property market 1Q 2023

Costa del Sol Property Report Q1 2023

At the end of our Costa del Sol Property Report for 2022, we noted that analysts predicted a year of moderation in 2023. However, we included the caveat that the Costa del Sol may take a different course from the rest of Spain. This report for the first three months of the year will confirm that prediction and show that, at least for now, prices are still very much on an upward trend and sales continue to be brisk.

property market 1Q 2023

The bigger picture

But before we dive into property statistics, it’s worth taking stock of the macroeconomic picture in Spain to provide a backdrop to the market.

Spanish economy

After finishing 2022 with 5.5% GDP growth, one of the highest in Europe, Spain is expecting a considerably less buoyant year. In March, the Bank of Spain predicted 1.6% growth for this year, with the European Commission forecasting a slightly lower 1.4%. Both figures are, however, above the Eurozone’s expected rate of 1%. Current predictions for Q1 growth stand at between 0.3 and 0.5%.

Spanish inflation

After most of 2022 with rampant inflation, 2023 has got off to a more moderate start in Spain. March registered a figure of 3.3%, the lowest monthly rate since August 2021. Underlying inflation, however, continues to grow and stood at 7.5%, driven mostly by the rising cost of food.

Interest rates

Unlike inflation, the Euribor shows no immediate signs of going down and is currently edging ever nearer to 4%. Most analysts believe it will rise to 4% sometime in the near future, although many predict that this percentage will be its highest this year.

Much will depend on the evolution of the economy in the Eurozone, future developments in the stagnant Ukraine war and unknowns such as more bank disruption on a par with Credit Suisse.

Certainly, the number of mortgages taken out in Spain has dropped over the last year, indicating a slowdown in the market. However, according to the Malaga Property Observatory, OMAU, 45% of buyers on the Costa del Sol purchase without a loan, suggesting that the market is less affected by rises in interest rates.

property market 1Q 2023

Costa del Sol property sales in Q1 2023

Official statistics from the Registrars and Notaries for the first quarter of the year have yet to be released. However, those from the Spanish Statistical Ïnstitute (INE) are available for January and February.

According to these figures, there were 5,767 transactions across the province during those two months, with February registering 3,042 sales alone. The total represents a 14.4% decrease on the same period in 2022.

Nevertheless, we believe it’s worth pointing out that over 108 properties changed hands every day on the Costa del Sol in February. A slower rate undoubtedly, but not perhaps the moderation experts had in mind when they made their 2022 predictions.

Key takeaway 

The appetite for property on the Costa del Sol appears to remain strong and transactions have quickened since Q4 last year.

property market 1Q 2023

Costa del Sol property prices in Q1 2023

Spain publishes no official selling price statistics – most available are based on valuations or asking prices on online portals. However, the different sources give a general overview of the situation. They also show that the general price trend on the Costa del Sol continues upwards.

Tinsa (based on valuations)

The company’s Q1 report found that prices for Costa del Sol real estate went up 7.6% in the year to an average of €1,977 per square metre. In quarterly terms, the increase was 1.2%. Tinsa also calculates that prices are still 22.6% below their 2007 peak and 47.2% higher than their lowest. Tinsa found that the property prices on Costa del Sol had made up the most ground in Spain after Madrid and Barcelona.

Gesvalt (based on valuations)

According to this valuation company, prices rose by 11.5% in the year to Q1 to €2,419 per square metre. The increase was the highest in the country and the average price now stands as the fourth most expensive in Spain, behind just Guipúzcoa, Madrid and the Balearics.

However, when it comes to the quarterly change, Gesvalt reports that prices varied by just 0.3% between the end of December and March.

Marbella was, yet again, the most expensive place in the Costa del Sol to buy property with an average valuation price of €3,343 per square metre. It ranks as the second most expensive city in Spain with over 50,000 inhabitants. The average price in Benalmádena, Estepona, Fuengirola, Mijas and Torremolinos exceeded €2,000 per square metre.

Idealista (based on asking prices)

The property portal calculated the average square metre price at €2,849 in March, the equivalent of a 13.9% annual increase. The figure is among the highest in Spain, indicating that homeowners are taking advantage of the still strong demand.

OMAU (based on asking prices)

According to the quarterly report, prices rose by 4.16% in Q1 this year compared to Q4 2022. Their average stood at €3,759 per square metre. Marbella registered the highest price at €5,501 and also the highest quarterly increase (5.6%). Estepona had the second most expensive property on the Costa del Sol with prices at an average of €3,192, although OMAU reports that prices rose by just 0.6% in the last quarter.

property market 1Q 2023

Costa del Sol prices in April 2023

Several places on the Costa del Sol surpassed the area’s average price increase at the beginning of this year. According to Idealista, many registered double-digit hikes, for example:

Benahavís – prices rose by 7.5% to €3,981 per square metre, slightly below the increase in Q4 2022.

Estepona – values continued to soar by 19.3% to €2,993 per square metre.

Manilva – prices skyrocketed by 18.8% to €2,149 per square metre.

Marbella – values surged by 18.6% to €4,138 per square metre.

Sotogrande – property prices continued their upward trend and went up 7.8% to €2,723 per square metre.

All five resorts except Benahavis saw strong quarterly growth in Q1 as well. In Marbella alone, prices experienced a 4% uptick between December and March.

Although Tinsa estimates that Costa del Sol property still has 22.6% to grow before it regains its highest price on record (reached in 2007), the valuations company brings this figure down considerably for some locations. Marbella is a case in point, and Tinsa calculates that prices in this resort are just over 10% away from their maximum.

Key takeaway 

Despite predictions of lower prices, values on the Costa del Sol show no real signs of falling, particularly in locations such as Marbella and Malaga city. Indeed, the increase in Q1 is, according to Gesvalt, faster than that seen between Q2 and Q4 last year. The company attributes the phenomenon to the rush to buy property before interest rates rise still further.

property market 1Q 2023

Foreign market on the Costa del Sol

International buyers have traditionally played a significant role in Costa del Sol real estate, and Q1 appears to have been no exception. OMAU reports that foreigners make up 34% of the market, a unusually high share that underlines the interest in Costa del Sol real estate from abroad.

Key takeaway 

Costa del Sol property remains as popular as ever among international buyers.

Costa del Sol rental market

The lack of long-term rental property on the Costa del Sol was the poster child of Q1 this year. According to Idealista, while supply in Spain dropped by 5% in Q1 to its lowest level since 2016, on the Costa del Sol, it plummeted by 15%, one of the highest decreases in the country. In Malaga city, the deficit was considerably worse, with 27% fewer properties available in the first three months of the year compared to the same period in 2022.

Meanwhile, rental rates continue to spiral upwards. According to Gesvalt, Costa del Sol rentals cost 14.7% more at the end of March than a year earlier and average €12.6 per square metre, one of the highest in Spain. The quarterly rise was almost 3%.

Yet again, rental properties in Marbella saw their prices skyrocket to an average of €16.70 a square metre. According to Idealista, rental rates rose by 22.1% in the year. The situation was considerably worse for tenants in Estepona, where rates soared by 34.9% in the year, with a 10.8% uptick in Q1 alone.

Key takeaway 

Supply shows no sign of growing, so tenants can expect more expensive rates and buy-to-let owners, better yields.

property market 1Q 2023

The market for the rest of 2023

Given the weight of foreign buyers and investors on the Costa del Sol in tandem with the lack of supply, it appears unlikely that prices will halt their upward trend. On the contrary, we expect them to continue to rise. However, we predict a slightly less pronounced curve over the next few months based on quarterly figures.

In terms of sales, we are currently in high season for buying and February figures indicate a busy market despite higher interest rates. We believe we are looking at between 80 and 100 sales a day on the Costa del Sol for most of this year.

Tourism, the area’s main economic driver, is currently above pre-pandemic levels. For example, Malaga Airport welcomed nearly 1.5 million passengers in Q1. The figure represents a 25.1% increase on the same period in 2022, but more significantly, 9% more than in 2019. Flight operations were 11.4% higher, indicating that the Costa del Sol is looking at a record year. Based on these figures, we believe the property market will mirror at least some of this activity.

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Research sources

INE sales figures for Feb

INE stats for Jan and Feb

Idealista rental supply stats

Gesvalt prices Q1 2023 (need to register to download)


European commission GDP and inflation predictions

Tinsa (register to download)

AENA stats—primer-trimestre-del-ano-un-416-mas-que-en-el-mismo-periodo-de-2022.html&p=1575075845293


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