Real Estate Prices falling everywhere, but not in Malaga

When I arrived in Malaga in 2014 the real estate market was unrecognisable compared to what we see in 2023. To say the market has boomed would be an understatement.  

What is now surprising is that while the rest of the world is seeing falling property prices, Malaga and the Costa del Sol remains steady and continues to be a favourable destination in 2023, receiving investment and high demand for properties. 

What is happening in the rest of the world?

With the recent rises in interest rates, global housing markets are experiencing widespread declines as the central banks try to control inflation, leading to a significant rise in mortgage rates. As a result, demand for properties have fallen, and so have prices.

What is happening in Malaga and the Costa del Sol?

The real estate market in Malaga and the Costa del Sol has experienced an increase in housing prices in 2023. In the first quarter of 2023, the average price per square meter in Malaga was €2,333, representing a 6.8% increase compared to the previous year according to the Registrars Association. Because of demand and the increase in material costs, the prices of new homes in Malaga have significantly risen, with a 14.51% increase over the year.

High demand, less inventory

While we can see a decrease in the number of transactions in 2023, prices are expected to rise below the inflation rate, making the market more affordable [2]. 

We are continuing to see a lots of foreign buyers, currently accounting for 32.62% of total sales [1]. 

Both nationally and internatuonally prices are remaining steady, and they are not expected to fall due to the continuing high demand.

But why? 

Limited supply and challenges in obtaining planning permission are contributing to the price stability and long-term value of properties in the area [3]

On top of the wide range of property options and a favorable investment climate, there are also the following factors:

1. A resilient economic recovery

The province of Malaga has shown impressive economic recovery since the pandemic. 

In 2022, the Gross Domestic Product (GDP) of Malaga grew by 7.7%, surpassing the 5.8% growth in 2021 [1]. 

This growth trend is expected to continue, with a projected GDP increase of 2.2% in 2023 [1]. 

Malaga maintains its position as the most dynamic economy in Andalusia, surpassing other major cities like Seville [1].

 These positive economic indicators provide a strong foundation for a thriving real estate sector.

2. Record-breaking company formations

Malaga has experienced a surge in the creation of new companies, resulting in a historic high number of firms affiliated with the Social Security system [1]. 

The province currently boasts over 57,600 companies, with the services sector accounting for nearly 80% of the productive fabric [1]. 

This entrepreneurial activity contributes to job creation and reinforces the economic stability of the region. 

Additionally, the unemployment rate in Malaga is at its lowest since 2008, with 130,088 registered unemployed individuals [1]. 

A robust job market and a favorable business environment make Malaga all the more appealing for property investment.

3. Rising export growth 

Malaga has also witnessed significant growth in exports, with the year 2022 reaching a record high of 2.88 billion euros [1]. 

In the first four months of 2023, export rates have continued to increase by 17.5% [1]. Over a thousand companies in Malaga engage in regular exporting, showcasing the region’s integration into international markets [1]. 

The ability to expand business beyond national borders enhances economic stability and attracts foreign investment, positively impacting the real estate sector. 

Even companies like Lamborghini have started investing in property recently!

4. Tourism recovery 

The tourism sector plays a crucial role in the economy of the Costa del Sol. 

Despite the challenges posed by the pandemic, tourism is booming.

 Hotels in the province have witnessed visitor numbers and overnight stays surpassing pre-pandemic levels [1]. 

In the first five months of 2023, 2.24 million tourists visited the area, with 7.1 million overnight stays recorded [1]. 

The revitalization of tourism, particularly driven by international visitors, reinforces the appeal of the Costa del Sol as an investment destination.

Conclusion

With a strong rebound in the economy, record-breaking numbers in various sectors, and a favorable investment environment, Malaga and the Costa del Sol continue to be an attractive destination for property buyers. 

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