Guide to Investing in Property in Costa del Sol
Investing in property can be a great way to diversify your overall portfolio, and looking further afield for a place to buy can help to bring you a better ROI if you choose wisely. Unfortunately, thanks to the recent financial crisis, Spain has been much maligned of late, but there are green shoots of growth starting to emerge – especially in the ever-popular Costa del Sol.
There are currently quite a few bargains to be had in the region because of the 2007 / 2008 global meltdown. Prices are as much as 40 to 50% down on peak levels, so the room for growth is clear and savvy investors are beginning to snap up deals all across the Costa del Sol.
Many analysts believe that the worst is now firmly behind us and the housing market has reached its bottom in Spain, but only time will tell if this is truly the case. However, there are plenty of encouraging signs across the country.
Statistics such as annual price increases of 5.12% to June 2015 and overall property transactions being up 7.9% in the same period show that Spain is slowly beginning to come out of the doldrums.
Positive indicators aplenty across the Spanish housing market
As we’ve already touched upon above, there are some good early indicators that Spain’s housing market is moving in the right direction. Let’s take a look at them, and more, in greater detail:
- Apartment prices – Buyers and investors are always interested in price movements when evaluating a market, and the signs coming from Spain are good at present. Apartment prices were up 6.47% in 2014 and 2015 is expected to be another growth year. The average home value in 2014, evaluated by sales in that year, was €141,718 and this year is expected to close at €145k and beyond. This is an increase that takes the market back to the levels seen in 2012.
- Sales made – Another healthy indicator is the total sales made in 2014. This figure was up for the first time in seven years and is on course for a greater increase in 2015. Last year saw a jump of 2.6% and 2015 is being estimated to show a further 7.5% increase in property being sold across Spain.
- Mortgages issued – Volumes rose in 2014 by 13.8% to reach a total just shy of €39.5 million and lenders are expected to issue around €42 million in 2015, a further increase of 6%.
- Average mortgage value – Not only did the amount of mortgages increase, so too did the average mortgage value. The average residential mortgage in 2014 was stated as €131,984, a 15.8% increase on the figures for 2013. 2015 is expected to follow suit with a more moderate increase of 3.4%.
- New construction figures – The days of construction on every corner are not quite back yet, but the cranes are returning to the Spanish skyline slowly but surely. 2014 saw a steady increase of construction projects being undertaken, and in 2015 a further 7.5% increase is expected.
- Future project approval – Residential developments are once again beginning to seek approval and the figure estimated for 2015 is a 5% increase on last year.
- Property market as a whole – While the majority of investors will only be interested in the residential market, getting an overview of the entire property landscape can also serve as a good indicator for future growth. While this figure is far less pronounced than the residential sector alone, the Spanish property market as a whole is still showing signs of growth and is currently on course for a 1.8% increase on the figures given in 2014.
Predictions for the coming year and beyond are optimistic and many investors are actively seeking out the hottest deals across the Costa del Sol.
Why choose the Costa del Sol?
The Costa del Sol is synonymous with sun, sea, sand and sangria here in the UK, and Brits are well accustomed to the region thanks to years of package holidays and cheap flights. Much of the property along the Costa del Sol is at the luxury end of the Spanish market, and it is that sector that is enjoying the largest growth of late.
If you are considering purchasing an investment property abroad with a view to letting it out to tourists, then the Costa del Sol is an ideal location. The region enjoys around 325 days of sun every year, so out of season times are kept to a minimum. This means that your fill rate will be significantly higher here than in other areas.
Tourists are given plenty of options for entertainment here too. The Costa del Sol boasts some of the finest golf courses and the water sports on offer are wide and varied. For those more intent on relaxing while they are here, there is an abundance of things to keep them occupied too; beach lovers, night clubbers and shopaholics are all well catered for.
The infrastructure is also good, with numerous amenities and transport options available. Communication systems are bang up to date and there are fantastic medical facilities throughout the region.
Where on the Costa should you buy?
From San Roque in the west to Málaga in the east, the Costa del Sol has long been a favourite location for Brits looking to invest in property abroad. Here we give you the low down on some of the most popular places for property along the Sunshine Coast:
- Estepona – Possibly one of the most charming coastal towns along the whole length of the Costa del Sol, Estepona is a beautifully picturesque place to buy your property. From large fincas through to quaint townhouses, Estepona has it all.
- Málaga – The sixth largest city in Spain, Málaga is a lively hub that balances the old with the new in a way that other cities fail to achieve. Property here is diverse and in depth research is necessary. However, there are undoubtedly some fantastic opportunities to be had here.
- La Cala de Mijas – The mix of affordability and affluence that can be found in La Cala de Mijas is something that attracts plenty of investors to a town that is growing in popularity. Many ex-pats already call the town home and the luxurious villas located here offer those who want to get away from the more ‘touristy’ areas the perfect retreat.
- Puerto Banús – What can be said about Puerto Banús that you don’t already know? Home to the rich and famous, this is one of the glitziest places along the whole coastline. The shopping and nightlife is excellent here and the properties available range from tiny apartments through to high-end luxury villas. The nearby Los Flamingos Golf Resort is one of the jewels in the Costa’s crown.
- Torremolinos – Torremolinos managed to get itself a label that few resorts would want in the 80s, but now it has smartened up its act and many investors are finding good opportunities here. Close to Málaga airport, Torremolinos definitely warrants closer inspection when choosing an investment property on the Costa del Sol.
- Benalmadena – Situated a mere 19km from Malaga Airport, Benalmadena is a part of the Costa del Sol that is gaining in popularity. The atmosphere here throughout the summer months when tourism is at its peak is electrifying and the award-winning Benalmadena Marina is widely regarded as one of the finest in the world.
- Marbella – Ask a Brit about the Costa del Sol and the chances are good that they’ll automatically think of Marbella. This stylish town has some beautiful properties within its borders, but prices are not cheap.
- Sotogrande – As high-end as Puerto Banús, but a lot more low key, Sotogrande is a stunning, picture card image of a Spanish coastal town. The white architecture here seems to never go off-colour and the port is one of the most beautiful places to while away an afternoon. Property here is at the luxury end of the market, but it is definitely money well spent.
- Fuengirola – One of the forerunners of the package holiday boom in the 1980s, Fuengirola is another town that has been unfairly tarnished in the British press. The upside is that there are bargains to be found here and the tourists keep on coming every year to soak up the seemingly endless rays of sunshine. Fuengirola is hugely popular with Nordic tourists and it is the last stop on the C1 Train from Malaga Airport, making it very accessible and affordable to get to.
These are just a few of the well-known names in the area but there are many other towns, cities and resorts along the length of the Costa del Sol. Buying a property abroad is no different to buying a property here in the UK when it comes to the importance of selecting the right location. Therefore, it is vital you make sure that you find out all that you can before making any final decisions about which part of the Costa you should invest in. Sites such as Idealista and Fotocasa can help you get an idea of price ranges in individual areas.
Types of property available
As with most of Spain, the types of properties that are available to investors are quite varied. From sprawling multi-million-euro mountaintop villas down to studio apartments, all are on offer here.
Another thing to consider when looking for an investment property on the Costa del Sol is whether or not to buy real estate on a new development or opt for a resale property. This is something that would need to be decided by the individual as both have their pros and cons, such as different tax implications. Doing your homework at this stage will certainly pay dividends further down the line.
As with any other investment you make, research is everything. Find out as much as you can before you sign on the dotted line. Thanks to the Internet, property research has never been easier, so there really are no excuses nowadays.
What to do once you’ve found your Costa del Sol property
Now that you have done all of your research and found a suitable property for your investment, you will probably be wondering, ‘What now?’ Well, walking you through all of the do’s and don’ts of property investment in Spain would take another guide altogether – so we wrote one! Click here to find out more about the process of buying property for investment in Spain.
Feature image credit: lutmans via Flickr.