The coronavirus pandemic has also affected the price of luxury property in Spain, with prices falling by up to 20% on the Costa del Sol, according to a report by the luxury real estate agency, Barnes. However, Spain's new normal, the opening of the Spanish borders and the arrival of foreigners and expats will boost the luxury real estate market on the Costa del Sol, according to the company's forecasts.
Barnes explains that the decreases will depend on the liquidity needs of owners, which is why in the segment of super luxury homes, with prices starting at five million euros, no variations are expected. The average price in the luxury property market in the Costa del Sol is 7,000 euros per m2, in a context that is especially favourable for potential buyers in the coming months.
With the demand for second homes in Spain by foreigners seeing some changes due to the health situation, the behaviour of international demand in the coming weeks, i.e. foreigners and expats planning to buy property in the Costa del Sol, will be of great importance. 90% of the demand in the luxury market in the region is foreign and expat buyers come mainly from the United Kingdom, France, Germany, Belgium, Italy, Switzerland, Russia and Scandinavian countries. With more than 300 days of sunshine a year, the Costa del Sol exceeded 13 million tourists in 2019, 40% of the total tourism received in Andalusia, which meant an economic impact of more than 14,000 million euros for the province of Malaga.
"The international buyer will once again return to this part of Spain thanks to its cultural, sporting and social attraction. With the reopening of Malaga airport, we expect things to also pick up again, because without flights there are no customers. And with the arrival of the summer months, activity will be reactivated with force and property prices will recover gradually. Furthermore, as far as the health crisis is concerned, the reputation of Spain and mainly of the Costa del Sol will not be affected, due to the excellent crisis management of Andalusia, a region with fewer confirmed cases per 100,000 inhabitants compared to other parts of Sain", say Jeremy Lauwers and Marie-Laurence Van de Berg, managing partners of the Barnes office in Marbella.
Engel & Völkers confident about the Costa del Sol's potential
The consultancy firm, Engel & Völkers, has also issued a post-COVID-19 price report and reaffirms its confidence in the Costa del Sol and more specifically in Marbella. "One of the markets where a high concentration of demand is detected is the Costa del Sol, where price stability has prevailed, with the exception of specific cases where the owner wanted to accelerate the sale," they say from the company. While in the east and west of Marbella, the average cost remains at 3,900 euros/m2, in luxury residential areas with luxury villas, like Nueva Andalucía, average prices rise to 4,200 euros/m2, and reach up to 5,800 euros/m2 in the Golden Mile, according to data from the consultant.
The nationality of Engel & Völkers clients in Marbella have traditionally been expats with high purchasing power. However, after the pandemic, clients have gone from being divided between 75% international and 25% national, to approximately 50% each, with an equally high demand from residents from northern Spain.
The preferred type of housing for buyers in the Costa del Sol has hardly changed. Local clients prefer larger properties with private outdoor spaces and even those with apartments and penthouses are now looking for villas to buy. There is also an increase in demand for holiday rentals. On the other hand, international clients clearly lean towards wanting to reside in Marbella if another situation of confinement were to take happen, according to Engel &Völkers.
In Malaga there is an increase in the demand of clients, both national and international with high purchasing power, for the purchase of single-family villas, with a garden and pool at prices around 3,250 euros/m2. Prices have hardly changed, although slight decreases have been detected in the most exclusive areas of the city such as the historical centre and the east. The percentage of foreign buyers in Malaga remains at 65% compared to 35% for national buyers.