Analysis: Real estate prices on the Spanish Costa del Sol in 2022

Estimated reading time: 10 minutes

Analysis: Real estate prices on the Spanish Costa del Sol in 2022. A look at the real estate market on the Costa del Sol shows a very different story than in 2020, the latest real estate statistics reveal…

This is according to statistics from Idealista and Tinsa.

2 years ago, Spain was just coming out of a 7-week total lockdown, and the real estate sector had ground to a halt. But now the scenario is complete different.

2021: The beginning of recovery

Looking back on this year, property sales in both Málaga and the rest Costa del Sol were good in the first quarter of the year. Prices also rose in the area.

In this article – Analysis: Property Prices on the Spanish Costa del Sol in 2021 – we take a detailed look at the numbers in and analyze what they might predict for the near future.

The numbers and the lifting of travel restrictions to Spain lead analysts to predict that “a quick recovery” is on the horizon.

Home sales go up

The first three months of the year saw a busy quarter registered on the Costa del Sol (Q1 2021). According to the report of the Association of Registrars (Colegio de Registradores) for the first quarter, 7,208 properties changed hands in the area between January and March.

This is an increase of 14.4 percent over the previous quarter. There was particularly strong activity in the resale sector. The number of transactions rose by 18.3 percent.

The annual figures are not so positive. Between April 2020 and March 2021, sales fell 18.1 percent, although the decline was not as large as some analysts had expected given national and international travel restrictions.

New build exception Costa del Sol

There was much better news for new build homes, as sales went up with 26.2 percent that year.

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Many properties sold

The Costa del Sol has one of the busiest sales activities in Spain, with some of the best national sales records in the first quarter of this year. In terms of total sales, 23,518 property transactions took place, the fifth highest number in Spain.

Sales of new homes reached 6,319 in the first quarter, the third highest number in Spain (after Madrid and Barcelona). The figure represents a one-year increase of 26.2 percent.

Sales figures are beginning to show growth in demand.

The numbers point to an exceptionally fast recovery of the property markets of both Malaga city and Costa del Sol once the health situation returns to normal.

Costa del Sol property prices are rising

Spain does not publish official sales price statistics – most of the available statistics are based on valuations or asking prices on online portals.

However, a look at some of the country’s valuation sources provides a useful overview of the situation. It also shows that the general trend for prices on the Costa del Sol is rising.

Analysis: Prices real estate Spanish Costa del Sol in 2021

• Association of Registrars (based on indicated prices in property deeds): The average price reached €2,010 per square meter in Q1, which translates into an increase of 0.9 percent over Q4 2020 and 3.9 percent in the year.
• Tinsa (based on tax assessments): Prices rose 0.3 percent in the year to an average of €1,688 per square foot.
• Gesvalt (based on tax assessments): Property on the Costa del Sol rose by 3.6 percent in the quarter, the highest increase in Spain, to €2,019 per square meter. The increase was the fifth highest average price in the country, placing the costa even ahead of the province of Barcelona.
• Sociedad de Tasación (based on tax assessments): The Costa del Sol experienced a price increase of almost 2 percent, the highest on Spain’s Mediterranean coast. The average price per square meter was 1,755 euros.
• Fotocasa (based on asking prices): The real estate portal reported that property prices in Spain generally reversed their downward trend in November and have increased every month since. In the first quarter, prices on the Costa del Sol rose 1.4 percent.

Málaga city sees biggest price increase

The city of Málaga appears to have taken the lead in property price increases on the Costa del Sol this year, a position usually held by Marbella and Estepona. According to the Registrars Association, the city saw a year-on-year price increase of 13.6 percent in Q1 with an average square meter of €2,190.

Tinsa reported that house prices in Malaga rose the most in Andalusia, by 5.1 percent in the first quarter.

Prices also rose outside the capital. According to numbers based on asking prices published by Idealista, the Costa del Sol saw an increase of 3.9 percent in the year to April. This figure was significantly higher in several areas:

Benahavis, Estepona, Marbella & Sotogrande

• Benahavís: prices rose 11.6 percent to 3,404 euros per square meter.
• Estepona: the increase was 6.3 percent to €2,348 per square meter.
• Marbella: prices rose more moderately (4.1 percent) to €3,156 per square meter.
• Sotogrande: property rose 4.3 percent to €2,384 per square meter.

What it means? After months of a downward trend, prices on the Costa del Sol have returned to an upward trend.

The Costa del Sol’s excellent climate, location and quality of life make it compatible with the increase in teleworking for Spanish buyers looking for gardens and terraces. And for the foreign investor as a second home destination.

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New build homes in Sotogrande and Estepona

New construction sales increased their share of the market in Q1. According to the Registrars Association’s quarterly report, they represented 27 percent of the market in Q1, significantly higher than the 15 percent and 10 percent in the previous two years.

The city of Malaga and the Costa del Sol currently have a vibrant new construction market. Statistics from Tinsa show that by 2020 the area will have issued 6.2 permits per 1,000 existing properties, almost double the national average (3.3).

Some 5,640 new construction projects are to be completed this year in a total of 264 projects along the Costa del Sol. Malaga and Estepona will take the lion’s share with 1,174 and 1,089 new homes respectively. Mijas will see the third highest number of completions with an expected total of 835.

The Costa del Sol has one of Spain’s largest markets for new construction, a situation that looks set to remain stable in the near future.

Lots of foreign demand for real estate

The Costa del Sol attracts many foreign buyers and non-Spanish buyers typically represent about 30 percent of the market. The British account for the majority, followed by French, German and Dutch buyers.

The first quarter of 2021 saw severe travel restrictions. Spain closed its borders to British nationals from late December to late May, and many other European countries advised against foreign travel. These restrictions meant that property purchases on the Costa del Sol by foreigners were lower than usual.

However, the percentage (25.6 percent) was only 1.68 percent lower in the year. And the Costa del Sol recorded the third highest percentage of foreign buyers in Spain, after the Costa Blanca and Tenerife.

Despite Brexit and travel restrictions, foreigners (investors and second home buyers) can’t get enough of real estate on the Costa del Sol.

The purchase of a second home or vacation rental continues to be a key motivator for prime property buyers. In a boost to the industry, the increase in telecommuting means that owners will spend more time in their second homes.

What’s in store for the rest of 2022?

As the statistics in our – Analysis: Property Prices on the Spanish Costa del Sol in 2021 – show, the real estate market on the Costa del Sol has started 2021 on an excellent footing. Although sales and the number of foreign buyers have fallen, the recovery remains very strong.

New construction sector strongest

This is especially true for the new construction sector, currently the main driver of the market. New construction homes have risen sharply in popularity among second home buyers over the past 24 months, mainly because they offer more interior and exterior space than older homes. More space in the home has become a priority for buyers around the world.

Prices also appear to be on an upward trend again. However, there is a small caveat – some analysts believe that resale property prices will continue to fluctuate downward rather than upward for the rest of the year. Much will depend on the seller’s need to sell, and Idealista’s April numbers (based on sellers’ asking prices) certainly show that resale prices will not fall for the time being.

Which will never change…

However, one factor about the Costa del Sol is a given, despite any (seasonal) travel restrictions – the area enjoys one of the best climates in the world and has an infrastructure and amenities to match. We therefore expect property purchases in resorts such as Sotogrande and Estepona to rise steadily in the coming months due to pent-up demand.

As Tinsa said in May 2021, “The figures indicate that both the real estate markets of the city of Malaga and those of the Costa del Sol are experiencing a rapid recovery.”

Thanks for reading Analysis: Real estate prices on the Spanish Costa del Sol in 2021 & 2022

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