The Costa del Sol Property Market

Costa del Sol viewpointThe Costa del Sol has ranked for years as one of the top places to buy property in Spain, particularly among foreigners.

Like the rest of the country, the Costa del Sol property market suffered a major crash between 2010 and 2014.

However, unlike many parts of Spain, the market on the Costa del Sol has fully recovered and is currently experiencing an upward trend.

Costa del Sol leading Spain

The sharp increase in sales of all property and rise in the number of new-build licences have led many analysts to the conclusion that the Costa del Sol property market has fully recovered from the crash.

In May, the Association of Builders and Developers in Malaga (ACP) announced that 2016 saw a definitive recovery. Property consultants such as CBRE and Sociedad de Tasación share this analysis.

Figures appear to support the opinion, particularly those for sales. Almost 27,700 properties in Malaga changed hands between January and March this year.

Over a third of them were sold to non-residents with the British making up the largest group. This percentage is double that registered in 2007 and 2008.

Costa del Sol property sales

The first three months of this year registered the highest sales since 2008 and a 19.6% increase on Q1 2016. Those for the month of April were particularly high – 37% more than in March.

The number of properties sold on the Costa del Sol generally in Q1 this year stands well ahead of those in Andalusia and most of Spain.

Along with Madrid and Barcelona, the Costa del Sol is currently leading sales and demand in Spain.

Demand for new-build properties on the Costa del Sol appears to be high. The ACP announced that the number of licences issued went up by 121% in the first quarter this year. In Spain as a whole, they rose by 20%.

Costa del Sol property prices

Prices rose around 6% generally in Q1 2017 on the Costa del Sol, although this figure hides vast variations.

While property prices on the eastern Costa del Sol (e.g. in Nerja and Vélez-Málaga) went up by just 3.2%, those in western resorts increased by considerably more.

Property in Marbella, for example, cost 9.1% more in Q1 this year; 17.3% more in Torremolinos and 12.5% more in Malaga city.

However, property prices on the Costa del Sol remain below their 2007 peak across the board.

For example, property in Marbella now costs 16.5% less than it did in 2007 when the average price was €3,315 per square metre, the highest in Andalusia.

Benalmadena property prices currently sit nearly 40% below their 2007 price and those in Fuengirola at just over  25% less expensive.

Holiday rentals on the Costa del Sol

The vast increase in tourism on the Costa del Sol has led to a marked rise in investment in holiday rentals, particularly in key areas such as Malaga city centre and Marbella.

In May 2017, CBRE announced that the average yield on property on the Costa del Sol was 12.3% a year, the fourth highest in Spain.

Luxury property market

The Costa del Sol represents one of the key markets for luxury property in Spain and this is one of the sectors that has registered the strongest recovery since 2010.

According to the latest data, in 2016 sales of property on the Costa del Sol with a price tag over €1 million accounted for 86% of the market share in Andalusia, up from 51% in 2010.

Over the last seven years, sales of property priced over €1 million have gone up by 139% on the Costa del Sol, the highest increase in Spain.

Property prices

However, the Costa del Sol isn’t just about luxury property. Prices start at under €100,000 for studios and 1-bedroom properties situated in Benalmadena, Torremolinos and Nerja.

For €150,000 you can buy 2 and 3-bedroom properties in most resorts on the Costa del Sol with the exception of Marbella.

Hot spots for Costa del Sol property

Much of the Costa del Sol remains a buyer’s market and in some areas, such as Manilva and Benalmadena, there’s still oversupply of new-build properties.

However, consensus among industry professionals is that 2017 will mark a turning point in the market as demand increases and supply lessens.

Current hot spots (those in highest demand) include:

The ‘Golden Triangle’ – this area made up of Marbella, Estepona and Benahavís is highly sought-after by foreign buyers. New-build activity in the three resorts is currently high and there’s a shortage of available land.

Malaga city centre – supply falls well short of demand, particularly in the historic centre where there’s little on the market. Prices rose by 17.42% year-on-year in Q1.

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