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Finance & Legal

Investing in Southern Spain

Over recent years the Costa del Sol, covering areas such as Marbella, Puerto Banus, Benahavís, La Quinta and The Golden Mile, has enjoyed a huge boom in the property sector. Fuelled by a constant flow of international prospectors the price of residential real estate has increased by an average rate of 10% a year for most of the past decade.

Like all things property related, this has to come to an end. The last 4 years have seen a notable slow down and a decrease in prices. The Marbella area has received bad press following the unearthing of a number of illegally built developments due to a corruption scandal taking place in Marbella Town Hall.

So is it all doom and gloom? Should we pack our bags and go home? Definitely not! The current market conditions represent a fantastic opportunity for serious property investors. Firstly, at the present moment a number of distressed sales and repossessed properties in Marbella and surrounding areas are becoming available. By this we mean speculators who have overstretched themselves and need to sell properties at the price they purchased them for three years ago, or in some cases less. If you are in a position to move quickly and do not need to arrange finance these opportunities represent fantastic value for money. We believe that this situation will continue for much of 2014 with most repossessions and distresses sales being sold by the last quarter of this year.

The scandal of illegal building permits hitting the headlines has caused the intervention from central government in Madrid to control development in the area. We have witnessed a big slowdown in the building of new developments over the last few years. When granted, licenses are likely to stipulate far smaller build percentages and existing ongoing projects will be subject to some change. In short, this will create a shortfall in quality available properties to meet the growing demand from second homeowners and relocating families. This will in turn create an environment beneficial to vendors; a seller's market.

Yes there are many available properties in Marbella. Many properties along the Costa del Sol are overpriced, poor quality and in the wrong location. At Chestertons affinity we will source the best properties at the best price in the best locations. The main thing to consider is why the market here boomed in the first place? The Costa del Sol is a place that people will always want to live, or spend time in. The weather, the accessibility and the lifestyle dictate that there will always be a healthy flow of potential purchasers. The standards of both educational and medical facilities are some of the best in Europe and millions of Euros have been invested in the road, rail and air networks; the second runway at Malaga airport enables direct flights to almost anywhere in the world. The infrastructure here has been establishing itself for over 30 years; you are not buying in an area where this all still has to come, as with many of the emerging markets around the world.

At a time when many have been let down by pension funds, a deflated stock market and low rates of interest on saving accounts, property investors in bricks and mortar will always reap the benefits. This environment will always create a stable, sound and profitable investment, especially when we can help you source the best property at, in many cases, lower than its true market value.

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