As long as the world’s wealthy want to spend some of their time in the sunshine, the value of property in destinations like Marbella, Estepona and Sotogrande will remain in demand and retain its worth.
Estate agents tend to be optimists, even in the most adverse of circumstances. Ask almost anyone who’s livelihood depends on real estate on the Costa del Sol changing hands, ideally frequently and for as much money as possible (given that their daily bread is bought and paid for by commissions on closed deals), for their prediction about the post-pandemic property market and you’ll be told the future looks bright.
The esteemed economist John Kenneth Galbraith pithily pointed out, however, that “the only function of economic forecasting is to make astrology look respectable.” So, while the prevailing – some would even say sustaining – belief about real estate is that, whatever the situation today may be, tomorrow will be a brighter, better day, realists know that what truly sustains growth in any marketplace is demand outstripping supply.
The Costa del Sol, especially in-demand enclaves like Marbella, Estepona, Sotogrande and the exclusive urbanisations – such as La Zagaleta and El Madroñal – which are located in the hills around Benahavís, consistently draws wealthy people from around the globe who want to own a place of their own in the sun. While the area is hardly immune from the challenges affecting the wider world, you don’t have to be blindly optimistic to forecast a sunny outlook for its long-term prospects as a luxury real-estate investment destination.
If we consider the performance of the local property market over the 10 years during and after the global financial crisis (LINK: https://www.terrameridiana.com/9554-spain-and-costa-del-sol-residential-property-market-overview-2018.html), Marbella and Estepona did see declines in demand sooner than the rest of Spain, but recovered quicker and surpassed pre-crisis sales volumes by 2014 and 2017 respectively, whereas the country as a whole registered less than half the number of property sales in 2017 compared to its peak a decade earlier. A large share of that resurgence in demand has come from the top-end of the marketplace.
According to the latest Global Wealth Report from the Credit Suisse Research Institute (LINK: https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html), released in mid-2019, there were nearly 47 million millionaires in US-dollar terms worldwide, representing an increase of 1.1 million compared to just 12 months before. Of the top-ten places where millionaires reside, five are found in Europe – the United Kingdom, Germany, France, Italy and Spain – all just a short flight, or drive, away from the Costa del Sol, which goes a long way to explaining the area’s enduring popularity among Europe’s richest citizens.
The Coronavirus pandemic may have, curiously, bolstered the Costa del Sol’s credentials as a safe haven for real-estate investment. Most of the world’s wealthiest, who frequently live and work in big cities, have been confined to their permanent residences, however comfortable these may be, over the past few months. At the same time, many have discovered they don’t necessarily need to be in or near to urban metropolises to remain productive, ensure their children are well-educated, and have access to all the essential services, such as world-class healthcare, they rely on for their everyday, privileged, lives.
Places like Marbella, Estepona, Sotogrande and Benahavis represent a compelling choice for wealthier property buyers and investors who want to stay close to the action, albeit at a safe distance, who are looking to secure the finer things in life without taking risks, and who may be considering not just a destination to spend their holidays or leisure time, but as a place to live all the time. My prediction is that the Costa del Sol’s time in the sun looks set to continue for a long while to come.
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