Costa del Sol Property Market Remains Robust Despite Spain’s Economic Crisis

Amid the gloomy news headlines of plummeting real estate prices, multiple bank repossessions and as the Spanish government presses ahead with its austerity plans in a bid to get its house back in order; it appears that the sun has begun to shine once more on the prime Costa del Sol real estate market. Figures released on May 7th by the Bank of Spain revealed that foreign investment in residential property amounted to some 4,748 million euros in 2011, representing a 27% year-on-year increase, a second consecutive yearly rise, and the highest recorded level of investment by this group since the property bubble burst in 2008. 40% of total foreign investment in Spanish real estate spent in Costa del Sol Leading Malaga newspaper, Diario El Sur (May 8th) quotes Jose Prados, president of the Malaga Association of Developers and Constructors (ACPM), as confirming that the Costa del Sol received the lion's share of this bonanza; some  1,900 million euros, representing an impressive 40% of  all foreign investment in the country's real estate sector last year. Six out of every 10 sales were completed by British buyers followed by Germans, Scandinavians and other northern Europeans, all of whom have a long-standing predilection for the area, with an emerging interest shown by investors from Russia, the Middle-East and more recently, China. He indicated that that figures reported to him by local agents for the first quarter of 2012 remained promisingly robust, listing the great bargains to be had as a result of the generalised price drop (between 10% - 40% dependent on area) the stricter property purchase legal frameworks now in place and the introduction of incentives to boost the market; such as the government's 50% reduction on value added tax (IVA) from 8% to 4 % on the purchase of new properties; as key factors behind this resurgence in investment. Costa del Sol market remains resilient Industry professionals in the area concur that the Costa del Sol residential market remains resilient after a notable pick-up in sales witnessed last year as sellers began to drop their expectations and prices accordingly; and buyers who had been waiting in the wings for the market to bottom out, realised that now was the time to buy as they were unlikely to drop much further. As Lynn Clark from Personal Property Finder confirms: "2012 has started very strong with many agents reporting the best Q1 sales figures for 3 years and there is a confidence in the market that has been missing since the bubble burst. The banks are working with developers to make attractive funding options available to buyers and the high street banks are once again approving mortgages to non-residents albeit with much more sensible criteria. Now is an excellent time to buy, with properties at a 10-year low but healthy tourist figures making holiday rental property a desirable and affordable investment. Investors are back and buying." Luxury real estate sector healthy, thanks to property price drop At the luxury end of the market, primarily in the Marbella/Golden Mile area, business has   also been picking up. According to a recent article by Spanish news agency EFE, the luxury property market in this area saw more activity last year, again, thanks to the drop in prices.  It quotes Christopher Clover, Director of Panorama, Marbella's longest operating real estate agency as affirming that 2011 saw a 20% year-on-year increase in sales due to property owners readjusting their asking prices. There were some great bargains to be had as a result, with properties in prime areas priced in 2007 between €500,000 to €800,000 now selling for somewhere between €300,000 to €500,000. The very high end properties however, those over 2 million euros had experienced a 10-20% price reduction while those located in sought-after addresses with limited properties for sale continued to maintain their original price. Kristina Szekely, an established real estate agent in Puerto Banus, pointed out that there had been a shift away from the investor in multiple properties who used to make a "bulk" purchase of 8-10 apartments to sell on, towards those clients who had dreamt of owning a holiday or retirement home for years in Marbella and could now afford to do so.   The majority of buyers in this sector hail from northern Europe; Scandinavians, Belgians or Dutch with "a lot of wealthy Russians" and clients from the Middle-East, the article concluded. Worthy of mention when assessing the future of the Marbella market  is the projected investment of some 400 million Euros by Qatari Sheikh Abdullah Bin Nasir Al-Thani, which will transform the town's current La Bajadilla fishing port  into the state-of-the-art "Port Al-Thani" luxury marina complex.  On completion, the new port will have almost trebled its current mooring capacity and will boast a special docking pier for mid-size luxury cruise ships, a 5-star hotel and a string of upmarket shops, restaurants and bars contained within a dedicated 64,495 m2 commercial and leisure space.  Construction is said to be due to commence after the summer season and the first phase is scheduled for completion in 2015. With the inevitable property price rises and boost to the local economy that this is set to bring about, it's all the more reason for those who are in the position to do so, to make their move now and buy while the prices remain at such an all-time low. Most experts agree that prices for prime properties on the Costa del Sol won't be falling further, with some predicting that they will even experience a slight rise as soon as 2013 thanks to the growing demand from returning foreign investors. As Personal Property Finder's Lynn Clark sums up "I do believe that those who are waiting for the Costa del Sol market to implode and start giving beachfront apartments away for a handful of dollars are going to miss the boat and find their home in the sun once again slipping out of reach."