2. Marbella—the Real Story
In general terms 2015 saw the consolidation of recovery into growth on a regional
(Costa del Sol) level, accompanied by recovery in the national property market.
Once again Marbella was a trendsetter in this regard, and once again it proved
highly attractive to medium to high segment buyers from across Europe and
beyond. In this report we look back at 2015 and forward to the coming year.
Tourism
On the Costa del Sol the fortunes of the real estate market are closely linked
to those of the tourist sector. Indeed, an upturn in the latter usually precedes
new growth in the former, and it has been no different this time round. The
latest growth cycle began with an upsurge in tourist numbers on the Costa del
Sol that started all the way back in 2011. At first visitor numbers were high but
average spend was low, yet by last year those too had risen to set a new all-time
record for total revenue.
Occupancy rates were high, driven by a reinvigorated European travel market,
lots of new air routes and an attractively low Euro, but also importantly by the
gradual demise of tourist destinations in Tunisia, Egypt and Turkey, due to
the instability there. This has greatly added to enticements such as the better
service levels and value now available on the Costa del Sol, and confirms Spain’s
reputation as a safe and desirable holiday destination.
Marbella Direct - Market Report 2016
3. Demand
The latter also holds true for the residential market, which hit its low-point in
Marbella in 2012 and began to recover the year after, with other parts of the Costa
del Sol (such as Sotogrande, Estepona and Mijas) following about a year behind.
Along with the Balearics, Marbella can therefore be said to have pioneered the
Spanish property market recovery, and by 2015 recovery had become growth.
It has not yet become a seller’s market, but equally it is no longer a buyer’s market
either. At the moment the property market is in fact quite balanced, with no more
distressed properties and a solid demand for the lifestyle that Marbella and its
surroundings offer. Demand has shifted from being mostly price-driven to focusing
primarily on quality and lifestyle considerations.
It is as always strongest for prime beachside and golf fronting/country club locations,
but a clear trend is the preference among many for contemporary villas and
apartments that offer the latest architectural styles and technological features. Having
said that, the level of demand is currently such that the resales market is also strong
within a regional market that remains dominated by foreign buyers.
What has changed in recent times is the composition of such buyers, with 2015
seeing a significant drop in the Russian market and continued strength from
Scandinavia, Belgium, France and the UK. The British market is finding its strong
footing again amid good economic growth and a favourable exchange rate, with
Middle East instability also fuelling sales from mostly middle class Arab buyers,
while for now, the Golden Visa has failed to attract large numbers of Chinese
investors to the region.
Marbella Direct - Market Report 2016
4. We are not in the midst of a frenzied boom, when everyone seems intent on getting in on the act, so the
strong flows of investment into the region are considered and qualified, certainly not random and reckless. It
has therefore been highly encouraging to see the return of Spanish, British and other European investors and
property developers, with their Asian and American counterparts providing a further vote of confidence.
2015 was the year when investment projects broadly made the transition from the regeneration of previously
unsold developments completed around the time of the financial crash to the launching of entirely new ones.
The centre point of demand is for such new homes, which offer 21st century comforts in Marbella’s glamorous
sunshine setting. For now the projects are medium-sized and predominantly upmarket, with Taylor Wimpey
reaping the benefits of being one of the first promoters to return to the market in force.
New properties are selling fast and off-plan sales have returned in force, with new projects often selling
out before construction begins, as seen in places such as Nueva Alcántara. Service is another aspect that is
becoming important, along with modern design and luxuries, and as a result some of the new developments
feature clubhouses with reception areas, lounges and gyms, while the overall tendency has been for slightly
more compact villas and there has been a cry for more three-bedroom apartments in a market previously
heavily slanted towards two.
In addition to individual projects of this kind there have also been large-scale investments involving sizeable
tracts of land acquired for the development of new residential areas, as well as the purchase of entire resorts.
The latter includes the €225 million take-over of Sotogrande S.A. from Barceló by the American and European
investment funds Cerberus Capital Management and Orion Capital. In January 2016 it was announced that La
Zagaleta S.L. had completed the acquisition of the Valderrama golf course and adjacent development land for
€40 million.
The new luxury residential area, Valderrama 2, which will arise there (representing an investment of €200
million over the coming ten years) will add to Sotogrande S.A.’s own ambitious plans for the La Reserva
country club. In Marbella there has been talk of a similar take-over of Puerto Banús by new owners, while
Urbania International is developing the first phase of luxury new Icon Signature Villas in Santa Clara and
Platinum Estates has acquired 170.000m2 of beachside land adjacent to Los Monteros, where a new hotel and
village-style residential development will arise, representing a total investment of €200 million.
Marbella Direct - Market Report 2016
Investment
5. Marbella Direct - Market Report 2016
Year
Yearly % change
Total number of residential sales transactions in Marbella
Source: Spanish Ministry of Public Works
www.fomento.gob.es
2006
1,000
2,000
3,000
4,000
5,000
6,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sales
-19%
-41%
4% 9% 12%
24%
28%
-5%
6. Prices
The upshot of the rising demand for property by homebuyers and for building land by developers and investors
is that prices have been rising. While most figures released in this region are for the province of Málaga as a
whole – and therefore not reflective of its Marbella and Costa del Sol components – the general estimation is
that property prices have risen by as much as 10% (4.2% in Málaga province overall).
The increase has been strongest in the most sought-after beachside and country club areas, such as the Golden
Mile, Sierra Blanca, Puerto Banús, Los Monteros and La Zagaleta, but above all focuses on new-build villas and
apartments. The increase in values has therefore been much smaller in older homes and outlying residential
areas, while the competition for building land is in places driving prices up well beyond the average rate.
Marbella Direct - Market Report 2016
7. Looking ahead
Within the uncertainty of the international geopolitical situation, the Costa
del Sol remains an attractive, stable and secure destination. Added to this is
an economy that is showing strong recuperative growth (3% in 2015), with
falling unemployment, rising investment flows and a growing number of new
enterprises and greater focus on exports alongside traditional staples such as
tourism, construction, manufacturing and retail.
Productivity gains are being made and though it will take a little while for wages
to begin to rise again consumer demand has been growing. The relatively stable
position of the country’s banking sector is reflected not only in ECB stress tests
but also in a gradually normalised lending market in which mortgages are
once again available. It is the latter that will drive the recovery of the domestic
property market that began in 2015.
The top performers in this national recovery are Madrid, Barcelona, the
Balearics and Marbella/Costa del Sol, where the process of growth is by now
well under way. Some rural inland areas have not quite come out of the shadows
yet, but even in areas such as the Costa Blanca previously unsold bank stock has
been bought en masse by mostly American investment funds, and construction
has begun again.
For 2016 some 50,000 new homes are expected, soon estimated to reach
sustainable levels of 200,000, with the Costa del Sol leading the way in terms
of quality. The growth in prices will slow down a little as more new homes
are delivered, but competition for building land is expected to remain pretty
intense, and overall property prices in Marbella remain around 20% below
their pre-crisis highs. This against the background of the 2010 PGOU planning
directive for Marbella that was rejected by the Supreme Court in Q4 of 2015.
Marbella Direct - Market Report 2016
8. Marbella Direct - Market Report 2016
The latter has made the 1986 PGOU valid again until a new Plan General de Ordenación Urbanística
is drawn up and ratified – which could take around four years. In practical terms it is creating a divide
between those properties and tracts of land that are once again surrounded by uncertainty, and those
covered (and rendered legal) under the 1986 jurisdiction. It cannot be denied that the resurfacing of the
PGOU issue has taken the wind slightly out of Marbella’s sails, and the market is looking to the town hall
to provide a pragmatic solution for the interim.
This said, the status of the great majority of properties in Marbella remains perfectly legal and
unambiguous, while the likes of La Mairena, Mijas, Benahavis and Estepona will certainly benefit and
pick up some of the slack left by Marbella. They are generally well-run and solvent municipalities, with
Estepona having impressed with a mayor that has led a major beautification programme, which has
revived the town as a tourist and residential destination.
Estepona now features prominently as a residential hotspot, and its attractive coastal flanks are already
attracting a high end cluster of luxury homes and new developments, such as Le Mirage, Estepona Golf,
Sunset Bay Village and Casares Beach Villas. Indeed, the revival of this part of Southern Spain is such
that more and more people are once again looking for country properties in inland Andalucía too. There
they will find attractively priced country homes that are either ready to move into or make appealing
refurbishment projects or income-generating country properties in the form of boutique hotels. There
now exists a sophisticated support industry for those wishing to modernise such homes.
Overall, therefore, the region is expecting continued growth in 2016, with growing prices and more new
modern quality developments being launched – along with a strengthening resales market that reflects the
recovery of the national property market. What’s more, prices remain attractive and rental income from
both holiday and long-term lets make this a good year in which to purchase property on the Costa del Sol
at a time when growth is far from exhausted.
9. TONY CASSIDY
(+34) 637 939 359
TONY@MARBELLADIRECT.COM
FRANK WALSH
(+34) 678 974 454
FRANK@MARBELLADIRECT.COM
