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Marbella Real Estate Market Report

MARBELLA REAL ESTATE MARKET REPORT 2021

While Spain is well underway in its COVID-19 vaccination plan, with over 80% of the population over 12 years old fully vaccinated as this report is published, we are yet to come out of travel restrictions affecting our ability to travel. 2020 saw the world shut down and come to halt in many aspects. Yet, even then, the Marbella property market showed resilience and by now has outperformed all expectations, and since the start of 2021 is buoyant mainly the upper mid and high end market.

Marbella Real Estate Market Report 2021

After a somewhat active summer in 2020, the end of Q4 of last year saw an unexpected increase in demand and number of sales in spite of restrictions on travelling and activities.

The COVID-19 pandemic has clearly brought about major changes in many people’s priorities and behaviour and this we have observed in buyer preferences and decision making. 2021 has been the year of demand for larger green areas, ample living spaces, privacy, multipurpose rooms, high tech installations, and the search for a better quality of life. Decision making time has been nearly cut in half, with buyers keen on relocating to our area and/or remote working.

Read PDF - Marbella Real Estate Market Report 2021Demand has been steady and increasing since the end of 2020. There are still a large number of properties for sale and new projects underway or due to start in the coming two years so we don’t anticipate a shortage of stock except in ultra-prime areas where there is no more land to develop or where the planning required by the authorities has not been completed.

The monetary injection (quantitative easing) being fueled by the main central banks to face the pandemic and boost the economy has generated inflation and an increase in the demand for real estate as a safe-haven asset. In fact, we have seen a significant increase in commodity prices that have reached record highs during the last months and the stock market has performed well too, family savings have also increased during the pandemic and there has been an increase in average real estate prices.

There will be a greater demand from people looking to move out of urban centres to surrounding areas or other regions, in search of a better quality of life. Marbella has all the conditions to make it an ideal destination due to its climate, geographical position, easy connections from Malaga Airport with the main European cities and good transport by land, rail -Spain has the largest high-speed rail infrastructure among all EU Member States – and sea. The rich cultural legacy offered by nearby cities such as Malaga -the city of museums-, Cordoba, Granada and Seville is also an attractive reason to consider living in the area. Malaga has also become a technology hub, with many companies setting up their offices right outside the city. In addition, this is one of the best sports destinations in Europe with top facilities for golf, tennis, paddle tennis, water sports, hiking, jogging, rollerblading, mountaineering, cycling, mountain biking, horse riding, caving, extreme sports and many others.

1. THE MARKET: 2019-2021

Due to recent events, one must take into account 2021, 2020 and 2019 together to identify any trends in the local real estate sector.

At the end of 2019 the Costa del Sol property sector already showed signs of slowing down after years of steady growth since 2013.

Although 2019 was another record year for tourism in the region, the uncertainties surrounding Brexit, in particular, appeared to impact the market as enquiries decreased during the summer and only rallied again towards the end of the year, and continued during the first couple of months of 2020.

The new year started better than many expected, and this was partly due to a revival of enquiries from the British market once Brexit became a fait accompli.

Aside from the UK, demand came mainly from Scandinavian, Belgium, Dutch, French and Middle Eastern buyers but there was also a revival of interest from Russia, while new markets such as Poland, Turkey and USA were beginning to make their presence felt, albeit in small numbers.

1.1 PANDEMIC

From the first lockdown in Spain in March 2020 there was almost no real estate activity in our core areas of Marbella, Benahavis and Estepona. The market enjoyed a small mini-boom and started moving again in July after some restrictions were relaxed, but this was short-lived as a second lockdown was imposed by the Spanish government sooner than many expected.

See the chart below showing property transactions 2019, 2020 and the first two quarters of 2021 for the municipalities in “The Golden Triangle” (Marbella, Estepona and Benahavis). The overall sales drop in Marbella and Benahavis in 2020 vs 2019 was 30.24% and 29.15% respectively. In Estepona the drop was only 7.68% due to the sale of new builds which increased 163.07%. This was also noted in other municipalities but not to the same extent and less so in Marbella, where new build sales dropped slightly (2.71%). (Source: Ministerio de Fomento)

Property transactions by municipality (all)

Property transactions by municipality (new build)

Property transactions by municipality (Second hand)

There were property price adjustments in some areas. Prices fell slightly but only in specific cases: Properties that had been on the market for a very long time, those significantly overpriced, situated in the least popular areas or due to owners’ own personal circumstances. Nevertheless, there were no massive price drops, as might have been expected in a crisis scenario. Moreover, when the market started to reactivate in the summer, we experienced a wave of aggressive offers, only to be met by reluctant sellers.

As restrictions were lifted, remote property viewings via virtual tours, videos and video calls became an essential tool to help clients narrow their searches in preparation for their visit to the area. In cases where clients already knew the area and had very specific property requirements, remote viewings helped them make the decision to secure a property with a reservation, awaiting travel to complete the purchase.

During the 3rd and 4th quarters of 2020, we saw an increase of enquiries of 32% compared to the same period of 2019. In spite of travel restrictions, many more viewings took place and sales started to materialize during the 4th quarter of 2020 though in general, we observed that completion and signing of deeds took longer than usual.

Comparative values in the Golden Triangle (Marbella, Estepona, Benahavís)

1.2 2021 FIRST QUARTER

National:

According to Spain’s Ministry of Development, nationally 141,000 sales were completed in the first three months of the year, 13.1% of these were bought by foreign buyers.
Of these, 4.5% were non-resident buyers at a time when strict travel restrictions remained in place and down from only 7% in Q1 2020 prior to the pandemic.

Interestingly, some 8.6% of purchases in Q1 2021 were by foreigners already resident in Spain potentially seeking to upsize or relocate.

Malaga province:

On a provincial level, 7,208 property purchases were completed in Malaga Province during Q1/2021 which is an increase of 14.,4% compared to Q4/2020, according to data released by the National Statistics Institute (INE).

In terms of nationality, almost a third (27.53%) of all property sales during Q1 2021 in Malaga Province were to foreign buyers, almost the same as in Q1/2020 (27.76%), with the top 5 being British, Germans, French, Swedish and Belgians, in that order.

During this period, the Marbella area real estate market saw the beginning of a post-pandemic boom in the mid and particularly in the higher-end of the market, something which continues at the time of writing this report. While official figures regarding percentage of Spanish buyers vs foreign buyers in the Marbella, Benahavis and Estepona area are unavailable, we would expect figures to be significantly higher than those for Malaga province as a whole.

1.3 2021 SECOND QUARTER

There were 137,204 property transactions in Spain in Q2 this year, the highest number of property sales seen in Spain in one quarter since 2008, according to official statistics.

In Malaga province there were 7,259 property transactions in Q2, a small increase on the previous period. While the number of resales rose, with 5,576 a 7.8% rise against Q1, new build transactions stood at 1,583, which is 18.6% lower than the previous period.

New build vs Resales 2012-2021 (Q1 and Q2) - Benahavis

New build vs Resales 2012-2021 (Q1 and Q2) - Estepona

New build vs Resales 2012-2021 (Q1 and Q2) - Marbella

New build vs Resales 2012-2021 (Q1 and Q2) - Total

FOREIGN BUYERS – SECOND QUARTER 2021

National

Fewer than 1 in 10 (9.95%) of all sales of Spanish properties in Q2 were to foreign buyers, a small (0.23%) rise against the first 3 months of 2021. In terms of nationality, the largest percentage remained British buyers, which represented 9.49% of the total, the lowest on record, and only 1% more than sales to German buyers during this period (9.04%).
For reference, in 2009 British buyers amounted to approximately 1 in 3 of all sales of properties to foreign nationals in Spain.

Ranking of foreign nationalities buying Spanish property

Andalucía

For the region of Andalucia, comparing the most recent figures for Q2 of 2021 with the 4th quarter of previous years we can see that despite the pandemic, the proportion of foreign buyers vs domestic buyers has barely changed since 2013.

Porcentage Foreign buyers in Andalusia

Málaga Province

This difference is more noticeable at a provincial level for Málaga where traditionally 25-30% of buyers are foreign. However, the drop is still a relatively small change given travel restrictions from principal buyer markets such as the United Kingdom which remained in place throughout Q2 this year and the bulk of the decline coincides with the Brexit vote of June 2016.

Porcentage Foreign buyers in Malaga province

YEAR ON YEAR COMPARISON (2015 TO Q2 2021) SPAIN, ANDALUCIA AND MALAGA

Enquiries
In terms of nationalities for client enquiries and traffic to our web, British are still the highest percentage, followed by Germans, French, Swedish, Belgians, Dutch, Irish and Swiss. Russians are discreetly coming back to the market.

We have also noticed new nationalities such as Polish and Bulgarians.

Web traffic
Comparing the traffic to our website for the first 2 quarters of 2021 vs the first 2 quarters of 2020 these are our takeaways: (For the sake of relevance, only countries with 1000+ visits are included.)

Traffic: 29% more visits in 2021 so far vs 2020 and +36% against 2019.

Nationalities: Comparing 2021 visits so far to the same period in 2019 we can observe strong performances from all the usual areas such as the UK, Scandinavia and Benelux, with a few others which stand out, namely Poland up by 171%, Czech Republic +136%, UAE + 116%, Russia +105% and Ireland +86%.

Swedish Buyers
Sweden overtook the UK as the nation with the most searches for Marbella property in Q2 this year according to figures from Spain’s largest portal Idealista. Although it should be stressed that these are purely statistics related to web traffic to the portal, they do highlight a general trend.

In the first 7 months of 2021, we saw an increase of traffic to our website from Sweden of 71% compared to the same period of 2020 and +57% against 2019.

Percentage contribution of foreign buyers

1.4 SPANISH MORTGAGES

According to the Bank of Spain, almost €30 billion (€30,000 million) in mortgage loans were granted by Spanish banks in the first half of 2021. This represents increases of 60% & 35% against the same periods of 2020 and 2019 respectively. These are figures not seen since 2010 when the figure reached €37 billion.

1.5 BREXIT

Due to the pandemic and the lag in data availability, it is difficult to gauge the true impact of Brexit to date on British buyers.

With British second homeowners now limited to spending only 90 out of every 180-day period in the European Union, some UK residents with homes in Spain are rethinking their long-term plans.

For those with work and schooling commitments in the UK, the new rules aren’t too onerous, but for others looking to work remotely, or for retirees, the rule is leading them to consider a permanent move.

During the first half of 2021 of continued travel restrictions imposed by the British authorities with Spain being placed on the UK’s ‘Amber’ list has hampered attempts by Brits to visit Spain. On a local level, over the first 7 months of 2021, we’ve seen visits to our website from people in the UK increase against 2020 and 2019, supporting the argument that interest from British buyers remains strong.

Against all odds, British buyers remained on top as the principal non-Spanish nationality in Q2 2021 representing 9.95% of all Spanish property sales to foreign nationals, according to official data (Registradores).

Foreigns vs Spanish buyers ratio

2. PROPERTY TRENDS

Despite the turmoil, new opportunities are emerging as the way we live, work, exercise and interact is changing. Travel restrictions may be clipping the wings of prime buyers but with fewer people tethered to an office, this is likely to change with knock-on effects for second-home markets and investors globally.

On the Costa del Sol, the bulk of interest in luxury homes in the €2m+ range remains concentrated in the municipalities of Marbella and Benahavis, and to a lesser extent in neighbouring Estepona.

What are foreigners buying?

The majority across all nationalities buy more resale properties than new build properties. However, according to official national statistics for 2020 roughly a third of properties bought by Belgians (33%), Norwegians (32%) and Swedes (27%) are new build properties. Whereas of the traditional western and northern European foreign buyer market, the French (10%), British (15%) and the Irish (16%) buy proportionately fewer new build properties, favouring resale properties.

2.1 NUEVA ANDALUCÍA

Key areas of Marbella such as Nueva Andalucia in the so- called ‘Golf Valley’ have become very popular in the past five years. Property prices for reformed turnkey villas have reached unprecedented highs, especially those situated in a frontline golf position.

2.2 LA ZAGALETA

Although transaction volumes are low, relative to Marbella the exclusive urbanisation La Zagaleta is experiencing a record year. The 900-hectare mountain retreat in Benahavis was named an up-and-coming location according to Knight Frank’s “Next Neighbourhoods: Places to watch in 2021” report due to its natural environment, connectivity – both in terms of technology and community – as well as privacy.

Other areas in Benahavis for which we’ve seen a renewed buyer interest are the Marbella Club Golf Resort, El Madroñal, La Alqueria, Los Flamingos and El Paraiso.

2.3 NEW DEVELOPMENTS

According to a report by Sociedad de Tasación (the leading company of Chartered Surveyors), the price of new housing in Spain stood at 2,472 euros/sq metre at the end of June, the highest figure since 2010 and, shortening the gap with the maximums recorded in 2007 (2,905 euros/sq metre). In the Marbella area, developers confirm that the lower end of the market (up to 500,000 euros) suffered the most, whereas prime developments with luxury units have increased their prices and many of them have been fully sold or are left with few units, especially those on a front line beach position in Marbella and Estepona or Beachside in Marbella’s Golden Mile.

2.3.1 BEACHFRONT

Renovated apartments in the development Marina Puente Romano in Marbella’s Golden Mile have also been selling for €10,000 to €25,000 per square metre depending on position and orientation within the development. The lack of new modern beachfront properties with the addition of hotel services is in high demand and accounts for the top prices achieved in Puente Romano.

Emare (Completed)

  • Location: Frontline beach, New Golden Mile, Estepona.
  • Prices started from €2,360,000 – €3,975,000.
  • 28 apartments.
  • Delivered in 2020.
  • All units sold.

Velaya (under construction)

  • Location: Frontline beach, New Golden Mile, Estepona.
  • Price range: €792,000 – €3,960,000.
  • 30 apartments, 6 bungalows and 2 villas.
  • Completion (estimated) 1Q/2022.
  • 70% sold/reserved (as of September 2021 according to developer).

Velaya - Beachfront Development, New Golden Mile

UNO El Ancón (planning process)

  • Location: Frontline beach, Golden Mile, Marbella.
  • Price range: from €8,700 to €15,000 per square metre depending on location and views, during the pre- construction phase. Prices will increase as soon as construction starts.
  • There will be 58 apartments, and completion is expected by the end of 2023.
  • License is just about to be granted, and there are no units available for sale, as all units are reserved (as of September 2021 according to the developer).

There is a demand for properties, especially new apartments, in the beachside Marbella-East area, which has become increasingly popular, but most developments are located in the mountainside. This area has arguably the best beaches in Marbella and clients have been buying old villas for renovation, with some of them reaching record prices for the area.

The Four Seasons Hotel and private residences project due to start soon will be an added value for the whole East- Marbella area.

2.4 BRANDED RESIDENCES AND HOTEL PROJECTS

According to Knight Frank Global Buyer’s Survey 2021, “39% of respondents would be willing to pay a premium for a branded residence. Services and amenities are the top motives behind the purchase of a branded residence.” In response to an increasing demand for branded residences in the last four of years, Marbella has become the destination for several very exciting luxury hotel and private residence projects.

A development located in the heart of Marbella’s Golden Mile called “Epic” will have two phases of branded residences by Fendi Casa.

EPIC - Branded Residences, Marbella

One of the biggest and most glamorous of the hotel projects is the Las Dunas Club and its five-star W Hotel, which will form part of a leisure and residential resort by the beach between El Rosario and Los Monteros, on the east side of Marbella.

Part of the new Starwood-Marriott group, this project features a luxurious modern design. The development is scheduled for opening by the summer of 2023, and involves an investment of €200 million on 170,000m2 of land, incorporating not only the five-star deluxe hotel with 186 rooms and suites but also a beach club and 86 tourist apartments, as well as eventually private residences.

The Four Seasons group is also planning a five-star deluxe hotel in a prime beachside location of 325,000m2 in Río Real. This highly ambitious project that includes a major upgrade in local infrastructure involves an investment of €700 million for a 180-room hotel. 200 apartments and 40 villas, with a new scenic pathway connecting the main hotel area to the beach club. The Surf Club, as it will be known, also features a more ‘boutique hotel’ with 30 rooms by the sandy shoreline.

Meanwhile, the iconic Hotel Don Miguel, which covers a 125.000m2 site in Marbella, is undergoing renovation works by the Club Med Group totalling €80 million to transform it to the Club Med Magna Marbella. Due to open in the summer of 2022.

The Hilton group is also strengthening its presence in the area with a new 194-room hotel near Puerto Banús – the Conrad-branded hotel in Spain – investing €134 million in it and a brand new exhibition centre. Named the Conrad Costa del Sol Hotel, it is scheduled to be ready well before the start of the 2022 summer season.

Another large-scale project involves the €77 million Siete Revueltas Resort in the Santa Clara area just east of Marbella, where a public fluvial park and luxury resort will arise in 2022 with capital from Bahraini investors.

Between them, they will generate over 2,000 direct jobs and stimulate the local economy, as well as adding valuable modern leisure amenities to Marbella. To ensure no momentum is lost, the Andalusian regional government, together with the Marbella Town Hall, has streamlined the usually lengthy bureaucracy and is giving its full cooperation to make these important projects a priority, with all eyes trained on the 2022 and 2023 tourist seasons.

WHAT BUYERS WANT

Larger properties: Oversized apartments or Villas with multi-purpose spaces that can be a