costa del sol - savills · estepona (29%), marbella (20%) y mijas costa (17%) 29% 20% 17% 2019 was...

REPORT

Savills Research

Spain Research – December 2019

Costa del Sol Residential 2019

José Félix Pérez-PeñaAndalucía Director +34 952 06 27 [email protected]

4-5Costa del SolOne of Spain's most active residential markets

8-9Newly built multi-family housingWe take an in-depth look into the predominant type of housing on the Costa del Sol

10-11Newly built single-family housingFocus on single-family housing

12-13Costa del Sol outlookWhat we should expect from the residential market in 2020

15ContactYour residential and analysis team in Andalusia

Contents

Costa del Sol, one of Spain's most solid markets

The Costa del Sol is one of Spain's most representative tourist enclaves. From the

sun and the beach to the gastronomy, golf, culture, leisure and business, all have a place in this enclave in the south of the country.

After the economic crisis, the Costa del Sol has re-emerged as the most important residential enclave in Andalusia. In recent years, coastal municipalities have experienced different rates of growth at different speeds. The most noteworthy of them in terms of growth have been Estepona, Marbella, Mijas and Torremolinos. It is in these municipalities where a greater transformation can be felt in terms of their residential markets.

Estepona has been a model of change, as both the public administration and the private sector have worked together to develop a large and extensive residential offer in the municipality.

Traditionally second-hand homes have been the main drivers of the residential market on the coast, although in recent years new housing projects have returned with a vengeance, with around 10,860 homes (multi-family and single-family) sold in 2019.

Projections for the coming years indicate a trend towards stabilisation in terms of the inclusion of

supply and demand for new housing, leading to a slowdown in price growth in practically all the municipalities.

The luxury or super-luxury sub-market, on the other hand, continues to expand on the coast. However, its growth is contained within the most exclusive developments such as Finca Cortesin or La Zagaleta. The trend towards prime multi-family housing is clear, partially abandoning multi-family housing in order to respond to this type of growing demand.

2savills-aguirrenewman.com/research 3 savills-aguirrenewman.com/research

Foreword

The Costa del Sol includes the main municipalities of the province of Malaga and part of the east coast of Cadiz (Sotogrande and La Alcaidesa).

Without a doubt, the sun and the beach continue to be the essential elements of Costa del Sol tourism, to which we must add other attractions like culture, conventions, health and wellness, golf, sailing and leisure, among others. The confluence of all these elements has made this area a perfect destination to live, work and enjoy every month of the year.

The Costa del Sol has a population of more than half a million inhabitants (529,496, INE 2018) with an extensive network of infrastructures, like the AP7 and A7 motorways, the N340 highway, the medium-distance

rail system, and the urban and inter-urban bus network.

All this is combined with a wide national and international education offer, two international airports (Gibraltar and Malaga-Costa del Sol) with a large volume of passengers - more than 68,000 and nearly 20 million, respectively - which provides an extra attraction to the varied hotel and golf offer in the area.

ResidentialThe difficulties experienced by the Costa del Sol and the country as a whole following the worldwide financial crisis are now a thing of the past. The real estate market in the main municipalities on the coast and in the provincial capital has performed excellently in recent years, especially in the residential segment, positioning

itself among the most dynamic in the country.

The number of transactions has maintained the upward trend that began in 2011 for the whole of the Costa del Sol, while in the rest of the country the upturn took place in 2013, mainly due to the strength of tourism, international demand, the climate, and its ability to position itself as a residential destination in new markets.

The latest available data show that in 2018 it closed with 19,382 transactions, 6.65% below the market peak (recorded in 2007, 20,762 transactions) and 96% above the 2011 minimum (9,889 transactions), according to the Spanish Ministry of Development.

It should be borne in mind, however, that, as is the case at

Dynamism, new players, increased residential transactions and new buyers

José Luis BravoResidential Coordinator, Andalucía

The Costa del Sol market continues to be as attractive as it was years ago, both for the foreign and national profiles, with a varied and high-quality offer distributed throughout all its municipalities.

The number of transactions has increased in recent years thanks to the arrival of new buyers, mainly from France, Belgium, Switzerland and Norway, who have progressively taken up the slack of the English market, which has been weakened recently by the uncertainty of Brexit, although it remains loyal to the Costa del Sol and is still the main foreign buyer.

On the supply side, new construction has grown considerably, with more than 200 developments under way in 2019.

The rapid growth in the number of homes on offer, together with the strong increase in prices and political instability, both nationally and in the main European economies, could be the key factors in the moderation in the number of visits, as well as a more stable rate of sales detected since the second half of 2019, although in general the coast continues to progress at a good pace.

The Costa del Sol continues to be a residential benchmark nationally and internationally

Costa del Sol

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Source Savills Aguirre Newman Research

Transactions Newly built housing recovers weight in the number of transactions

Initial supply The initial supply of new housing grows since 2006

the national level, there is a major difference between the newly built market and the second-hand market. While in 2008 new housing accounted for almost 52% of total transactions, the figure fell rapidly to just 12% by 2018.

The absence of new developments forced demand to turn to the second-hand product, which since 2008 grew steadily, although the start of new developments in recent years is reviving sales of newly built supply.

New ConstructionThe current asymmetry in the residential growth of the different municipalities on the Costa del Sol is a clear reflection of the different local strategies and the appeal of each town, its economic, tourist and political situation.

Thus, while Marbella continues to have problems due to its PGOU (General Urban Development Plan), Estepona has taken advantage of this situation by improving the process of granting licences and other urban development procedures, which has favoured new construction in the municipality.

The supply of new residential construction has begun to grow in 2019, after 12 years of continuous adjustment. As reflected in the historical series, multi-family housing has the greatest weight compared to single-family housing, with the latter being concentrated in municipalities such as Marbella or Sotogrande.

SOTOGRANDEALCAIDESA

TORREMOLINOS

BENALMÁDENA

FUENGIROLAMIJAS COSTA

MARBELLAESTEPONACASARES

MANILVA

Residential market zoning Municipalities analyzed


Costa del Sol Costa del Sol

LIVEWORKENJOYCOSTA DEL SOL

The municipalities with the highest initial supply were Estepona (29%), Marbella (20%) y Mijas Costa (17%)

29% 20% 17%

2019 was marked by the consolidation of the newly built residential market. The residential market has not stopped growing over the last few years, driven not only by large domestic and international developers and funds, but also by the return of the local developer.

The reactivation of the development activity, specifically of residential products, has brought with it an increase in construction costs. This situation, in which developers and builders are involved, has generated fierce competition in the prices of tenders and work contracts, leading in some cases to the paralysis of projects due to a lack of qualified labour or the flight of workers to other sites.

SupplyMulti-family housing continues to attract attention in the main municipalities of the Costa del Sol.

In the last 12 months, the initial supply (the sum of all the newly developed properties on sale, regardless of whether they have been sold or not) was concentrated in Estepona, Marbella and Mijas Costa (29%, 20% and 17% respectively). These areas also had the highest number of new developments on offer in comparison to the previous year.

La Alcaidesa, where only one project has been detected, is worth mentioning, as is Fuengirola, where a single project commercialised in phases concentrates 60% of the initial supply of this municipality.

PricesThe average price on the Costa del Sol was €374,560, with an average value of €2,494 per sq m for newly built multi-family homes (for an average housing of 150 sq m).

The highest average prices were in Alcaidesa (€4,515 per sq m), Fuengirola (€3,128 per sq m) and Marbella (€3,079 per sq m). This situation ref lects the peculiarities of the residential offer in the municipalities of Alcaidesa and Fuengirola. Leaving these specific situations aside, Marbella would be followed by Mijas Costa (€2,438 per sq m) and Torremolinos (€2,413 per sq m).

At the other end of the spectrum, the municipalities with the lowest average

Multi-family housingConcentration of supply, price growth, emergence of new product types and growth in construction costs

Distribution of average prices Average new multi-family housing prices

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Turn Key 2020 2021 2022Source Savills Aguirre Newman Research

Distribution of the initial supply Estepona led the offer of the Costa del Sol

Delivery of housing units 2020 is the year with the most deliveries

values of impact were Benalmádena (€2,055 per sq m), Sotogrande (€2,061 per sq m) and Manilva (€2,176 per sq m).

Delivery of Housing UnitsMost of the new multi-family housing being marketed in the municipalities of the Costa del Sol is expected to be delivered in 2020, accounting for 46% of the total supply.

At the end of 2019 there were 2,500 turnkey homes on the market (28% of the total).

Demand Side According to in-house estimates, foreigners represent about 80% of home buyers compared to 20% Spanish nationals (the percentage may vary depending on the municipality).

Brexit has caused a decline in British buyers, although they continue to be the largest group of foreign buyers on the Costa del Sol. Scandinavian buyers did not lag too far behind, and Belgians, French and Germans were also very active during 2019.

TrendsThe current trends in multi-family housing involve open plan spaces with spacious, divider-less rooms and large terraces to enjoy the views and the good climate all year round.

Kitchens are the focus of attention for both domestic and foreign buyers, who seek open spaces with minimalist designs, light tones and central islands.

In terms of exterior construction, there is a clear preference for the use of clear materials, modern and simple aesthetic lines. Common areas tend to be larger and include swimming pools, garden areas, and in many cases gyms or running tracks.

In addition, home automation and security are becoming more and more common aspects and are becoming complementary elements that are perfectly integrated into homes.

TORREMOLINOS€2,413 per sq m€299,811

BENALMÁDENA€2,055 per sq m€269,019

FUENGIROLA€3,128 per sq m€441,754

MIJAS COSTA€2,438 per sq m€320,388

MARBELLA€3,079 per sq m€540,790

ESTEPONA€2,293 per sq m€350,260

CASARES€2,322 per sq m€378,728

MANILVA€2,176 per sq m€231,478

SOTOGRANDE€2,061 per sq m€392,744

ALCAIDESA€4,515 per sq m€505,688 0

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2014 2015 2016 2017 2018 2019Source Savills Aguirre Newman Research | Luxury homes were excluded from the sample in 2018 | All product on sale being

on the market for more than five years was removed from the analysis in 2019

Evolution of the average price New multi-family housing


Newly built multi-family housing Newly built multi-family housing

In 2019, single-family homes concentrated almost all of the activity in the prime or luxury segment, as is usually the case. The market continues to be very active in the municipalities of Marbella, Estepona and Casares.

However, during this last period we have detected developments in municipalities that are very oriented towards multi-family housing (as is the case in Torremolinos).

Supply1,468 single-family homes are currently being marketed on the Costa del Sol.

The initial supply was concentrated in Marbella, Mijas Costa and Estepona (26%, 23% and 16% respectively), municipalities where the supply included the largest number of residential

developments. Sotogrande, where new projects involving this type of housing were detected as early as 2018, is very close to the values of Estepona (15%).

PricesThe average price on the Costa del Sol was €1,011,904, with an average impact value of €3,008 per sq m (for an average housing of 336 sq m).

The highest average prices were in Casares (€7,005 per sq m), Estepona (€3,683 per sq m)

and Marbella (€3,087 per sq m).The municipalities with the lowest levels were Manilva (€1,260 per sq m), Fuengirola (€1,712 per sq m) and Sotogrande (€2,245 per sq m).

Delivery of Housing UnitsAt the end of 2019 there were 619 turnkey single-family homes on the market, accounting for 28% of the total.

It should be noted that, due to the high degree of exclusivity of this type of housing and the possibility of customisation by the

The latest single-family housing developments are mainly concentrated in the luxury segment, and in some cases include a wide variety of services

Single-family housingExtension to new municipalities, price growth, focus on prime housing

Distribution of average prices Average new single-family housing prices

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Turn Key 2020 2021Source Savills Aguirre Newman Research

Distribution of the initial supply Marbella led the offer of the Costa del Sol

Delivery of housing units The turnkey dominates the market

buyer, construction often begins at the time of booking, without the need to achieve a minimum of sales of the residential complex as a whole. This situation affects the time of delivery of the work, being unevenly distributed over the marketing period.

TrendsAs in multi-family housing, the current trend in single-family housing is towards open, minimalist spaces, clear lines and spaces integrated with the terrace areas.

As far as common areas are concerned, single-family housing developments do not usually have shared spaces, although luxury residential complexes may have a wide range of services more typical of a luxury hotel.

55% of the offer of single-family housing are independent villas

55% The municipalities with the highest initial supply were Marbella (26%), Mijas Costa (23%) y Estepona (16%)

26% 23% 16%

TORREMOLINOS€2,361 per sq m€613,750

BENALMÁDENA€2,392 per sq m€992,736

FUENGIROLA€1,712 per sq m€397,451

MIJAS COSTA€2,336 per sq m€592,463

MARBELLA€3,087 per sq m €1,361,223

ESTEPONA€3,683 per sq m€941,415

CASARES€7,005 per sq m€3,336,183

MANILVA€1,260 per sq m€382,467

SOTOGRANDE€2,245 per sq m€537,134

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2014 2015 2016 2017 2018 2019Source Savills Aguirre Newman Research | Luxury homes were excluded from the sample in 2018 | All product on sale being

on the market for more than five years was removed from the analysis in 2019

Evolution of the average price New single-family housing


Newly built single-family housing Newly built single-family housing

The Costa del Sol's residential market continues to be one of the area's main economic drivers.

Over the last year, land sales for housing construction have not slowed down. This is evidenced by the entry of new players, mainly international, and the return of the local developer. Although it is true that there is a high concentration among the top developers, as the top 19 market more than 5,600 homes and account for more than 51% of the total initial supply on the coast.

Prices are expected to grow moderately (3%-5%) in 2020.

A certain stability is also expected with regard to the addition of new projects, in line with the moderation in demand, both for main and second homes.

The market is expecting the emergence of new residential models such as coliving and the increase of short term rental housing with the attending decline in long term rental housing, as is already happening in the city of Malaga.

The yield performance of the short term rental market still raises doubts due to the absence of regulations governing this market.

The arrival of new residential product models has been detected, such as senior living,

aimed at non-dependent elderly people who have welfare and leisure services in the complex. Eco-friendly residences have also been identified, which focus on the quality of life, health and well-being of their residents, and which also aim to respect the environment. Finally, some developers have already shown their interest in naturist or LGTBI-centred developments.

The Costa del Sol is positioned as a multicultural, multilingual place open to the world, where the residential market must satisfy the needs of a wide variety of owners and tenants who increasingly want to enjoy this area of Spain for longer, breaking the seasonal trend.

The luxury segment deserves a special mention, as it is one of the fastest growing sectors worldwide. On the Costa del Sol, this segment has always been concentrated mainly in the municipality of Marbella and Casares. Over the last year we saw its expansion to other parts of the coast, such as Estepona or Fuengirola.

However, super-luxury assets are still confined to the six most exclusive developments on the coast, some of which are considered to be the most exclusive in Europe.

Moreover, the market is constantly evolving. Although mainly focused on single-family housing, in recent years there has been a shift towards luxury and super-luxury multi-family housing. The product is large in size and meets high quality standards, accompanied by a wide range of services for the owners, approaching the concept of branded residences.

Costa del Sol outlookWhat we should expect from the Costa del Sol in 2020

The average price of new construction is expected to grow by 3-5% by 2020

Developers 2018-2019

MARBELLA

ESTEPONACASARES

BENHAVIS

SOTOGRANDE

MÁLAGATORREMOLINOS

MIJASBENALMÁDENA

FUENGIROLA

Babel Capital



Costa del Sol outlook Costa del Sol outlook

Pelayo BarrosoResearch+34 91 319 13 [email protected]

Arturo DíazExecutive Director+34 91 319 13 [email protected]

Research

Residential

Savills plc.Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.This bulletin is for general informative purposes only. Savills accepts no liability whatsover for any direct or consequential loss arising from its use. It is strictly copyright and reproduction of the whole or part of it in any form is prohibited without permission from Savills Research. © Savills Commercial Ltd

Savills Aguirre Newman AndalucíaWe carry out a rigorous and objective analysis of the real estate market in order to be able to provide our clients with information on the real situation in each of the sectors, thus helping them to make the most appropriate decisions at each moment.

Jonathan PinoResearch | Andalucía+34 952 06 27 [email protected]

José Luis BravoResidential Coordinator | Andalucía+34 952 06 27 [email protected]

Gema de la FuenteResearch+34 91 319 13 [email protected]

Pablo MéndezExecutive Director+34 91 319 13 [email protected]

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costa del sol - savills · estepona (29%), marbella (20%) y mijas costa (17%) 29% 20% 17% 2019 was...

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