The commercial property rental market has plummeted in Malaga and on the Costa del Sol as a direct result of the Covid pandemic and with prices falling to 2015 levels.
Real estate experts claim that there is a general decrease in rents of between 15 and 20 per cent, although in some ‘more touristy’ streets such as in the historic Malaga city centre it is more pronounced. In the city’s main shopping street, Calle Larios, a maximum rent of 300 euros per square metre is now the order while, before the crisis, up to 360 euros was being paid. And even with the rent reductions there are several empty premises waiting for a new tenant.
The director of the consulting firm Savills Aguirre Newman in Malaga, José Félix Pérez-Peña, confesses that the situation is “delicate”, as companies have been forced to close because of the drop in revenue. He said that the biggest falls in rent have been in the city centre because of the loss of tourists and Malaga people have preferred to stay in their neighbourhoods and make use of local businesses.
Pérez-Peña said that most rental contracts are being revised downwards to try and dissuade businesses from leaving. And, in some cases, landlords have dropped their rents by as much as 50 per cent he claimed.
He also explained that Covid clauses are being included in some of these new contracts to determine what would happen to rents in the event of new coronavirus restrictions or the temporary closure of business activity being enforced.
The head of the Eurobienes consultancy, David Guerrero, agrees. He explains that prices have fallen principally around Calle Larios, which was also the street where prices had risen the most during the last five years.
Guerrero also adds that the price of business transfers has also fallen dramatically, especially in the hospitality sector, which has been particularly badly hit by successive opening hours and capacity restrictions.
Faced with this situation, he says that the landlords are being understanding and prefer to lower the rental price before risking that the tenants leave.
However he does acknowledge that brands are once again testing the market looking for opportunities.
“The mood is recovering; the vaccine news, good weather and the approach of summer will help the sector," he believes.