Spanish Property Market Report 2019 - Sun And Golf Properties
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Spanish
Property Market
Report 2019
Introduction
Following the end of yet another year, is a After the 2012 debacle that left the price
time of reflection to redefine personal and of property at rock bottom, the real estate
business objectives, with a view to starting market gradually recovered at a slow
the new year that is already underway. Those but steady pace. Thus, year on year and,
of us dedicated to the real estate sector especially, since 2015, not only did the
throughout Spain and, more specifically property market exhibit good health but, in
on the Costa del Sol, following five years of addition, an incessant growth that few market
moderate but sustained growth, we must experts and almost no economists predicted.
make a mandatory stop (an urgent and
necessary stop), to reposition ourselves for Starting from the closest reference, 2018
the near future. For this, our proposal is was a year in which sales rose 11% over
simple. We want to give you a detailed report the previous year. More specifically, and
on the situation of the real estate market in according to data contributed by the National
Spain in 2019, with projections for 2020 that Statistics Institute (INE), the number of homes
are already approaching. But, before that, to sold amounted to 557,919 (not including
gain some perspective of the market and and officially protected homes ‘VPO’). This is when
to be able to thoroughly analyse the data, we the figure matched exactly that of 2008,
encourage you to review the recent history which shows an authentic post-crisis recovery
(over the past five years) of the Spanish real with solid foundation (see Graphic 1).
estate sector.
PROPERTY SALES IN SPAIN SINCE 2017
800.000
NUMBER OF PROPERTIES SOLD
600.000
400.000
200.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
The evolution of the real Source: Ministerio de Fomento
estate market in Spain
Graphic 1
from 2017 to 2019
Page 2
But there is one more important fact in As you will notice, the recent evolution of the
addition to this: the volumen of sales from real estate market in Spain explains, in some
foreign buyers broke all-time records in 2017 way, the continuous progress that the sector
and is currently 12% of the total volumen (see has undergone, and what we foresee awaits
Graphic 2). This provides an excellent incentive the Spanish property market in the future,
for the immediate future. which we aim to uncover in this report.
Graphic 2
Page 3
Property Sales:
Current sales levels in the Spanish real
estate market
The increase in home sales suffered a The real estate market on the coast continued
significant “stop” this 2019, almost in the its growth with the sale of holiday-type
middle of the year. The lack of government properties, the main attraction of foreign
and the waiting for the new Mortgage Law investors. We will refer to this in the next two
were the determining factors of certain sections of this report.
notorious detention within the sector. Then,
over the months, ceased to be observed.
The new Mortgage Law calmed the waters
and the elections did the same. Individuals
and corporate investors finally launched into
the purchase of property, culminating in this
way, a mostly positive year. If this is added
to the fact that the middle sectors agreed
to financing after many years of waiting, the
results end up being optimistic from any angle
they are looked at.
Another change that was noticed this year was
that shift in investment in buy-to-let properties
towards the purchase of homes for one’s own
enjoyment. The increased competition of
temporary Airbnb style rentals and the high
rates of running property rentals in Spain,
have discouraged the purchase for these
purposes. On the other hand Spain continues
to offer very interesting areas for a second
home, for leisure and free time for people
over 50, whose purchasing power and lifestyle
allows living a part of the year in their home
country and another in a much more relaxed
and sunnier place.
Page 4
Current state of the real estate market
on the Costa del Sol
With its key areas such as Marbella, a true is still far from pre-crisis levels, however sales
paradise of residential tourism, the Costa del within Marbella’s Golden Triangle are higher
Sol brings together high quality properties (of than they’ve ever been (view Graphic 3 in
various categories), intended for sale and also comparison to Graphic 2 on page 2).
for short and long term rentals.
Tourism is definitely a decisive element in the
If we refer to rental properties, the price current situation of the real estate market
of these in Marbella, for example, has a on the Costa del Sol. Malaga airport, days
high price that amounts to € 22 per square before the end of 2019, reported that it had
meter and is considered one of the highest surpassed the 19 million travelers it registered
nationwide. Marbella, without a doubt, in 2018. Citizens arrive from 131 different
thus becomes an inexhaustible source of destinations which, attracted by the climate,
residential properties for rent, an activity that culture and lifestyle, become potential buyers
did not stop in 2019 and promises to continue of homes in areas such as Marbella, San Pedro
its upward trend during 2020. de Alcantara, Torremolinos, Benalmadena
and other popular destinations of the Costa
This phenomenon has increased, del Sol. To this phenomenon is added the fact
simultaneously, the sale of real estate in the that the large hotel chains are expanding their
area. Because Marbella attracts tourists with facilities or disembarking on the Costa del
high purchasing power who, in love with the Sol, with proposals of high quality and price
city after staying in hotels or rented houses, accommodation, thus promoting the arrival of
decide to invest in the town for a holiday or high-class tourists to areas such as downtown
habitual residence surrounded by luxuries Malaga , Benalmadena, Marbella or Estepona.
and well-being. As previously stated, in This forms a virtuous circle that will remain in
2018 the national average of property sales force in 2020.
throughout Spain matched that of 2008, but
PROPERTY SALES IN MABRELLA SINCE 2017
7500
NUMBER OF PROPERTIES SOLD
5000
2500
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
The evolution of property Source: Ministerio de Fomento
sales in Marbella,
Estepona & Benahavís Graphic 3
Page 5
Real estate market
situation in Malaga
If we talk about Malaga, it must be said that it is
a flourishing province and that its capital city is
surprising however you look at it. In addition to
attracting new tourism every year, it captivates
investors from all over the world. This explains why
some regions of Spain are still recovering from the
consequences of the crisis and others, like this one,
are in their most promising time. Truly, as a province
and as a capital city with very strong satellite areas,
one could say that the real estate market of Malaga
is at its best. Not by chance, its real estate market
occupies, for years, the podium of being one of the
main and most dynamic capitals in Spain.
It is worth noting that the more populated areas,
such as Marbella or Malaga capital, are touching
their “ceiling” or growth limit due, in large part, to
the lack of land suitable for new construction. These
areas are giving way to others, until today in growth
and in constant expansion like the Cala de Mijas, the
New Golden Mile, Marbella East or Estepona West.
On these sites, which are also enjoying very good
press, not only is there more land available, but,
fortunately, the City Councils are driving growth and
granting work licenses in record time.
Page 6
Property Prices:
Effects of the market situation on
property prices and supply
The price of homes in 2018 rose for the fifth sale that do not receive a viewing in months
consecutive year, by 6%, reaching figures and therefore can even stop being of interest
similar to those of 2007. There remains in the eyes of the real estate agents in charge
much to be done so that prices match those of their sale, as they know it’s impossible to
before the last major crisis in the real estate sell at the price the owner is asking, despite
market, although it may be they never will. their advice.
This, although it sounds like a bad prognosis,
is good news. Why? It needs to be that way to Too optimistic prices is certainly an issue that,
stimulate a buoyant and prosperous market. in the course of 2020, experts in the real estate
Property prices are somewhat over-inflated market like ourselves need to advocate and
in Spain. This means that, the sales cycle of educate property owners to list properties
a house or apartment is much longer than at realistic, not over-inflated prices, for the
that of 10 or 15 years ago. The main reason benefit of not only everyone involved in each
according to specialists is, precisely, the stage of the sales processes (from the seller to
unrealistic or inflated price. It is estimated that the buyer, through a long list of intermediaries
prices are 20% above their real value, which between), but also to help the Spanish property
would explain the brake on sales in certain market as a whole.
areas of Spain.
In fact, supply has grown and prices continue
to be on the rise, so a buyer confined to a
certain budget searches and searches without
finding a viable alternative or decides to wait
for a miraculous price drop, which then
doesn’t happen. It is therefore imperative that
property owners, are advised by real estate
agents, to be aware that a sky-high price
would have a negative and counter-productive
effect. Why? A property that delays its sale, is
a house that loses value and attractiveness
within a portfolio and begins deteriorating,
as the months or years go by without being
inhabited. We are talking about apartments for
Page 7
Property Types:
Which types of properties are in most
demand?
Following the real estate recovery since There, in the so-called Golden Triangle made
2015, demand has become somewhat more up of Marbella, Estepona and Benahavis, where
sophisticated. Buyers have stopped focussing new proposals and developments spring up
only on the sale price of properties and again like mushrooms. According to data provided
put special emphasis on characteristics such as by the College of Architects of Malaga, in 2018
modern style, comfort, quality of finishes and Marbella registered 587 new housing projects
technology applied to the construction. This (252 in 2017) and Estepona 1,107 (compared
indicates that, evidently, the market has turned to 800 the previous year). This shows an
its course and has changed notably throughout upward trend that is believed to remain in
Spain, especially, in Madrid, Barcelona, the 2020, although with some caveats. Buyers who
Costa del Sol and Valencia. In these areas as descend from an airplane at Malaga airport,
well as throughout Spain, a marked interest in with the illusion of defining a second residence
superior quality and sophistication when buying in the province in a matter of days and, even
a property was revealed. This, which had been in less than 24 hours, are faced with an offer
manifesting in recent years, remained in force in of new construction so huge that It intimidates
2019 and will continue this year.
Furthermore, them.
the resale of second-hand properties,
recovered during 2019, mainly, thanks to the
fact that the Spanish banks re-opened the tap
on mortgage loans. Which, without a doubt,
made it possible for many homebuyers and
investors to gain access to the Spanish property
market, which was before mainly accessible
to cash-only buyers. Likewise, many buyers of
new promotions have returned to the resales
market, which offers a better price per square
meter and that, in recent years, there has been
an increased trend in property renovations to
add value, factors that have “motorised” the
sale of properties more than 20 years old and
more.
Nevertheless, new construction continues to
grow. On the Costa del Sol, for example, where
there is still a lot of land suitable for construction.
Page 8
What solution is seen in the face of this Another factor that is positively affecting the
phenomenon? In the near future, the real launch of new construction properties to the
sales possibilities will depend on how well market, is the granting of building licenses,
informed real estate agents are to offer their which in most circumstances, are much
customers a varied and, at the same time, shorter than before. In Marbella, for example,
limited range of possibilities. Among hundreds delays used to be so long that they put the
of new developments and off-plan properties real estate project at risk and, in addition,
within the market, the ones that stand our also caused the real estate product itself to
are those that show high quality, unbeatable lose interest in the eyes of buyers. We are
location, design and, of course, an good price. mainly referring to off-plan projects that were
With all these ingredients on offer, the dish born from a great idea or declaration of good
will lean towards the proposal that meets intentions and ended up being diluted as an
expectations and is in line with the potential unfulfilled promise. Fortunately, this no longer
buyer’s budget. In summary: the future of new happens in Marbella, where building licenses
developments in Spain, and more specifically are being granted more quickly than usual.
in Andalusia, will be in the hands of personal And that is not all: in 2020, thanks to some
real estate shoppers and renowned agencies measures taken during the course of this
in the area. The success of the sale will depend year around the issue of urban planning, the
on your “good eye”. Less is more in these times for the delivery of contruction permits
cases. The non-Andalusian buyer needs a will continue to be reduced for the benefit of
limited number of alternatives, very different architects, real estate agents and buyers.
from each other, to make a purchase decision.
No more than five or you will end up so
overwhelmed that, in the face of perplexity,
you may decide to postpone your desire to
purchase in the region.
Page 9
Property Buyers:
The average buyer’s profile in Spain
The profile of the average Spanish property Malaga? This capital, with its development
buyer is that of a citizen between 25 and 45 which has increased the true value and price
years of age with an indefinite employment of properties, registered 28% of foreign buyers
contract. They are the ones who buy a house last year.
to reside in and needs to obtain a mortgage.
If
we talk specifically about the foreign buyer, So, what can we summise? That the British
in 2018, as we have already indicated, 12% market is very important throughout Spain
of homebuyers in Spain were foreigners. The and, more specifically, on the Costa del Sol.
citizens of the United Kingdom (13%) lead the But attention, as a result of Brexit, the level
podium, followed by French and Germans of purchase from citizens of the United
(7%), Moroccans and Romanians (6%), and Kingdom has fallen slowly but considerably.
Belgians and Italians (5%) (see full statistics in In particular, potential homebuyers with an
Graphic 4). approximate budget of € 800,000. We will have
to continue waiting for possible Brexit shocks
Specifically in Andalusia, foreign buyers in in 2020 and how the “uncertainty effect”
2018 accounted for 13% of the total, of which impacts the future plans of potential buyers of
English accounted for 22%, followed by the houses and flats in Spain.
Swiss (10%) and Belgians (8%). And what about
Graphic 4
Page 10What’s Next?
Trends and predictions for 2020
Based on the detailed analysis of the data and the release of a large number of resale
provided on the real estate market withing properties on the market, the supply could
Spain in 2019, it is possible to predict outcomes outstrip demand, resulting in a lower price
for the near future. In 2020, the sustained and much more serious competition. In such
and sober growth of the sector is expected to circumstances, it would be expected that low
continue. It is excellent news, although those and medium category homes will suffer the
who are dedicated to the real estate market in consequences and those considered luxury,
our country would like a new boom or explosion, with high quality and price in prime areas will
something unlikely given the circumstances. It remain unscathed for some time.
It is worth
is estimated that at the economic and political mentioning, on the other hand, in spite of the
level nothing will change significantly in the next progress of the real estate market in Spain 2019
two years, so the growth trend will continue and, above all, the size of its territory, it presents
without haste or pause, reducing the chances a wide variety of situations, so it is necessary to
of another real estate bubble burst.
Until highlight that there are areas that may register
today, the supply of homes in Spain satisfies deceleration symptoms, while others, such as
their demand, but, be careful, an excess of Andalusia, will continue its upward trend and
supply could reverse this situation, generating curve.
a “rebound effect”. Due to the proliferation
of new construction throughout the territory
At a national and general level, the signs
of stabilisation and good health of the real
estate market provided by the current level
of activity will predominate in the next year.
Consequently, we can only be positive and
optimistic about the future that awaits us in
2020. But, attention: the real estate sector
must be cautious and not “rest on its laurels”.
Spanish real estate agents should not take a
step back in their pursuit of excellence within
their daily work of advising new investors,
since a false movement can take them to
other latitudes. If you continue with your foot
on the accelerator and a hand on the brake
lever to react in real time to the changes that
are coming, then success will be guaranteed,
not only next year but also in several more.
Page 11CONTACT US
PHONE: + 34 951 56 05 11
WEB: sunandgolfproperties.com
EMAIL: info@sunandgolfproperties.com
ADDRESS: Rosemary 3 Nuevo Rosario, Floor 1(C. C. El Rosario),
29604, Marbella, MalagaYou can also read
