Costa del Sol property: who’s buying?

Spain is quite unusual in that when you talk about real estate trends you always have to distinguish whether you mean the mostly national primary housing market or the largely foreign secondary ‘holiday’ market.

In other words, are we talking about Spanish people buying homes to live in or about foreign buyers acquiring a holiday home or full-time residence in the sun? You see, these two property markets that exist in the same country often follow their own patterns, and sometimes they even move in entirely opposite directions.

Where the domestic property market naturally reacts to the performance of the Spanish economy, areas such as Marbella, where the foreign secondary market is dominant, are more dependent upon the economies of Northern Europe.

It is for this very reason that Marbella entered recovery well before the rest of Spain. Driven by rallying economies in Scandinavia and Russia, the local real estate market bottomed out in 2012 and started to grow again from 2013 onwards, whereas the national market is expected to bottom out this year and resume growth in 2015.

Where initially property sales were driven by Scandinavian and Russian cash buyers, they were later joined by homebuyers from Belgium, France and Arabian countries, and now increasingly by British buyers too. As a result, foreign buyers became increasingly dominant not just within Marbella but for the whole of Málaga province. Where before the financial crisis, in 2007, foreign buyers accounted for 3,506 transactions out of a total of 21,727 – or 16% – the figures have now changed to 4,739 and 11,128 respectively, with purchases by non-Spaniards accounting for 43% of the total.

Scandinavian, British and Belgian buyers now rank among those driving the revival in the Marbella real estate market, with many still cash buyers. As the banks begin to provide mortgages again on a growing scale and the Spanish economy continues growth first shown in 2014, the number of people buying properties through financing will once more begin to grow significantly. Thus creating a more balanced, broader client base for a market in which the number of foreign buyers is expected to grow but the Spanish market is also predicted to slowly return to health. As a result the portion of sales claimed by foreign buyers is likely to peak soon, after which it should begin to drop as the domestic market reclaims its rightful position of dominance.