The Costa del Sol still brings property buyers in.
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Buying property on The Costa del Sol has been the popular with British expats and second homeowners for decades and in that time it has weathered all sorts of storms. It started life simply enough as the Costa del Fun offering a long sandy coastline, hot sunshine and a few high-rise hotels catering to the country's first package tourists.
Its attractions grew along with its bars, restaurants and glitzy clubs and, since then, the Costa del Sol has been known variously as the Costa del Crime (due to the presence of those who preferred not to holiday in the UK, at Her Majesty's pleasure) and the Costa del Cranes. More recently it's become the Costa del Corruption because of discoveries that, over the past ten to 15 years, local officials were giving illegal planning permission to developers in return for bribes.
Couple that with the added pressure of the screaming headlines that predicted a price crash of mega-proportions and you'd be forgiven for thinking that it was all over for Spain's south coast. But according to agents in the area this isn't so; the Costa del Sol is still seeing sunny skies and eager investors.
Lawrence Maeck of La Perla International Living, which is currently developing the high-end La Heradia in the Monte Mayor golf resort near Marbella, says that rumours of the Costa del Sol's death are exaggerated.
"There's been a lot of bad press and newspapers are making generalisations about the market, which is unfair," he explains. "Some people are finding it difficult to sell but it depends on what market you're in. Our sales ratios are up 70 per cent this year." Maeck claims that the quality end of the market isn't seeing any problems. "Good property for sale on the Costa del Sol is still selling." La Heradia is certainly doing well at the moment, which may be testimony both to its quality and the fact that it gives the people what they want.
The resort is a mix of townhouses and villas, many of which are constructed to order. Prices start at €695,000 (£473,000) for a two-bedroom townhouse, rising to just under €1 million (£680,000), while villas cost from €930,000 (£633,000) for something with four bedrooms and go up to just over Û1 million (£680,000), depending on the size and style of the property.
Building plots start at around €400,000 (£272,000) for something measuring around 3,000 square metres and Maeck estimates that it will cost somewhere in the region of €600,000 (Û408,000) to build a substantial villa measuring approximately 300 square metres. The design of any property has to follow guidelines approved by La Perla International Living to ensure the traditional pueblo style of the development is maintained. On-site facilities include a beautiful championship golf course, spa, tennis courts and nature reserve, and it's all just a short hop from the playgrounds of Marbella and Puerto Banus.
Prices like these seem a far cry from when people were snapping up apartments on the beach for less than £100,000 15 or so years ago, but that figure won't buy much these days. In the four years from 2001 the area saw 15 to 20 per cent capital appreciation per year, with purchasers flocking to buy for their own use and for investment purposes. Some of these folk have been unlucky, with several developments earmarked as illegal, and owners now waiting to see if their property will face demolition. However, the majority of homeowners haven't experienced anything of the sort, although they have suffered a slowdown that saw prices only rising by 11 per cent last year.
Maeck points out that, in addition to the great climate and famous coastline, the Costa del Sol has other benefits that bring property buyers in. One is the short flight of two-and-a-half hours from the UK, the other is that the area is so well developed there are no worries about infrastructure, education, healthcare or any lack of amenities. Malaga airport is also being expanded and new motorways make connections along the coast ever easier.
In contrast to what doom merchants are reporting about an over-inflated market, Maeck points out that prime property is not overpriced when you look at comparable homes in Portugal or southern France. "It's actually 50 per cent less than the south of France, even though for the past seven or eight years price growth has been phenomenal, because Spain started low."
Vanessa Rueda of Taylor Woodrow de Espana's Costa del Sol office agrees that there have been some issues lately, particularly in the case of unfortunate buyers who were duped into purchasing illegal properties. However, she still sees a strong market in the region. "The type of property that is selling are two-bedroom apartments with quality finishings, nice views, a swimming pool and garden," she says. "These tend to be priced between €250,000 [£170,000] and €300,000 [£204,000]."
Taylor Woodrow offers several developments in the popular Los Arqueros Country Club. Apartments in the Las Encinas development start from £175,000 for two bedrooms on a complex that also includes a communal pool, gardens and tennis courts. Nearby Los Eucaliptos also offers high-quality two- and three-bedroom apartments ranging from £170,000.
Many prospective landlords are also worrying that the rental market is now oversupplied. Returns that were above six per cent several years ago have since dropped to less than four per cent net. Rueda says landlords need to think carefully about the kind of property they are buying. "I would look for the best quality accommodation in the area," she says. "If you are thinking of renting, it's very important to be located close to the beach or to a golf course."
Agent Derek Blaney, who works with UK company IPI International, claims that though the market has indeed quietened in certain sectors, it doesn't mean no one is buying. He says: "The market has actually gone back to being stable, more sensible and people are now buying for lifestyle rather than pure investment." He adds that it now may actually be a good time to buy if you're in the market for the long haul. "At the moment there is good value to be had."
Blaney explains that someone who bought ten years ago, for example, has seen huge increases in the capital value of their property and, as a result, is in a better position to negotiate on price than someone who bought recently at the top of the market. "Long-term owners can sell below market-listed prices while still realising a profit and so there are bargains available."
Blaney sees the current hot spots as being around Marbella and Puerto Banus where properties near the beach sell from around €650,000 (£442,000), rising to over €1 million (£680,000). Areas that are also sought after, such as Sotogrande or Valderrama, are available for those with budgets of around €450,000 (£306,000) to spend. There are cheaper alternatives if you're prepared to sacrifice some of the glamour of the region but Blaney advises you won't get much for less than €250,000 (£170,000) with that price buying you a fairly standard two-bedroom apartment on a decent complex.
If you want somewhere up and coming that will give you the opportunity to enter a growth market at a lower price, Blaney recommends the outskirts of Estepona and Sotogrande , which "still has room to develop". Currently, Blaney has a lot of property in Estepona, where prices start at around €175,000 (£119,000) for fairly standard one-bedroom apartments in small complexes, but for something a little more substantial, such as a two-bedroom re-sale property in a nice development, you can pay around €220,000 (£150,000). It's also possible to find property for that price on the marina. Alternatively, Chesterton is selling another Taylor Woodrow development in Estepona, the Las Mimosas golf resort, where prices start at £115,000. Proving that you don't need a small fortune to live here.
It is still possible to get good value in Marbella, if you're not overly fussy. Blaney has apartments measuring 45 square metres starting from as low as €161,000 (£110,000) in the town, with larger apartments in better locations starting from around €250,000 (£170,000) and rising rapidly to around €995,000 (£677,000) for swanky complexes right on the beach. Don't even think about Puerto Banus, though, unless you have at least €350,000 (£240,000) to spend, and forget villas in either Estepona or Marbella unless you have at least €500,000 (£340,000). Even at this price properties won't usually come with a pool or any views to speak of.
For those who just want a holiday pad and don't need lots of space or facilities, it is still possible to find property from around €120,000 (£82,000) to €150,000 (£102,000). This is especially true in areas that have lost their glamour but still offer plenty of fun and sunshine near the beach, such as Fuengirola or Torremolinos .
Like Maeck and Rueda, Blaney sees that there are still positive signs in the market on the Costa del Sol: "Some people have put off purchasing for the moment and the area has taken a bit of a bashing, but it's still a beautiful location with good facilities, great weather, excellent healthcare and a lower cost of living - all less than three hours from the UK." In addition, he says he's had increased enquires lately, thanks to the awful British summer. He adds, though, that it's not just the weather; another factor is the number of high-profile crimes reported this year. Blaney concludes: "A lot of people are desperate to leave the UK and this is where they want to come."
Read our other articles about buying property in Spain:
as well as our overseas news stories affecting the Spanish property market or view our range of property for sale in Spain.
First published in Homes Overseas Magazine November 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.
