Eastern countries where people are now preferring not to travel to.
Demand for high-end properties
There was an unexpected downturn in the number of properties sold over the €4,000,000 mark in 2016. However, Christopher Clover of Panorama Properties is confident the future of the Marbella property market is still at the top end, predicting that prices will eventually climb to be compared to those of the Côte d’Azure. Outstanding, contemporary properties are being designed by outstanding architects and are drawing top-end clients from other parts of the world.
Optimism is in the air, but has the market fully recovered?
Clover argues that while the Spanish property market is still in recovery mode, there has been a healthy readjustment of how developers behave. Gone are the days of the old model of development where quantity and speed of build were driving down the quality of properties. Now gradual development is being driven by a more discerning clientele. As a result buyers today are receiving a broader choice of quality properties with a range of characteristics, prices and locations.
Major international funds are investing hundreds of millions of Euros into the purchase of development of land on the Costa del Sol, with particular interest in the high-end areas between Marbella and Sotogrande. These investments are a major indication of confidence in the future of the luxury Spanish property market.
Town planning issues in Marbella will continue to dampen growth in that municipality for the time being, but surrounding areas should see sales rising and properties selling more quickly than in recent years. The market is definitely recovering and the future in luxury real estate on the Costa del Sol is looking good.