Marbella Is Quality. in Bad Times, Quality Holds Its Value

“ Marbella is quality. In bad times, quality holds its value. In good times, quality increases in value.” Diana Morales Marbella Market Report 2009 Diana Morales

Marbella Real Estate Market The same goes for the stockbrokers and investment companies, where young “geniuses” earned fat commissions for Report 2009 inventing products that no one could understand. And even more for those opportunistic real estate agents who fast-talked MARBELLA IS QUALITY. IN BAD TIMES, QUALITY HOLDS ITS buyers into putting down payments on four apartments in VALUE. IN GOOD TIMES, QUALITY INCREASES IN VALUE. order to get rich quickly in a rising market. When all the IT’S AS SIMPLE AS THAT. IF YOU BUY QUALITY, YOU SHOULD buyer wanted was a holiday flat to enjoy… Now we are all CERTAINLY CONSERVE YOUR CAPITAL AND YOU ARE QUITE paying for it. SURE OF INCREASED VALUE OVER TIME. All the numbers look bad. The stock market is down, the All over the financially shaken world, people agree that 2009 banks which made those bad loans are now in trouble be- is time for a change. In Marbella, perhaps we should change cause the people cannot pay them back and the houses the our attitude when looking at property. bank figured as security are now worth less than they were before. More people are out of work. On top of everything Instead of thinking about money, let’s think about real va- else, the pound has dropped to practically the value of the lue. Let’s think about how nice the house is or how splendid euro, making it much more expensive for the British to buy the view is from the apartment terrace. For too long, people property in Spain. on the Costa del Sol have approached property asking only the question: How much can I get for it three years from Furthermore, the recession is Europe-wide and worldwide. now? We have always figured that, if one country crashes, another country will be doing all right and will take up the slack in Even the old established estate agents, who have seen booms the Costa del Sol property market. and busts come and go, refer frequently to “investment opportunities”. We all have come to look at things primarily Not this time. It’s the Perfect Storm. Everything imaginable in terms of their cash value. has gone wrong, both in the virtual economy, which is stock market numbers, and in the real economy, where people can Well, an over-emphasis on that attitude is how we got into no longer buy cars, so the carmakers are going to the wall. this mess in the first place. And when the bankers started And this means the factory workers are out of a job. doing it, the end became inevitable. A bank that lends money to people they know cannot pay it back has lost its head. Their only way out was to pass on the bad loans to other banks or investors, disguised as solid collateral.

2 © Feb. 2009 Diana Morales Properties Marbella Market Report 2009 Diana Morales

Even before its final approval by the So, what is there to Andalusian regional building authori- be cheerful about? ties, the new Marbella town development plan has been able to assign land for new schools and parks. Such public Well, everything real about Marbella interest projects had been completely is actually going up. One of the most ignored under previous administra- important factors here is government tions. The new public schools come in investment in improving the quality addition to the excellent privately run of life. This investment had already international schools already existing. started, before the Crash of 2008, as this will probably be known. The money 4 The coastal railway that presently 1 Burial of the N-340 highway. flow began simply because it was our runs from Fuengirola into Málaga city turn for State investment funds. The centre will be extended in the next few input has since been increased and years at least to Estepona and eventua- spread wider as part of the measures to lly to Algeciras. Imagine getting on the re-activate the economy. train for a quick and easy ride to Algeci- ras and then catching the ferry to Africa. The national government, the Anda- lusian regional government and the Roads throughout the interior of Málaga Málaga provincial authorities are all Province are being resurfaced and im- pouring hundreds of millions of euros proved as part of the economic stimulus into improving basic services on the plan. New bypasses and super highways Costa del Sol. Let’s take a look at some from Málaga heading north are nearing of the things going on around Marbella. completion. The new roads will ease 2 13 kilometres of uninterrupted beach promenade from travel inland to the historic cities of Marbella to San Pedro. For many of us, the most noticeable Andalusia and to the ski areas of the public work project is the 1 burial of Sierra Nevada. the coast highway, the N-340, on its way through the town of San Pedro de Municipal services to the many urba- Alcántara. This bottleneck has delayed nizations along the coast are steadily and infuriated residents for years, but being improved. Streets are being work on the massive tunnel project is resurfaced, bus service is being increa- finally underway. sed, rubbish collection is improving and increased police patrols are protecting 2 The Marbella seafront promenade, the zone. “El Paseo Maritimo”, is now divided into three disconnected parts: Marbella New water desalinization plants and 3 town, Puerto Banús and San Pedro de Private Hospital in Estepona. Hospiten Group. improvements in the water distribution Alcántara sections. The sections are network along the coast will assure separated by rivers and streams. When a steady supply of fresh water to the the new culverts and bridges are in place growing population. to cross these natural barriers, people will be able to stroll along 13 uninte- The City of Málaga is an explosion of rrupted kilometres of beachfront new public works building projects. from Marbella-La Bajadilla harbour to Most importantly for the foreign visitor, the beginning of Guadalmina urbaniza- the Pablo Picasso airport is doubling the tion passing through Puerto Banús. size of its terminals, improving the rail

3 connections, and opening the second 4 More and better hospitals. The Vialia Maria Zambrano Station in Malaga. runway of the airport itself. Costa del Sol regional hospital in Marbella now serves three times as In the city, construction of the new many patients as it did when it opened underground metro is advancing on 10 years ago. A major addition is now schedule, and making a mess of traffic underway to meet the demand. Seve- in and out of the city. This traffic will be ral new private hospitals have recently greatly eased when the metro goes into opened or been upgraded. service two years from now.

The new high-speed train from Málaga to Madrid has already been What does this in service for a year, attracting two have to do with the million passengers, double its original prediction. The AVE train puts Má- Property Market? laga at only two and a half easy hours from the nation’s capital. This makes ALL OF THESE “REAL” ELEMENTS it easier for well-to-do people from CONTRIBUTE TO AN IMPROVED Madrid and other Spanish cities to QUALITY OF LIFE AND AN UP-MARKET visit their Costa del Sol property. This ATMOSPHERE ALONG THE COAST adds to the property’s value and we FROM MÁLAGA CITY TO SOTOGRANDE, 5The World’s largest cruise ship, “Independence of the WHERE THE RECESSION HAS SO FAR should remember that something like Seas”. half the real estate market in Marbella NOT AFFECTED THE POLO SEASON. is Spanish. All this year-round activity means that Also in Málaga, the city is fast becoming there is a solid core to local life, which a capital port for cruise ships. The means that high-end restaurants have special docking area and the shiny at least some diners at all times of the new cruise passenger terminal have year and do not depend entirely on encouraged several major lines to visitors. This goes for shops, suppliers make Málaga their Mediterranean and all the services we associate with a headquarters. The world’s largest pleasant lifestyle. cruise ship, 5 Independence of the Seas, now calls regularly. Marbella is not simply a summer resort. It is a functioning resort city with a life of its own that does not In a positive development that has 6Technological Park of Andalucia (TPA), Malaga. nothing to do with tourism, the depend entirely on tourism. The 6 Technological Park of Andalusia, population of Marbella is officially just outside Málaga city, has grown 130,000 registered citizens but official to more than a hundred high-tech estimates of the real population are companies working in fields such as more than 300,000 full-time or part- computer processing and solar power. time inhabitants. Málaga in fact is now one of Spain’s leading producers of solar panels and And the bottom line is that a functioning technology. This success has given rise real economy means that the property to an initiative promoting the “Málaga market is never going to crash down Valley” scheme, to market the area as to zero as it might in a purely resort a centre of advanced technology, like area. Further, in an area like Marbella,

many of the well-to-do owners have 7 California’s Silicon Valley. Authorities Picasso Museum in Malaga. hope to attract more new companies the resources to wait out the downturn offering even more well-paid jobs. even if it causes them some problems. They will not sell their properties at As a major cultural city, Málaga offers fire-sale prices because they do not orchestra, opera and art galleries and have to. museums, including of course the 7 Picasso museum. Several Marbella property agents report that they have received ridi- A little farther afield, access is easy to culously low offers from aggressive the 8 Formula One circuit in bargain hunters who may try to buy Jerez as well as the Ascari racing a property for half of the price asked, circuit outside Ronda. for example. These agents, who are

long-established and who know their 8 Formula One circuit in Jerez de la Frontera. clients very well, often do not even pass on these very low offers to their sellers.

The agents also report that, although sales are fewer and farther between

4 © Feb. 2009 Diana Morales Properties Marbella Market Report 2009 Diana Morales

and are basically limited to quality properties in the best sell these apartments for 50 per cent less. I will let the bank locations, interest remains brisk. They note that enquiries take them first.” by Internet or in person have not slowed in 2008 and have actually increased during the last quarter of 2008 compared 3. Prices in general will not rise either. There are buyers out to the same period in 2007. So at least some buyers are out there but they are still watching to see whether prices drop there and will eventually purchase, once they realize that even more. When they realize that this is the bottom, they price drops have already occurred and are now factored into will put their money down and particularly in the case of the asking prices. property which because of its location and quality cannot be reproduced and is therefore unique. One agent also pointed out that there is one bit of financial bad news that is actually beneficial to a British seller of 4. Mortgages will become cheaper as interest rates fall. This Marbella property. That is the drastic drop in the value of is already happening as the Euribor, the euro base-lending the pound, from almost 1.5 euros down to just about one rate, falls through two per cent. The only problem is that the euro to one pound. This is nasty if you are a Briton wanting cash-strapped banks now make getting a loan very difficult. to buy in Spain, but if you are selling your Spanish property They have regressed to the old joke that a bank is an institu- to return to the UK, the euros you are paid will change into tion that only lends money to people who don’t need it. substantially more pounds than last year at this time. We are preparing this report in early 2009 and of course we 5. Meanwhile, all those public works projects will continue cannot predict how exchange rates may fluctuate during the to add real value to your property. Because the govern- rest of the year. ment finances them, they will continue even if the recession worsens.

What will happen in 2009? 6. Finally, we can almost safely predict that 2009 will bring the final approval of Marbella’s new urban development 1. There will be a few genuine distress sales from private plan, the long-awaited PGOU, which will legalise almost sellers who absolutely have to have some cash and are all of the properties built with dodgy permits in the boom. prepared to take a loss. Developers selling new properties This building plan, once cleared by the Andalusian regional will make even better offers, but they will not drop prices to government, will bring a new level of security to the area. ridiculous lows.

2. Prices in general will not fall any farther. Private sellers Advice to Sellers who do not absolutely have to sell will hang on and wait. Developers are already offering large discounts on new pro- 1. Stay calm and wait. Your established estate agent has the perties and at least one developer said publicly, “I will not best take on what will be a realistic asking price in today’s

market for your particular property. In the middle price ted price. This real value simply has to rise in price over ranges, many sellers have cut about 20 per cent from what the medium term. Marbella remains a good investment. they hoped to get a year ago. High-end properties usually Quality always is. offer smaller reductions. However, you need to consult your individual case with an experienced agent. 2. Find the right estate agent. Pick one who has seen booms and busts before and who will advise you carefully on your 2. Do not lose heart. The buyers who remain in the market particular needs. For the long-established agent, Marbella are very interested in Marbella and they will gradually work is a small town, where they know the market, they know the up the nerve to actually make a purchase. There is a signifi- properties available, and they know the sellers. If you are cant number of potential investors who are now frightened looking for a private re-sale, the established agent will know of the stock market and want to put their cash into a real the best offers and if you want a new flat from a developer, investment like property. They will soon realize that now is a this agent will know which developers are offering the best good time to buy in Marbella. deals on quality property.

3. Keep in mind that, even after reducing your price to a rea- 3. DIY. Do It Yourself. Do not think that you can read an listic level, you are almost surely still making a profit if you article saying, “The market is down” and make yourself a have owned your property for more than two or three years. tidy profit. Do not think that you know a property, even if you make a “virtual tour” on the Internet. That tour does 4. Finally, your property remains a good investment, both not show you the noise from the highway, for example. If for real value and for monetary gain. Here’s one more you are going to put down half a million euros, perhaps you, reason why: When governments bail out the banks and in person, should take a good look around with that expe- pour money into stimulating the economy, they do this by rienced estate agent we mention in Point Two. printing money. This means that the money, which is a necessary crutch right now, will be worth less in the future. When the euro is worth less, prices begin to rise. This is What Is Available? called inflation. Inflation is the unavoidable down side of pumping money into the system. But it means that your real The slow market for 2009 is basically good news for buyers. and valuable asset, your Marbella property, will be worth All types of property are available at reduced prices in all more money in the medium or long-term future. areas of the Costa del Sol. For those looking to purchase somewhere near Marbella we can distinguish a number of Advice to Buyers different zones and types of property. These range from high-density areas such as Calahonda, halfway to Fuengiro- 1. Now is the time to buy. See Point 4 above in Advice to Se- la, where you can find holiday flats for under 200,000 euros, llers. You can buy real value in Marbella today at a discoun- to high-end estates in the hills above Marbella, where two-

and-a-half to five million euros will buy you a villa on a nice experts to luxury automobile dealers, for its well-to-do inha- piece of land. A very nice piece of land. bitants and visitors.

Starting to the east of Marbella, on the beach halfway to In the hills behind Marbella reaching up towards La Con- Fuengirola, is the town of La Cala, which has become a cha mountain, the villas have fantastic views over the city sort of little England in the last few years. The local public and the Mediterranean sea to Africa and Gibraltar. Worth school in fact has as many foreign pupils as Spanish ones, mentioning are the well established areas of Marbella Sierra making it willy-nilly the first public international school and Blanca, Cascada de Camoján, Rocio de Nagüeles and Lomas not at all a bad place for a family to start a new life in Spain. del Marbella Club.

Just to the west, the long-established developments on From Marbella out to Puerto Banus, with berths for more the giant Calahonda estate, including both beachfront and than 900 yachts, the shoreline is known as the Golden Mile, hillside, have experienced an amazing building spurt over lined with luxury villas and apartments. Following the basic the past few years. Do not be put off by what appears to be maxim of real estate investment – Location, Location and an entire hillside covered with stair-stepping blocks of flats. Location – this would be the area to choose. Once you are inside most of the apartments, the views over the sea to Gibraltar and to Africa are fantastic. You can find From Puerto Banus inland, you drive through densely built- holiday flats at less than 200,000 euros and elegant penthouses up zones to arrive in a few minutes at the famous Valley of for a million euros. Golf, where some excellent re-sales can be found bordering the golf courses. Some of the prime areas are Nueva An- The succeeding areas towards Marbella are consolidated dalucía with the Aloha, Las Brisas, and Los Naranjos golf urbanisations that stretch inland over the hills to make a courses. pleasant suburban landscape. Apartments, townhouses and detached villas are available in a wide price range. Most of Then comes the town of San Pedro de Alcántara and the the estates here have grown slowly over the years. We can long-established Guadalmina beach and golf development. mention Hacienda Las Chapas, Santa Maria Golf and Hills, Reaching up into the hills behind, we find the municipality Elviria, Las Chapas, El Rosario, Los Monteros, Bahia de of Benahavis, known for its restaurants and for being the Marbella, Santa Clara, Altos de Los Monteros, and Rio Real Andalusian zone with the highest income level. In these Golf. hills are several exclusive estates such as El Madroñal and La Zagaleta, with its own helicopter landing pad. Others Then comes Marbella town itself, a thriving resort city with include La Quinta and Los Arqueros golf developments. a registered full-time population of 130,000 that soars to more than 300,000 in the summer months. The city offers Along the western coast towards Estepona, several very large every amenity and every modern service, from computer and luxurious new golf developments have been steadily

taking shape over the past 10 years. Growing areas are West About the authors Estepona and Manilva on the beach, as well as the beautiful white village of Casares in the mountains, with a municipali- DIANA MORALES, PRESIDENT OF DM PROPERTIES ty that stretches to the beach. One example of the upmarket development here is the very large El Cortesin golf project Is an internationally known and respected Marbella Estate with a golf course, luxury boutique hotel, apartments and agent, with over two decades of experience. DM Properties villas. Marbella has been able to gather an acclaimed team of Marbella Real estate experts and international partners that The Costa del Sol then officially terminates at Sotogrande, in continually share thoughts and knowledge of Marbella and the shadow of Gibraltar. Sotogrande, home to the top-rated the Costa del Sol with clients and collaborators. golf course in Europe, as well as a yacht harbour and polo grounds, continues its carefully planned growth just as it has DAVID SEARL for the past 40 years. Author of the book You and the Law in Spain and many So, even if new construction has basically come to a halt, magazine articles regarding Spanish law and property, is we see that the Costa del Sol, and Marbella in particular, originally from the USA but has lived and worked in Spain continue to grow in real value and will continue to improve for the past 40 years. over the next few years, even through today’s recessive times. Even though we have spoken against valuing things only in terms of money, it looks as if Marbella is still a good investment as well as being a nice place to live or spend your holidays.

8 © Feb. 2009 Diana Morales Properties FOR OVER TWO DECADES, DIANA MORALES PROPERTIES HAS BEEN CONSIDERED ONE OF THE MOST TRUSTED REAL ESTATE AGENCIES IN MARBELLA & THE COSTA DEL SOL.

Avda Ricardo Soriano 72 B1 - 29600 Marbella, Malaga, Spain Tel: +34 952 765 138 - Fax: +34 952 771 871 www.dmproperties.com - [email protected]