Real estate and Spanish property

A little history
The early 90’s saw homes on the coast at rock-bottom prices with little enthusiasm from buyers, uninterested in the area or scared away by the recession. At the time the Costa del Sol had poor infrastructure, decaying town centres, few leisure options and highly seasonal tourism – outside Easter, July and August, many areas all but closed down.  By 1995, the tide started to turn coinciding with new infrastructure such as the airport terminal and the completion of the Marbella ring road and a new political situation in many municipalities along the coast. The length and breadth of the Costa del Sol from Sotogrande to Nerja was rediscovered by holidaymakers, residential tourists and foreign retirees, all keen to get their feet firmly on the property ladder. Helping them do so were developers from all over Spain and Europe, drawn to the Costa del Sol’s huge investment potential.

Development of land increased massively and cranes sprang up all over the coast – the ‘Coast of Cranes’ was an unavoidable nametag. Inevitably, property prices soared and the eight years from 1997 to 2004 saw double-figure increases with savvy investors reaping huge profits on sales. Back-to-back purchases on off-plan properties were particularly popular and many buyers doubled their investments during this period. Encouraged by the renewed interest, business offering all types of services and amenities opened in many areas – shopping centres, golf courses (the Costa del Sol now boasts over 45), English-language cinemas, restaurants and service-related activities – and the Costa del Sol is now one of the few places on the Mediterranean that can describe itself as a year-round resort. The area now has hospitals, international schools and numerous service-related activities catering specifically for expat needs.

2004 and beyond
But, what goes up must come down and since 2004 price increases on the Costa del Sol have been more modest – just under 10 per cent in 2006 and predictions for 2007 are between 5 and 10 per cent.

For buyers used to a market where investments double in a few years, the current situation seems stagnant. Rumours of the bubble bursting and property recession are in the air. Estate agents report that resale properties are now taking far longer to sell and developers have noticed a definite slowing up in the number of off-plan purchases. And for the first time in several years, developments are being finished without having been completely sold. Many back-to-back buyers hoping to sell their off-plan property before signing the final title deeds have been caught out and have found themselves having to complete on purchases they couldn’t afford.

But, consult a local expert, especially one who has been in the property industry since the early 90’s, and most are quick to stress that single-figure price rises are normal and signs of a healthy property market with mature prices. Many predict that the next market cycle on the Costa del Sol will consist of several years showing between 5 and 10 per cent returns. And, it’s worth remembering that as a secure annual return, this provides a good medium to long-term investment. Most importantly, almost everyone firmly believes that prices generally will not go down – the odd desperate sale by a would-be back-to-back buyer who can’t pay the mortgage or a property owner in need of ready cash are possible exceptions – but it’s still worth placing your money in bricks and mortar on the Costa del Sol. There’s also excellent buy-to-let potential as new relocators all need somewhere to live.

A buyer’s market
While the Costa del Sol is no longer the place for a quick profit – property investors out for short-term gains have now turned their attentions elsewhere – for the investor with medium to long-term plans the Costa del Sol is your oyster. ‘Se vende’ signs are everywhere, but what should the discerning buyer look for?
Property gurus always claim there are just three considerations when choosing a property – location, location and location, and within a relatively small area, the Costa del Sol offers a surprising variety of locations. Take your pick from the hustle and bustle of urban life, the peace and quiet of an inland retreat, front-line beach positions, golf-course properties and panoramic views from coastal vantage points.

Once you’ve decided where, it’s time for what. Quality is the key here. During the property boom, many homes were built quickly with little attention to quality and finish. These were bought by those in search of a quick profit and many are now for sale. Avoid them and set your sights on quality construction. In a slower market, developers are keen to offer as much as possible and nowadays many complexes come with 24-hour security, generous gardens and heated pools. The properties themselves are spacious and fitted with a range of features: top of the range appliances, sound insulation, domotics, sophisticated heating, alarm systems… Choose the best you can afford

Something a little different
As well as a variety of location, there are also different types of properties. If you’re looking for a home within a golf resort offering services, it’s worth looking at Doña Julia, Finca Cortesín and Valle Romano at the west end of the coast, the resorts in Mijas Golf Valley in Mijas Costa or La Parchite Golf and Los Merinos in Ronda. Football Village in Valle Romano gives you the chance to boast a footballer as your neighbour.

If you want the services provided by a luxury hotel but in the comfort of your own home, several hotels offer the chance to buy an apartment within the hotel. Las Dunas and Villa Padierna in Estepona and Cruiser Hotel (currently under construction) in Torremolinos are among the five-star possibilities. For those thinking of retirement within a purpose-built complex, consider Sensara in Benalmádena, Vitania in La Cala de Mijas and Sol Andalusí in Alhaurín de la Torre.
But above all, take your time. It’s your market and there’s plenty out there. Shop around and make sure you exactly know what you’re buying before you sign on the dotted line.