Professionals working closely with the real estate sector on the Costa del Sol got together with Marbella town hall this week to discuss the current climate on the Costa del Sol for property investment.
The event ‘Marbella town planning - present and future’ organised by SUR in English at the Hotel Don Pepe Gran Meliá, discussed how the Costa del Sol, and especially Marbella, is attractive to property investors and how it will develop in the coming years.
The event was attended by Mayor of Marbella Ángeles Muñoz, who spoke to guests, all representatives of the property, real estate and legal sectors, after a welcome by SUR inEnglish editor, Rachel Haynes.
Muñoz stressed the importance of the event, which was streamed live on surinenglish.com. “To have SUR in English for so long and inform [English-speaking residents] is good news. It’s a good opportunity for us to have an event like this to create interest and development,” she said. “Marbella has seen investments, projects and house construction triple since 2019. The Marbella model must be one to visit and invest in.”
Participating experts in the round-table session were Kika Caracuel, Marbella’s councillor for Housing and Town Planning; Nicolás Parada, senior associate at Triay Lawyers; Darío Fernández Palacios, director partner of Prime Invest; and architect Iago Milet, of Milet Oliver Arquitectos.
The panel discussed a wide range of topics, including what kind of profile new buyers currently have, why Marbella should be chosen as a location, the shift from buying a property for tourism to residential use, the security of investing on the Costa del Sol and, most importantly, the new urban masterplan (PGOU), which is in its final stages of approval.
Quality of life in the town was a hotly discussed subject, with Iago Milet, from local architectual firm Milet Oliver, saying that Marbella had gone through an “important transformation” in the 25 years since he moved there, and that it could well be “the California of Europe” so long as they don’t waste the opportunity to make it into a “true paradise”.
“The pandemic has provided us with the chance to make our homes away from our workplace. We can offer foreigners a residence and facilities to attract them, which include a first-class airport and a high-quality cultural offer,” he said.
Marbella town hall’s councillor for Housing and Town Planning, Kika Caracuel, stressed, among other points, that the town is the ideal place to live because of its green spaces and other facilities, which are being worked on in the new urban masterplan.
“We’re the Spanish town with the most green zones per square metre, which fits into our plans to create a ‘garden city’ and is something that new buyers are demanding,” she said.
The councillor pointed out that the Covid-19 pandemic had changed the way some considered Marbella.
“Lockdown was a very tough test for everyone. Among [the pandemic’s] consequences, it highlighted the importance that Marbella has as a place to live all year round - not only as a second home - and the new profile of buyers, who appreciate the mild climate; the good communications, health and education facilities, including multilingual schools, which are important for foreign families,” she said, referring to the increase in professionals from around the world working from the Costa del Sol.
Additionally, Caracuel suggested that Marbella isn’t just about the sun and the beaches, and that it offers a tourism culture for shopping, dining and sports; which all need to be put on display to potential buyers and investors.
“Marbella needs to be the town of tourism, the town of culture, the town of technology, the town of sport. We need to continue advancing with the offer for visitors or future residents,” she said.
Malaga has attracted a lot of companies within the technology sector, kick-starting a digital era in the city’s technology park, and Caracuel explained what role Marbella can play in that development. “We have very important companies coming to Malaga, and that push [by the companies] needs to extend to Marbella. There is a digital future, and the new urban masterplan will take it into account and have new features to make Marbella a town of the future,” she said.
But Marbella’s future isn’t exclusively digital, thanks to world-class sports facilities, aided by consistently good weather.
“We have a very good sporting infrastructure,” said Caracuel. “During the winter, lot of European [football] teams come here to train, it goes without saying how good golf is, and we’re also celebrating a Davis Cup stage in Puente Romano.”
One of the effects the pandemic has had is that there are now a lot more people in search of homes that better suit their needs of working remotely. The developments and the properties that are now being made available are more equipped for those workers, veering away from home that used to be designed purely for pleasure.
Architect Iago Milet believes that the pandemic has brought about an evolution of the home. “Now, [houses] have all the services to be very well connected with the world. We have the concept of the passive house, and sustainability and comfort are well developed in this moment.”
Milet went back to his early days on the Costa del Sol, as he remembered the status of the buildings that were around at the time. “The first time I arrived here in Marbella, all the houses and apartments were not well insulated. I had a very bad impression of the construction. Now it’s like the rest of Europe,” he said.
Darío Fernández pointed out how successful the town has become and how it has gone from being a seaside holiday destination to a location for residential tourists. “[Buyers] aren’t looking for a holiday home, but a permanent one. It’s a great opportunity for Marbella and for developers,” he said.
Fernández, who is director partner of Prime Invest, a real estate consultancy that provides management services to property companies and investors with developments in Spain, also listed several changes that new houses have implemented since the pandemic began. Buyers are, in turn, looking for homes to match their own needs.
“We have been isolated, so people want more space. [Because of remote work ], we have a lot of northern Europeans permanently working here. They need more [square] metres, more living areas and space to work inside and outside the house,” he said.
These changes also have an effect on the prices of the homes themselves. The cost of properties is an important aspect, as years ago the Costa del Sol was known for being cheaper than in other parts of Europe. However, international buyers are now being offered more high-end luxury properties, instead of smaller and cheaper ones.
The cost of building homes has also increased, though that has more to do with the way they are built and the materials being used.
“It’s true that we are using very high quality [material] and that the price of construction has grown in the last year,” said Iago Milet, who estimated the cost increase of being between 20 and 25% compared to last year.
“Now the problem is not only [price], but the material delay. I suppose in the rest of Europe it’s the same. With the pandemic, the transport and the production of raw materials is a problem,” he explained.
For Darío Fernández, the Costa del Sol remains attractive from a financial point of view compared to other similar areas, even if the financial market is still recovering from the brunt of the pandemic.
“It’s true that the price has changed a lot in the last three years. The increase of median average price is very significant. Average [off-plan] houses were 500,000 euros and now they’re 800,000 euros,” he explained.
Additionally, Fernández pointed out that Marbella housing prices have increased so much because of where the market has come from in the last decade. “We came from a very low point. Five or six years ago, we were selling units for under the construction cost, because maybe part of it was done in the previous crisis,” he said.
“What Iago said is true, we are suffering from an increase in the construction cost, that isn’t really fully translated to the price,” Fernández explained, citing that part of that extra cost is being absorbed by developers, who are reducing their margins.
Buying a home is no easy task without professional guidance, as the process is usually not as straightforward as many people would like. Moreover, there are additional hoops a buyer and future resident has to jump through in order to complete their purchase, such as taxes or payments that need to be made, or the different types of visas that can be applied for.
In December 2021, the Andalusian regional government approved the LISTA law, a piece of legislation that will regulate and speed up building permits. Nicolás Parada, a lawyer specialised in real estate law and senior associate at Triay Spain, a leading independent law firm, praised the legislation. He believes that it will attract more people to think about investing in Marbella.
“In the case of off-plan units, in Spain when you purchase a property, the payments are secure, they have to be. That gives a lot of security to the client and to the investor when they make their investment,” he said. “Since the previous financial crisis in 2008, some clients were sceptical about what was going to happen to their money.”
Another important aspect is the delivery date of a client’s house, which has also been reinforced due to the responsible declaration, which allows developers to go ahead with the new building declaration before the notary and start handing properties over to people, which was previously a much longer process. “In the past it wasn’t that easy. They need to obtain the licence of occupancy and it took more time than expected because it was up to the town hall,” Parada explained.
“Another good thing is that clients have guarantees by law. When we guide them through [those] guarantees, they feel more secure. It’s a matter of giving the right information to the client. Since 2020, responsible declaration is making the sales go through a lot faster,” he added.
The United Kingdom’s exit from the European Union also put forward a problem that hadn’t previously existed, and that is that a lot of British citizens purchase homes abroad but now require different documentation to reside in Spain as they can no longer remain in the country for more than three months.
“One of the things that I found since Brexit is that Brits ask what to do about the 90-day rule,” said Parada. “There are different types of residencies that allow you to live here. One of them the golden visa, and [there are] other mechanisms to reside here. This is very important for everyone to know, because sometimes they decide not to purchase a property as they think they can only be here 90 days,” he said.
Parada mentioned a new visa due to become available later this year, the digital nomad visa, which makes it easier for foreign workers to work remotely from Spain.
“Spain wants to attract talent. That means that if you work for a foreign company and you want to come here to live, you can do that. You become a tax resident once you live here for more than six months,” Parada explained. “This gives a big chance for CEOs and directors of entities to make their [temporary] residential place a permanent place.”
On the subject of taxes and interest rates, Nicolás Parada also has insight into what people should expect to pay when they purchase a home in Spain or if they plan to permanently move here, though some regulations can be found in other countries too, with company CEOs paying their share in their home nations.
“Those that are thinking of coming and living here in Spain, especially when they have a good salary, have something called the Beckham law, that not many people are aware [of],” he said. “You’re only going to pay, in income tax, 24%. Obviously, there are some formalities you need to comply with, but you can be tax-efficient and not necessarily pay a huge tax bill.”
Nicolás Parada reinforced the idea that in financial terms, it’s a very good time to invest in Marbella property.
“I think that capital appreciation and rental yield are looking very good at the moment. Renting is expensive, so if you can purchase a property, the mortgage interests are really low, for non- residents and residents,” he said.
“Unfortunately, for young people who live in this area, the square metre is very expensive. So they can’t buy a property for cheap. If you’re under 35, you pay 3.5% on transfer tax as long as you buy somewhere for under 135,000 euros,” he said, in reference to rental yield.