ALTHOUGH the volume of sales in the markets of Marbella, Estepona and Benahavis dropped slightly during 2019, agents reported a surge of sales in the last quarter of the year, and there are fundamental reasons to be optimistic for the evolution of the market in 2020.
Post Brexit Mini-Boom
One factor that has affected the market in this past year has been the ‘pent-up’ demand caused by Brexit: when there is uncertainty in any market, purchasers normally take the attitude of ‘wait and see what happens’.
Now that there is certainty and full clarity in the direction of Brexit, and a corresponding increase in the value of the pound, there is little doubt that this pent-up demand we have seen in the past year will result in hundreds of purchases in the next few months, giving an important boost to the market in 2020.
A surplus of brand-new properties in some areas
Especially in the area of the New Golden Mile of Estepona, there has been an increasing surplus of new projects/properties on the market. Following the law of supply and demand never being in equilibrium, this is not a surprise and it normal in any property market. There are now so many new promotions (not counting projects of less than five units) that one cannot see all of them even in a week’s time. Our own study of April 2019 illustrates that there were almost as many properties in new developments for sale at that time (1911 units), as all those sold from 2016 to 2018 (2063 units).
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The new developments with the best location, design and architecture, the highest quality finishes, the most effective promotional efforts and of course the best prices will prosper. The buyer will end up with more competitive prices in addition to an amazing choice of well-finished new properties. The less competitive projects will have to work hard to improve on the above points and will eventually sell, but more slowly.
The Economy: cautious optimism
There have been indicators of an economic slowdown in Europe and in Spain in the last few months. On the other hand, there are positive indicators, as stated recently by Luis de Guindos, the Vice President of the European bank, which point to an economic upturn mid-2020. (https://elpais.com/economia/2019/12/13/actualidad/1576227956_640111.html). Most other professionals with whom we have consulted are also cautiously optimistic with respect to the evolution of the European Community growth. The property market shows absolutely no sign of overheating such as in the years before the crisis starting in the end of 2007, which lends additional optimism to professionals assessing the market.
Prime and Ultra prime markets are thriving
The higher-end market which comprises an important part of the market in this area tends to be less affected by economic ups and downs anyway. This should be added to the fact that most purchases today are “life-style” purchases much more than purchases just for investment. If Marbella now has areas which are considered “Ultra-Prime” for the first time in its history, it is because the buyers in this area are willing to pay high prices, compared to only a few years ago, to live in these areas.
New, world-class hotels and more tourism will bring more affluence to the area
The continuing increase in tourism in the Marbella area will remain the prime source of buyers for real estate. Just look at the increase of tourism in the lowest month of the year, December! The number of cars on the road is like that of the shoulder seasons only a few years ago. The arrival of the Four Seasons, as well as the W Hotel, will bring a whole new segment of the luxury market to Marbella from those habitual clients of these world-famous brands, who have not yet discovered Marbella and who will return, many of them with their friends.
Improvements are still needed
If the Marbella area real estate market is to remain healthy over the medium and longer term, it is clear that the municipal governments of this area need to make further improvements and solve old problems. For example, after twenty years of urbanistic chaos in Marbella, due to no fault whatsoever of the property owners, further steps must be taken to solve the problem of first occupation certificates where thousands of owners are technically living illegally in their homes where, also, with no first occupation certificate, they cannot rent legally their properties out for less than two months, in accordance with the law for touristic rentals.
There also has to be a solution, now rather than later, to push the overcrowded coastal highway traffic up to the autopista during the peak season.
Despite recent improvements, many areas and neighborhoods need more attention and care from the municipal authorities.
It is up to all of us to come together, individually and collectively, to work with the public authorities to encourage them to undertake these improvements and help Marbella and surrounding areas reach their full potential as a quality resort area, the only resort area on the whole Mediterranean Basin with a 12-month season.
May I take this opportunity to wish everyone a happy, productive and positive 2020! Visit our site www.panorama.es for more background.