Property Insight: Update on the Costa del Sol Market

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VMN managing director Christian H Zeuthen[/caption] In this interview, Villa Marbella Now’s managing director, Christian H Zeuthen, brings us up to date with latest developments in the Costa del Sol property market, and offers an authoritative (and “cautiously optimistic”) preview of future prospects and trends…

As we settle into autumn after the summer tourism season, how would you evaluate the Costa del Sol real estate market for the first three quarters of the year, in general terms?

The first half good; the last half less so. The biggest movements have been in the €100,000 to €200,000 range, two-bedroom, two-bathroom apartments – newish, well-designed or recently reformed. It’s tough with old homes. Unless you give a substantial discount you will not sell. If people come in and see grey marble and aluminium-frame windows they’re out the door immediately. Sales faded a bit from May-June. I think people took a breather. Also, I think a lot of vendors became too optimistic with their prices – there’s been a small upward trend in prices. [caption id="attachment_2199" align="alignright" width="300"]

Penthouse panorama in Los Arqueros (Benahavís)[/caption]

And for 2015?

I’m moderately, cautiously optimistic, People who have said no in the past or have been hesitant this year have added, “We’re coming back next year”, and if just half of them do we’ll have a very good year next year. Those who are looking now to buy have been in the process for the last six months. I don’t see a big opening until people are more sure about the recovery. If you look at financial markets, at statistics for the different countries, they are moving out of recession but it’s not a strong recovery yet. People are still coming because we can see the rental market is doing very well. That means the interest in being here and coming here is still very much present.

How important is the luxury property market to Villa Marbella Now?

There are still bargains at the higher end. If you save 20 per cent on a house listed for €5 million, that you can now get for €4 million, you’ve saved one million. That’s a lot of money in natural terms. But this requires people to come here with four million in cash, not having to borrow the money, and people with that kind of money just don’t fly in and spend four million at the same frequency as before.

Do you believe the market has now bottomed out?

I think prices have fallen a little bit again this year but I don’t see a further reduction. This is just a gut feeling. In the cheaper range, there are not a lot of bargains left. The really good ones went three or four years ago. Then people were dropping their keys into the bank. The ones around now are available for good prices, fair prices, that’s the market level now. Compared with when the crisis hit (2008-2009), prices are 40 per cent lower or even half. If it’s not half it’s not realistically priced. I don’t see prices galloping onwards – maybe a few per cent up here and a few per cent up there – but in three to five years probably yes, because the world will improve. In the meantime, if you buy to enjoy your property, you will not make a loss, that’s for sure. [caption id="attachment_2203" align="alignright" width="300"]

Tree-lined tranquillity in Elviria (Marbella)[/caption]

Foreign demand continues to increase for properties in Spain, including popular areas of the Costa del Sol. Have you noticed that trend at Villa Marbella Now? What are the main nationalities among your clients, and what percentages (approximately)?

The Russians, who represented about 20 per cent of the market, more or less, have gone home; they’re sitting there and waiting. The Scandinavians (Danish, Norwegians and Swedish) and French are buying, and the Belgians have a lot of money. The Brits are also back. You can see the effect of the UK being out of recession and the stronger pound sterling, but they are more cautious with their money than in the past. I would say about 35 per cent of the market is UK.

Visitors have access to a wide and varied range of hotels on the Costa del Sol, but holiday homes remain a popular choice for tourists. How buoyant is the current rental market for clients planning to buy a home for investment purposes?

The rental market has been super buoyant for the last three years, so the cautious person, they rent; they don’t have to pay all the up-front expenses. Once they’re sure, a big proportion of those who rent will probably buy. People rent long term, for €4,000, €5,000, €6,000 a month, which is a lot of money, simply just to be cautious with their funds. At viewings, almost everyone comes and asks what rental income you can get from the property. People want support for a mortgage or just have a wise mentality. If you buy something for €200,000 you need some return on it. Especially in the summer season, with the blink of an eye you can make 10 weeks of rental. People pay the money and they’re happy. If you maintain the property right, 25 to 30 per cent of your rental clients will come back the next year. [caption id="attachment_2207" align="alignright" width="300"]

Frontline beach exclusivity on the New Golden Mile (Estepona)[/caption]

Have any of your clients taken advantage of the new “Golden Investor Visa” options introduced by the Spanish Government? If so, what nationalities?

I’ve had enquiries – Chinese and Russian – but no effect whatsoever. It has not changed anything at all, at least not here.

What one key piece of advice would you give to someone trying to sell their home on the Costa del Sol?

Keep it clean, neat and tidy.

And a buyer?

Never be afraid to make an offer.

Finally, what five key aspects of the southern Mediterranean lifestyle would you highlight to a family planning to move to and settle on the Costa del Sol?

• There are a lot more activities at hand… leisure, sports, not necessarily only golf. You can do more exercise than you can at home because you don’t have to commute. • It‘s cheaper to buy foodstuffs. If you spend your money wisely, everything from tomatoes to a gin tonic is cheaper. • Children can be outdoors all the time, and there is an excellent choice of international schools. • It’s an active and healthy lifestyle with a reasonable stress level, but you have to be very self motivated. • It’s well connected. There are a lot of attractions within convenient reach. If you think about the climate, you have skiing in winter and the beach in summer. Also, you have cultural events in Madrid, Córdoba and Cádiz, and you still have the rest of Europe nearby for vacations.