What is the current situation in the Mediterranean real estate markets, what is the right type of property to invest in, what is the real return on such a purchase and what criteria should be used to choose a second home? In the second part of our series, we will focus on Spain, which, along with Italy and Croatia, is the preferred destination for Central European clients.
The series are delivered by Lucie Pilipová Gaffi, Managing Partner, Mediterranea Real Estate Investments.
According to recent analyses by brokers and international firms, it is a good time to invest in property in Spain. Figures from the first quarter of this year show that not only has demand for housing in Spain increased, but also the number of building permits given out for residential projects virtually all over the country. For such a rapid increase in developments, experts advise not to delay buying, as residential property prices are expected to rise by 4% or more. On the Costa del Sol then more between 5-10% per year.
Another interesting fact is that although property prices are rising, as is demand, the price of energy remains at one of the lowest levels in the whole of Europe and therefore the cost of running the property is not expected to rise significantly. Our colleagues in the real estate sector also agree that in dynamic markets such as Barcelona, Madrid and Málaga, it is possible to sell an acquired property almost immediately.
Mediterránea focuses mainly on the Costa del Sol, which is characterised by a unique authentic atmosphere, with more than 300 days of sunshine a year, more than 70 golf courses and excellent infrastructure, a high level of service and above all an interesting return on investment. Of course, the Spanish south is also a great choice for buying a second home. Year-round direct air connections to Malaga from all European destinations, including Prague, Vienna, and Katowice, as well as Ostrava and Pardubice, allow you to get to your second home within a few hours. As is the case in other destinations, the well-known rule of “location, location, location” applies to second homes in Spain. That is to say, the closer the property is to the sea and services, the higher the return on your investment and, for an eventual exit, the quicker the sale.
For a second home, the ideal solution is to buy a newly built apartment with a terrace in a new development that offers complete facilities with outdoor and often indoor pools, fitness, relaxation and co-working area. However, you have to take into account that these complexes are located further away from the sea, so in most cases not within walking distance to the beach. So if driving to the sea is not an obstacle for you, then this is an excellent choice. Your property will be brand new, with all the guarantees from the developer. The other option is to buy a nicely renovated second hand property in one of the older urbanisations right by the beach.
Another interesting option is the typical smaller terraced houses with a garden or patio, in urbanisations with a swimming pool and direct access to the beach. For an interesting return on investment, we recommend focusing on off plan projects, as close to the sea as possible, where you can expect appreciation of up to 20 or even 30% just during the planned construction until the moment of taking over the apartment from the developer. Another option is to buy an existing new property and rent it out short or long term. The real annual return on tourist rentals is between 3% and 8% depending on the location.
For a second home, the ideal solution is to buy a newly built apartment with a terrace in a new development that offers complete facilities. The other option is to buy a nicely renovated second-hand property in one of the older urbanisations right by the beach.
The clear leader in terms of investment is Málaga, a vibrant, typical Andalusian city of half a million with a beautiful historic centre and cathedral, the Arab castles of Gibralfaro and Alcazaba and the 7 km long Malagueta beach. For its atmosphere, gastronomy, museums and numerous cultural events, it is de facto the most sought-after place for short stays in the south of Europe all year round. Since the 1970s, of course, the monden area of Marbella and Puerto Banús, known for their posh style but of course also for their higher property prices, has been very popular. Estepona, originally a small seaside town with a harbour, has also become a very popular investment destination in the last 15 years, but aspires to become a major competitor to the aforementioned Marbella thanks to the beautiful new pedestrianised town centre and main beach, the intensive building of very good infrastructure and services, and the current supply of new developments. The historic centre of Estepona, with its typical Andalusian houses with hanging pots, is very similar to the old town of Marbella. Another not so well known but wonderfully relaxing zone is the area between Sotogrande and Gibraltar. La Alcaidesa, with its wide beaches and magnificent golf courses right on the sea and unforgettable views of Gibraltar (20 minutes away by car) is a dream location for your peaceful second home close to the Atlantic. Nearby Sotogrande is a favourite haunt of high-profile Madrileños, known since the 1960s for its traditional luxury villas, sprawling mansions, as well as the horse polo field and the most famous golf course, Valderama. About 20 years ago it grew with the brand new sports port Puerto de Sotogrande standing on the canals and a number of nice restaurants and cafes.
Next time, we will focus on the different areas of the Costa del Sol and gradually present them in terms of return on investment.
Read also: investing in foreign real estate – autumn reflections and tips – Croatia Part 1
