An increased number of foreign buyers is set to boost the residential property market in the Costa del Sol in Spain, one of the country’s most popular areas with overseas purchasers.
A new market forecast report from Instituto de Practica Empresarial (IPE) business school, in collaboration with property company Mar Real Estate, suggests the market could grow by 10% in the area.
It also says that the market is set to grow by between 5% and 7% in major cities such as Madrid and Barcelona and 3% in other cities.
The IPE says that home prices on the Costa del Sol are already up 10% this year, and now represent 5% of all sales nationwide and if sales continue growing at their present trend, the property market in Málaga province will increase to 20% of the overall Spanish market.
The growth is buoyed by foreign demand for holiday homes on the Costa del Sol and the IPE report suggests that surging sales will help reduce the glut of new homes on the coast. Indeed, the excess inventory of new homes is expected to fall by 50% this year.
Luxury home sales, in particular, are coming back strongly on the Costa del Sol, according to the IPE report, driven by a better exchange rate in Pounds and Dollars, and the security and stability of Spain.
Meanwhile, the latest report from property valuation firm Tinsa says that the Spanish property market is undergoing a widespread recovery. Average property prices fell by 2% year on year in July, the lowest rate of decline since May 2008 but this masks growth areas along the Mediterranean coast in particular with some areas seeing price growth of 2.8% year on year.
The data shows that on the Mediterranean coast, where prices have fallen by an average of 47.6% since the economic downturn, the average price of a home has increased by 3.8% since the end of 2014. This is more than large cities and the Balearic and Canary Islands where average prices have risen by 0.2% and 0.9%, respectively.
Tinsa data also shows that five of the top 10 most expensive property hotspots are located in the Balearic Islands but Alejandra Vanoli, managing director of Mallorca Sotheby’s International Realty, said that there are prices per square metre in these locations that far exceed Tinsa’s estimations.
‘It’s not unheard of to reach as high as €30,000 per square metre for the most desirable Port Andratx home. Demand is strong from some of the wealthiest individuals and families in Europe, the US and beyond,’ she explained.
Tinsa figures also suggest that the Balearics weathered the storm of the Spanish property market price ‘correction’ more positively than the rest of the country. While the average drop in prices across the whole country stands at 42%, in the Balearic Islands most regions registered less than a 35% decline.
Palma was also highlighted by Tinsa as property transactions increased by more than 50% in 2014, higher even than the mass volume markets of Torremolinos and Benalmadena. Indeed, luxury bricks and mortar is seen as one of the main drivers behind the strength of the Balearic property market. Tinsa director Jose Antonio Lopez states that the luxury coastal market is one of the areas where the turnaround is most clearly seen, owing to the differing dynamics at the top of the market.