Why Buy in Malaga in 2023

I and many others living in Malaga 10 years ago never predicted the unprecedented rise of the real estate market along the Costa del Sol and Malaga region. We are now witnessing one of the fastest-growing real estate markets in Spain, and the world.

And while property prices have been falling globally in the last 12 months, prices on the Costa del Sol have remained strong.

As per a report by real estate consultant Gesvalt, Malaga leads the Spain’s market with a 12.4% annual increase in property prices, with rental prices experiencing a similar surge of almost 18%. 

The Demand

Spain, like many other countries, is still feeling the economic impact of the pandemic. But despite the year of economic uncertainty, high inflation, and rising interest rates that is being felt around the world, the demand continues for properties in picturesque locations along the Costa del Sol. 

The region of Malaga, known for its stunning coastal beauty and appeal to second home buyers, has recorded an annual property price increase that outpaces that of other prime markets such as Alicante (11.4%), Las Palmas (8.4%), Madrid (4.8%), the Balearic Islands (7.2%), and Barcelona (2.4%).

Despite a slight slackening in demand compared to 2022, the heavy number of buyers still means that worthy properties get snapped up quickly once on the market, while properties sitting on the market for longer periods inevitably get purchased as well, often for close to asking price. 

Who is buying

In 2022, we had a mixture of Spanish and foreign buyers. Now, in 2023, investors and foreign buyers make up a larger percentage of those purchasing. 

As for local Spanish buyers, according to Gesvalt, the effort required by national residents to buy a property has increased almost three percentage points from the previous quarter, standing at 36.1%, and this surpasses the recommended 35% threshold for maintaining “healthy” personal finances. Rises in interest rates has further deterred these buyers.

However, this is not the case for investors and foreign buyers, as the rise in property prices in Malaga and Costa del Sol signifies an opportunity. The property value in these areas is projected to continue increasing, providing capital appreciation and the potential for high annual rental returns.

The Rental Market Boom

The rental market in Malaga has been on a continuous upward trend for some time now, with prices skyrocketing by 17.9% in just the past twelve months. This increase is one of the highest in Spain, trailing only the Balearic Islands (22.4%), Santa Cruz de Tenerife (20.3%), and Girona (20.1%). 

As tourism continues to grow on the Costa del Sol, so do the opportunities of short-term rentals, with many buyers seeing this as a secure method of investment with high yearly returns.

Malaga’s Most Expensive Localities

Within the province, Marbella holds the title of the priciest locality. Here, the cost per square meter for purchase is €3,272, and rental properties go for an average of €18 per month. The price per square meter in Malaga city center has also risen considerably, and is now rivalling Marbella’s title as most pricy locality. In both areas, the cost per square meter can go upward of 12,000, prices seen in cities like Miami, Berlin, and Beijing.

Where to invest

Other areas along the Costa del Sol present prices that are a lot more accessible compared to Marbella and Malaga city center. For example, in Benalmadena, Estepona, Fuengirola, Mijas, and Torremolinos, the average price per square meter is still only between €2,100 and €2,300 for purchase, and between €12 and €14 for rentals. 

Many buyers, including the majority of my clients, are tending to focus on these areas, which also offer the largest potential for capital appreciation. While some are looking for pure investment opportunities, others combine this investment with the luxury of enjoying a second home, a vacation property. 

For these buyers, the Costa del Sol and Malaga is a compelling and attractive place to be.

References:

– https://www.laopiniondemalaga.es/malaga/2023/07/11/precio-vivienda-venta-encarece-malaga-alquiler-89711061.html

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