In the spring of 2006, the whole of Spain was shocked by the arrest of the mayor of Marbella – the most fashionable resort on the coast – on charges of corruption, primarily related to the illegal issuance of building permits. This is not the first such scandal on the Costa del Sol, but this time the actions of the authorities were the most decisive. Hundreds of residential buildings turned out to be outlawed – and their legal status has not yet been settled definitively. Superimposed on the Spanish trend towards stabilization of the real estate market, corruption scandals have led to the fact that the growth of housing prices has almost stopped.
And yet experts are looking at the future of the coast with sufficient optimism. The objective advantages of the Costa del Sol, primarily the climate and constantly developing infrastructure, do not allow us to doubt that the demand for local real estate will not decrease in the foreseeable future.
The prospects are rosy
Only about 15 years ago, it was possible to buy apartments in the resorts of the Costa del Sol for less than 150,000 euros. Now it is difficult to find any decent offers for such an amount. Prices grew especially rapidly at the beginning of the decade – starting in 2001, for 4 consecutive years, annual capital gains amounted to 15-20%. Then came 2006, and the growth rate of the market decreased – in 2006 prices rose only by 11%, and the forecast for 2007 even more modest.
Skeptical buyers often say that the Costa del Sol real estate market is now overvalued. However, Laurence Meik from La Perla International Living notes that housing prices are not too high in the primary market – it is enough to compare them with similar offers in the south of France, where the cost of real estate is at least twice as high.
The future prospects of the Costa del Sol should be viewed optimistically also because the impressive infrastructure of the coast continues to develop. In particular, Malaga Airport is expanding, and a new road network is being built along the coast. By the way, for Russians, the Costa del Sol is also interesting because there are direct regular flights to Malaga from Moscow.
Lawrence Meik says that there are no problems with the quality of housing on the market, and cites as an example the La Heradia complex at the Monte Mayor Golf Resort near Marbella, consisting of villas and townhouses, many of which are built to order. Townhouses with 2 bedrooms cost from 695,000 euros, villas with 4 bedrooms – from 930,000 euros. A building plot with an area of about 3000 sq. m. m costs from 400,000 euros, and the construction of a solid villa with an area of 300 sq. m. on it. m will cost approximately 600,000 euros. On the territory there is a championship-class golf course, spa, tennis courts. And all this is located near Marbella and Puerto Banus.
Vanessa Rueda from Taylor Woodrow de Espana gives another example of a successful, legally built complex, initially not too expensive and growing in price. The cost of 2-bedroom apartments in the Las Encinas complex in the popular Los Arqueros Country Club resort starts from 260 000 euros, while the apartments are furnished, have a good view from the windows, and the complex has a swimming pool and a small garden. In the nearby residential complex Los Eucaliptos, prices are higher – apartments with 2 and 3 bedrooms cost from 363,000 euros.
But the level of income from renting out real estate is really not as high as we would like. If a few years ago the average annual rental income was more than 6% of the cost of the object, now it is only about 4%. This is due to the fact that the cost of real estate has increased, and competition among private apartments for rent is exceptionally high. Here is what Vanessa Rueda advises: "If you intend to rent out your property, then to get a good income, the house must be very good and located near the beach or golf course."
Expensive, but not always
Derek Blaney, a specialist at the British company IPI International, says that the slowdown in price growth does not mean a lack of demand: "After the Costa del Sol market stabilized, the buyers' goals changed somewhat. Now people are buying real estate here more often for themselves, and not for profit."
The most popular areas to buy, according to Derek Blaney, are the neighborhoods of Marbella and Puerto Banus. Here, houses near the beach cost from 650,000 to 1 million euros and are more expensive. Other popular areas are Sotogrande or Valderrama, where prices start from around 450,000 euros. There are also more affordable offers – for about 250,000 euros, you can buy a standard 2-bedroom apartment in a decent complex, but not in the most prestigious location and at some distance from the sea.
For those who want to buy inexpensive real estate on the Costa del Sol, Derek Blaney recommends the suburbs of Estepona and Sotogrande, where there is still room for construction. Prices here start from about 175 000 euros – for standard 1-bedroom apartments in small complexes. For more solid housing, for example, 2-bedroom apartments on the secondary market, you will have to pay about 220,000 euros.
You can find cheap deals even in Marbella itself. For example, an apartment in a city with an area of 45 sq. m. apartments cost from 161,000 euros, larger apartments in more convenient areas cost about 250,000 euros. The maximum prices reach 995,000 euros – for apartments in luxury complexes right on the beach. In Puerto Banus, prices start from 350,000 euros, villas in Estepona and Marbella cost from 500,000 euros - but these will be offers without a private pool or sea view. Well, in areas such as Fuengirola or Torremolinos, modest apartments can be found for 120,000 - 150,000 euros.
Britons Jan and Janet Brown bought a 2-bedroom townhouse at the Monte Mayor Golf Resort in 2002. The La Heredia complex with a golf course, spa and a spacious plot with a lake perfectly suited the family. The couple decided to buy a townhouse at the off-plan stage, and after the project was completed, they made small changes. Now the house has an open-plan living and dining room, a kitchen, 2 bedrooms with a private bathroom and toilet, a garden and a spacious terrace. Note that Jan and Janet bought the house for their own vacation, not for investment.
Algarve's rival
Due to the good climatic conditions and the long season, the Costa del Sol is an ideal place to play golf. With the exception of the Portuguese Algarve, no region of continental Europe can boast of so many golf courses - currently there are about 60 of them on the coast. Recently, residential complexes designed for wealthy golfers have been increasingly being built.
In the company T5 Estates, you can buy 2-bedroom apartments priced from 415,000 euros. For this money, the buyer will get a view of the sea and the golf course, panoramic windows, marble floors and an equipped kitchen, as well as access to the territory of the golf resort with an area of more than 200 hectares, where there are such infrastructure facilities as a spa, gym, tennis center, outdoor and indoor pools, shops and restaurants.
The Village at Valle Romano resort is located not far from Estepona. There are 1,100 apartments, two 18-hole golf courses, a sports complex, a swimming pool, a spa and a five-star hotel. The expected completion date of the project is 2009. The cost of apartments starts from 215 000 euros.
Golf lovers can also purchase a free plot on the territory of the golf complex and then build their own houses on it. So, the cost of a plot of 4000 sq. m. m in the resort La Reserva de Sotogrande starts from 525,000 euros, while plots in the new complex San Roque can be bought for about 495 000 euros.