Costa del Sol property beach views - read about our market outlook for 2021

¿Qué está de moda y qué no en el sector inmobiliario de la Costa del Sol este 2021?

Despite very low tourism figures, Brexit and the pandemic, 2020 was a much better year for the real estate sector on the Costa del Sol than many analysts expected. And with vaccine programs kicking off in many of the Costa’s key buyer markets, 2021 is off to a good start for the property. Industry insiders expect to see an increase in demand starting in June once international travel begins to open up.

But what can we expect to see specifically in the Costa del Sol Real Estate Market this year? Who will buy and where? What types of homes will be in fashion in 2021? And what can we expect overall from the property this year? Read on for our report on what’s hot and what’s not in the real estate sector on the Costa del Sol this year.

Costa del Sol Real Estate Market

A little history

But before we turn our attention to 2021, it is worth taking a look at last year’s market. While it is true that sales fell by 22%, they recovered towards the end of 2020. In the fourth quarter, the Costa del Sol recorded the second-highest sales activity per 1,000 inhabitants in Spain after the Costa Blanca. And new construction sales increased 8% in 2020.

Prices remained static for newly built properties and fell 5-10% for resale homes. However, those at the higher end of the market (€ 800,000 +) held their value. Marbella resurfaced as a luxury hotspot in 2020 with the focus firmly on the «Golden Triangle» of Benahavis-Estepona-Marbella.

Costa del Sol Real Estate Market

Who buys properties on the Costa del Sol?

Since its crowning as the «California of Europe» in the mid-1960s, the Costa del Sol has attracted thousands of northern Europeans as visitors and second homeowners. More than half a century later, these nationalities continue to make up the bulk of foreign buyers. Even in 2020, when travel was severely restricted, more than 28% of sales on the Costa del Sol went to foreigners.

The latest annual statistics (2019) show that among foreigners, the British were by far the majority: they represented 24% of the total in Andalusia. The second most important nationality was Swedish with 14%. The 2020 quarterly statistics reflect this trend.

We expect more of the same in 2021. British buyers will remain the largest group despite the introduction of the 90-day stay limit after Brexit. For them, the Costa del Sol now has an unexpected advantage: unlike the Costa de la Luz, the southern Costa Blanca and the islands, you do not need an army permit to buy.

British buyers will be joined by Scandinavians, Dutch, Belgians and Germans, all of whom will continue to favour the warm climate, excellent air connections and safety that the Costa del Sol offers. As has been the case for the past 20 years, their presence will be, as Tinsa observed, «more evident as the market becomes more exclusive.»

Costa del Sol Real Estate Market

What kinds of properties will be in fashion in 2021?

The pandemic brought with it some fundamental changes in housing trends around the world. These have sprung up on the Costa del Sol and will continue to claim their claim throughout 2021. Along with them, there will be an increase in demand for second homes, newly built properties on the Costa del Sol available immediately and a continued rebound in investment for the rent.

New trends in housing types on the Costa del Sol

Confined life changed the way many of us consider our home. Mobility restrictions meant that if we already had a private outdoor space, we valued it more than ever. And if we didn’t, we added one to our list of must-haves. Inside, we found that we needed additional space to work from home and study. Plus more space for everyone without having to be on top of each other.

In short, quality of life at home. And as a result, villas with private gardens or spacious apartments with generous common areas became highly sought after. Real estate sales on the Costa del Sol with a price above 1 million euros increased by 15% between July and October of last year. And this trend is likely to continue well into 2021.

Second-home revival

For many northern Europeans, the pandemic has meant months trapped at home in the rain and darkness. As expected, in these circumstances, the appeal of the Costa del Sol, drier, warmer and brighter, has been stronger than ever. Furthermore, Covid-19 has shown that remote work is not only possible but desirable.

As a result, analysts point to a sharp rise in demand for second homes in the sun. Particularly on the Costa del Sol, a destination perceived as safe, easily accessible and offering excellent digital connectivity. We expect an increase in sales as international travel becomes possible.

New constructions ready to live

In its Perspective of the real estate market in Spain 2021 , CBRE reported that one of the “most striking consequences of the covid -19 ”was“ greater demand for new construction homes with immediate availability ”. Buyers were reportedly unwilling to wait 12 to 18 months to finish construction.

CBRE expects that the demand for immediately available (or imminent) real estate will remain strong in 2021. The Costa del Sol currently has a thriving new construction sector focused on the western end in Sotogrande,  Manilva and Estepona, and in the area central, in Mijas Costa. and Malaga city. The high demand for this property could lead to price increases in the areas «most pressured by supply,» says CBRE.

Investment for rent

Industry statistics revealed a significant increase in buy-to-rent (BTL) and build-to-rent (BLR) investment on the Costa del Sol during 2020. The growing population of the area, the increase in digital nomads and the lack of affordability have driven rentals to the forefront.

A JJL report found that 24% of homes in Spain were for rent and expected to increase exponentially in the next few years. CBRE has similar predictions and forecasts that it will exceed 27% in five years. The same report found that the Costa del Sol has the fourth-highest rental rate in Spain after Madrid, Barcelona and Palma de Mallorca.

Investment in BTR in Spain experienced a 22% rebound in 2020 and the Costa del Sol is one of the areas marked for the expansion of this niche sector. Analysts believe that while funds will increasingly be attracted to BTR on a large scale, individual investors will favour BTL’s opportunities in key areas of the Costa del Sol.


Where are properties being bought on the Costa del Sol?

Based on the trends listed above, we expect the following hot spots on the Costa del Sol this year:

Western Costa del Sol

Space is high on buyers’ wish lists, so the less populated areas of the Costa del Sol will take centre stage this year. Among them will be Manilva, an area whose population has increased significantly in recent years but still offers the lowest construction density on the coast. Casares and Sotogrande can also expect to see great interest, as both offer wide-open spaces in a pristine landscape.

New projects between Sotogrande and Estepona will also experience strong demand, particularly since the vast majority offer generously sized homes with private gardens and/or large common areas. Parcels of land in this part of the Costa del Sol will also appear on the radars of many buyers.

Benahavis-Estepona-Marbella perennial gold

Many buyers will be drawn to the so-called «Golden Triangle» this year. Properties priced over € 5 million are expected to be particularly popular in Marbella According to figures from the city council, the Construction tax revenue will increase by 13% this year, mainly from high-end new construction.

Costa del Sol Real Estate Market

2021 in a nutshell

As we well know from our experience in 2020, the future is far from predictable. However, there are certain underlying trends that should set the course for the Costa del Sol real estate sector this year.

Gradual price recovery

The new year has gotten off to a good start for properties on the Costa del Sol. In February, Tinsa reported that square meter prices on the Mediterranean coast increased overall by 2.3% in the year https: //www.tinsa .es / service-of-studies / imie / general / tinsa-imie-February-2021 / According to the prices requested on the Idealista online platform, the increase was 3.4% in the Costa del Sol in general, 6.8 % in Estepona and 3.3% in Marbella.

The general consensus points to a rebound in resale prices throughout the year, although some sectors (small properties with little outdoor space in urbanized areas) may continue to register decreases of between 5 and 10%. However, new construction prices are expected to maintain their value or increase in areas with a shortage of supply.

Gradual increase in sales

Mobility restrictions have led to pent-up demand among the most demanding market on the Costa del Sol: foreign buyers. Once tours are open again, sales should gradually increase; many analysts point out that this will happen from the middle of the second quarter.

Great interest from foreign funds

One thing is for sure, the Costa del Sol will continue to attract international investors. According to Cushman & Wakefiel , foreign funds have already allocated € 9,200 million for real estate investment in Spain in 2021, 18% more than in 2019. Around 20% of this goes to the residential sector.

On the Costa del Sol, investment will continue to focus on new high-end buildings. 40% of the largest developers in the area, including Neinor Homes and Via Celere, are backed by REIT capital. Construction is concentrated in the extreme west of the Costa del Sol and in luxury second homes for the residential tourism market.

Final words

Of course, a lot will depend on the success of the vaccine programs and how quickly international travel returns, but we look forward to a good year for the Costa del Sol real estate sector in general. The area has attractive attractions that are impossible for northern Europeans to resist despite external factors. At The Property Agent, we look forward to a strong 2021 for the property.



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