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Marbella Property Market Report 2012

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The Market, The Crisis

Our clients often refer to “the market” or “the crisis” in Spain in general and relate it directly to the local real estate market in Marbella.

In our opinion, and from our perspective of having been through many peaks and lows in the market since we opened our office in 1970, it is misleading to equate the market in Marbella with the real estate market in Spain. This would be an oversimplification of the market factors at play here: as in many sub-markets, there are some factors which are comparable and many others which are not.

As you no doubt have read in the press, there are almost a million unsold, new properties in Spain due to the over-construction and speculation which took place up until 2008. These properties are located in almost every single town throughout the country. Of these unsold units, 90% are priced between €100,000 and €200,000, and often include apartments in poor locations with few local amenities; the typical “concrete jungle” of high-density building in coastal areas which become ghost towns in winter; or apartment blocks in unconsolidated areas where there will be future construction, noise and dust for years. This scenario bears little or no comparison with Marbella.

What makes Marbella different from the rest of Spain?

  1. There are far fewer new properties for sale in Marbella: as a result of 24 years during which our Municipal General Plan was not renewed, there was a shortage of new land being zoned for construction, hence causing a freeze in building activity. The General Plan was only just renewed in the middle of 2010.
  2. Marbella is, fortunately, a market that is not only a local market, and an active local market at that, but also a regional market, a national market, and especially an international market… four markets in one.
  3. Marbella is known the world over as a “Quality Destination” and quality, consolidated markets have reacted far better to the general crisis in Spain and other countries in the sense that there has been less price reduction and more market movement. Quality destinations attract the more discerning tourists, and this summer has been the best year for five-star hotel occupancy in Marbella since 2007, as well as a record monthly number in August, of 7.64 million foreign tourists in Spain itself (Diario Sur 23.09.11). There is a proven correlation between the increasing number of tourists and increasing number of real estate sales in the same area.
  1. As much as anything else, Marbella has become a really glamorous place to live again, with an efficient, honest local administration, and with a new General Plan providing a legal security for property owners that was missing in the last decade. Marbella provides not only the glamor (if one wants it), but represents one of the cleanest, most secure places to live on the Mediterranean Coast, with excellent health care available along with its fabulous climate and 12-month season.

Recent market movement

Despite the bad economic news, there has been important market movement in the past several weeks. In the month of August 2011, usually a low month for property enquiries, Panorama had a historic record number of 178 new client enquiries from all sources. Also, we have received enquiries and made sales in the past several months from many people and previous clients who had sold their properties some years ago and who wish to come back to the “new” Marbella and buy again, taking advantage of the great opportunities there are in Marbella today.

Obviously some are deciding that the time is right to purchase here: the market appears to be getting a little stronger, but why, and especially with such overall dismal economic news? There are three basic possible reasons:

  1. When the stock market goes down and a bear market is upon us like it is, many sell a good part of their portfolios and invest in property as a “safe haven”. With interest rates at historic lows, where else does one put one’s money?
  2. Printing money, as governments have done in the past three years, always results in inflation. Not just right now, maybe not for a few years, but it will come in the not-too-distant future – all the professionals predict it. The best hedge against inflation is investment in well located, well bought real estate.
  3. Some buyers have been waiting three years or more for prices to drop to their lowest levels and many have decided that the time is right to purchase now. This means that there is unquestionably a “pent-up” demand factor in the current market. We should not forget that the major reason for most people buying property in Marbella is the very special “life-style” that can be enjoyed here: there are clearly a lot more than purely monetary and investment considerations coming into play in purchasing a residence in an incredible area such as ours.

Where are the prices today?

As we all know, the speculative high prices throughout Spain and much of Europe peaked in 2006 and 2007 and then the “bubble” burst. Marbella is no exception to this. Actual selling prices have easily descended by 30% or more, especially in properties priced under €1,000,000. Imagine a property located in one of Marbella’s many great residential areas, priced in 2007 at between €500,000 and €800,000 – you can buy one today for somewhere between €300,000 and €500,000! And on the mountain side of the Golden Mile, between Marbella and Puerto Banús, there are apartments available from €250,000 up to several million Euros.

The more expensive properties have also come down in price, but only much more recently. Sellers of these properties are finally accepting the fact that their properties are simply not worth, in today´s market, what they thought they were, and most are now adjusting their prices accordingly. Hence, many of the previous passive sellers have now become active sellers who simply want to “close and move on”. Even some of the higher priced, up-market properties over €3,000,000 have started to move, with somewhere between 25 and 30 having been sold so far this year, a sign not only of more flexibility in the asking prices but also a re-emergence in the marketplace of the high-end Spanish and international buyer clients.

In the under €2,000,000 price range there are also plenty of opportunities to purchase older properties for refurbishment. These properties are usually very keenly priced as the owners simply wish to move on and not invest further in the home, and they are usually a lot cheaper than buying a plot of land (if you can find a good one) and building on it.

Some properties are simply not being replaced

Because of the limited supply, we are beginning to notice that those properties being sold in the more exclusive, high-demand residential areas are not always being replaced with similar properties at similar prices. For example, last winter there were five or six sales of apartments in the highly sought-after apartment complex “Marina Puente Romano”, situated next to the Puente Romano Hotel, with real, after negotiation selling prices from €550,000 to €625,000, in the rear of the complex where the least expensive units are located. Right now we have nothing on our books in this price range in this particular development, and we have just received a new instruction at an asking price of €700,000. Why are the prices holding up there? Quality of location, limited supply, sellers who do not really need to sell and can hold out for a better price, and higher demand for these quality areas.

Unrealistic offers are not getting serious consideration from sellers

As a buyer, the key to a potentially effective negotiation is to offer a price (if you believe the property is worth it, based on your research and agent’s guidance) which will sound out the seller as to his bottom price but which, at the same time, will engage his interest and not be so low as to annoy him. A good agent is invaluable in this process.

We continually get “offers” from clients who view properties which might have already been reduced in their asking prices by around 30% or even more, with more room for negotiation, which are along the lines of “offer them half of their present asking price”. In fact, these are not really offers, nor have those trying to make this sort of offer really researched the market carefully, nor do we know of any who have succeeded. It is true that “cash is king” today, but real selling prices have not descended 65% from prior asking prices, as some would like to believe, nor will they ever reach these levels. Real selling prices have descended, however, close to levels of 8 to 10 years ago in many areas, less in the very prime areas where properties are not reproducible and where there are very few properties for sale.

In a Nutshell…

Despite recent activity, the essential truth of today’s market is that no property is selling which is not perceived by the buyer as a very good deal. Owners who are successful in selling are pricing their properties very aggressively, with a margin for negotiation. The good news is that there are a surprising number of buyers out there looking for the “special” property at a great price. And sales are being made in all price categories, every single day.

Big Investments are returning to Marbella

Highly illustrative of the renovated image and renewed popularity of Marbella is the tremendous vote of confidence given to the city by the recently announced €400+ million investment in an amazing port complex, to be made by a consortium headed by Sheikh Abdullah ben Nasser Al Thani of Qatar. This new facility will be located in the place of the current fishing port and marina of La Bajadilla, just below the USP clinic and within the Marbella city limits. It will be the most significant tourist facility of its kind built in the Mediterranean Basin in the last 40 years. The architects’ preliminary planning can be seen on the following link:

Construction is said to begin in 2012 and the first phase should be operative within three to four years. This amazing, high tech port will comprise some 858 berths, two berths for cruise ships up to 175 meters in length, leisure, restaurant and shopping areas, a five-star hotel and underground parking for 450 cars. Good competition for Puerto Banús, and a magnificent addition to the splendor of our beautiful city!

In addition, according to press reports, an agreement for a further project to establish an International Business School in Marbella has just been signed between the Mayoress and the company Nest Investments Ltd., headed by Jordanian Ghazi Abu Nahl (Diario Sur 11.10.2011)

Average number of property buyers in 2011

Big money is in good company. Many people are buying homes in Marbella every single day. So far in 2011, there has been an average of 214 property buyers in the Marbella area (including Benahavis) every single month this year, according to the Ministry of Public Works published statistics. (

Why choose Marbella?

I personally chose Marbella not only because it is a great place to live, to raise my children and to exercise my family profession but also because of the phenomenal mix of cultures that co-exist here. There are many alternative residential resort locations around the world, and Marbella is certainly not for everyone. However, the important questions one should reflect upon when considering buying a second or retirement home abroad today are:

  • Does it offer a 12-month season, with a wide variety of year-round cultural, leisure and sporting activities, including a wide range of golf courses within easy reach? Or is it seasonal and totally dependent on its “high-season” climate?
  • Does it provide a high level of public and private services, including hospitals and health care centres?
  • Infrastructures: are there good national and international transport networks? Are electricity, gas, water supplies reliable and sanitation systems efficient?
  • If you have children and are thinking of residing permanently, are there international schools at hand? Does the country have any prestigious universities?
  • Is it safe? Can you walk or drive around at any time of the day or night without fear? Do police support and apply civil government laws and principles which protect nationals and foreigners in the same way?
  • Is there political stability to ensure that civil rights are respected no matter who is in government? Is there respect for human rights, regardless of race, creed, or gender? Does it enjoy the protection of the European Union?
  • Are there other towns and cities of cultural interest within a comfortable driving distance such as we have here in Marbella, for example: Gibraltar, Málaga, Seville, Granada, Córdoba, Puerto de Santa María, Ronda, the Andalusian white villages, and the total culture change of the incredible and beautiful country of Morocco, just a ferry ride away? And snow skiing in the winter, two and a half hours distance?
  • Are there over 40 golf courses within a 45-minute drive?
  • Are there frequent direct flights from other major cities in Europe? Do you have a long journey by secondary roads after you arrive at the airport?
  • What is the social life like? Are there public events, concerts, glamorous gala nights, “buzz” if you feel like it?

Think about it. Marbella offers all the correct answers to the above questions, and offers much more besides. How many places in the world can match the Marbella of today with respect to the above criteria?

The present municipal government is getting increasingly acknowledged as competent and efficient, with excellent local services and infrastructure, new important investment and extreme care given to environmental issues compared with the past. All these factors are clear harbingers of a brilliant future for our city. It is clear that Marbella is no longer the town that it was in the early 70’s, but what city is? Evolution is inevitable and there will be good things accompanied by the not so good. On a balance, however, few would deny that Marbella remains today among the highest quality resort cities in Europe, and looks to remain so for some time to come.