Spain's Golden Triangle shines: Marbella leads the luxury housing revival

The COVID-19 pandemic brought an unprecedented transformation in the working and living habits of millions worldwide. The adoption of remote working and the freedom to detach from physical offices opened new opportunities for those seeking a higher quality of life. Marbella, located on the Costa del Sol, quickly became a favourite destination, attracting international buyers and investors who saw the region as an ideal place to settle and work remotely.

This phenomenon propelled record-breaking sales in 2022, a peak year when transaction numbers and average prices reached unparalleled levels. However, as global uncertainty and post-pandemic economic effects continued to evolve, Marbella's property market demonstrated remarkable resilience, solidifying its position as one of Spain's strongest markets, according to a report by Diana Morales Properties Knight Frank.

A drop in sales in 2023, but strong momentum remains

According to recent data from the Ministry of Housing, sales in Spain's 'Golden Triangle'—comprising Marbella, Benahavís, and Estepona—fell by approximately 20.31% in 2023. While this decline might have caused alarm in other markets, for the Costa del Sol, it marked a return to "normality" after the exponential activity recorded in 2022, an unprecedented year.

Despite the drop in transactions, the market remained robust; 2023’s sales figures, though lower, aligned the region with activity levels typical of a "very strong" rather than an exceptional market. This decline was accompanied by significant fluctuations across municipalities: Marbella reported a 13.92% increase in sales for the first half of 2024, Estepona saw a modest 1.65% rise, while Benahavís experienced a sharper 20.52% decline.

However, in Q1 2024, sales figures showed a 5.4% increase compared to H2 2023 and a year-on-year rise of 3.16%. This sustained upward trend reflects strong demand for properties in this prestigious area. The data suggests stable and growing interest in the region, likely driven by its continued investment appeal and allure to buyers.

Luxury villas and apartments: the pillar of the premium market

One key factor explaining the Costa del Sol market's stability is the robust demand for luxury properties, according to Knight Frank. High-end villas remain the top choice for buyers, particularly in exclusive areas such as the Golden Mile and La Zagaleta. However, it’s not just villas that attract buyers; gated luxury developments offering amenities like sports facilities and concierge services have become a cornerstone of the market.

In 2023, resale properties accounted for approximately 91% of all sales in the Golden Triangle, far surpassing new-build developments. Nevertheless, new construction projects continue to play a vital role in the region. In Estepona, for instance, available land has facilitated significant growth in new developments, attracting international investors and buyers seeking contemporary design and high-tech features.

Challenges in the construction sector: costs and delays

The construction sector has faced significant challenges in recent years. The pandemic triggered a surge in costs and severe delays in the supply chain for essential materials. Inflation made it nearly impossible to manage fixed construction budgets, with costs rising between 25% and 75% compared to pre-COVID levels. Additionally, delays caused by a shortage of skilled labour affected even the region's most prestigious projects.

Despite these hurdles, the outlook for the construction industry in 2024 and beyond is positive. Costs have begun to stabilise, and there are expectations that building permit processes will speed up, thanks to initiatives like Marbella's new General Urban Development Plan (PGOM), which is expected to be finalised by 2025.

What 1 million euros gets you

Comparative Values in the Golden Triangle (Marbella, Estepona, Benahavís).
How many square metres of high-end property can be purchased for €1,000,000 in:

DM Properties|Knight Frank

The international buyer: a key driver of the costa del sol property market

The property market on the Costa del Sol has a strong international component, with Marbella at its heart. In 2023, approximately one-third of all property purchases in Málaga province were made by foreign buyers, according to official data. Although British buyers have traditionally dominated the market, their share has slightly decreased in recent years. Nonetheless, they still lead with 15% of total transactions, followed by buyers from the Netherlands, Sweden, and Belgium.

An intriguing trend is the rise of buyers from Eastern Europe, particularly Poland and the Czech Republic. Similarly, Knight Frank has noted an increasing presence of American and Canadian buyers, drawn by new direct flight connections between Málaga and North America, as well as the opportunity to work remotely from the idyllic Costa del Sol.

Rising prices and stabilising interest rates foster optimism

In terms of price trends, property values continue to climb, especially in high-end areas. According to idealista, house prices in Marbella rose by 18.6% in 2023, while Estepona saw a 19.3% increase. Despite these rises, there is no sign of a property bubble, as demand remains well-aligned with supply in most market segments.

The European Central Bank (ECB) has also played a role in stabilising interest rates following a series of hikes triggered by post-pandemic inflation. So far in 2024, the ECB has implemented three 25-basis-point cuts—one in June, another in September, and the latest in October—bringing the interest rate to 3.25%. This is expected to provide additional momentum for mortgage transactions across Spain.

Emerging trends: young professionals and move-in-ready homes

A notable shift in the Golden Triangle property market is the changing profile of buyers. The rise of remote work has enabled more young professionals (Millennials and Generation Z) to relocate permanently to the Costa del Sol, often leaving behind large European cities. These new residents tend to favour more modern and practical homes, often fully furnished and ready to move into from day one.

The trend of "staycations," where prospective buyers spend several months in the region before committing to a purchase, is also on the rise, according to Knight Frank. Additionally, demand for "turnkey" properties—fully equipped homes complete with furniture and even smaller items like kitchenware—has grown significantly in recent years, setting a new standard in the local property market.

Conclusion: a bright future for the Costa del Sol property market

With connections to over 150 international destinations and its reputation as a paradise not only for tourists but also for those looking to settle in southern Europe, the Costa del Sol—and particularly Marbella and its Golden Triangle—remains highly sought-after by luxury buyers and permanent residents, as detailed by Knight Frank.

Despite challenges such as construction delays, licensing issues, and global economic uncertainty, the market’s resilience, the steady influx of international buyers, and stable prices suggest a bright future for the region. Marbella, Estepona, and Benahavís will continue to be synonymous with luxury, sunshine, and quality of life for many years to come.

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