Research – December 2019

REPORT Savills Research Residential 2019 Foreword

Costa del Sol, one of Spain's most solid markets

The Costa del Sol is one of Spain's most supply and demand for new housing, leading to representative tourist enclaves. From the a slowdown in price growth in practically all the sun and the beach to the gastronomy, golf, culture, municipalities. leisure and business, all have a place in this enclave in the south of the country. The luxury or super-luxury sub-market, on the other hand, continues to expand on the coast. After the economic crisis, the Costa del Sol has re- However, its growth is contained within the most emerged as the most important residential enclave exclusive developments such as Finca Cortesin or in . In recent years, coastal municipalities La Zagaleta. The trend towards prime multi-family have experienced different rates of growth at housing is clear, partially abandoning multi-family different speeds. The most noteworthy of them housing in order to respond to this type of in terms of growth have been , , growing demand. and . It is in these municipalities where a greater transformation can be felt in terms of their residential markets.

Estepona has been a model of change, as both the public administration and the private sector have worked together to develop a large and extensive residential offer in the municipality. José Félix Pérez-Peña Andalucía Director Traditionally second-hand homes have been the +34 952 06 27 82 main drivers of the residential market on the coast, [email protected] although in recent years new housing projects have returned with a vengeance, with around 10,860 homes (multi-family and single-family) sold in 2019.

Projections for the coming years indicate a trend towards stabilisation in terms of the inclusion of

Contents

4-5 8-9 10-11 Costa del Sol Newly built multi-family Newly built single-family One of Spain's most active residential housing housing markets We take an in-depth look into the Focus on single-family housing predominant type of housing on the Costa del Sol

12-13 15 Costa del Sol outlook Contact What we should expect from the Your residential and analysis team in residential market in 2020 Andalusia

savills-aguirrenewman.com/research 2 3 savills-aguirrenewman.com/research Costa del Sol Costa del Sol

The Costa del Sol continues to be a residential benchmark nationally and internationally

Residential market zoning Municipalities analyzed The Costa del Sol market the national level, there is a major difference continues to be as attractive between the newly built market and the as it was years ago, both for second-hand market. While in 2008 new the foreign and national housing accounted for almost 52% of total profiles, with a varied and transactions, the figure fell rapidly to just high-quality offer distributed 12% by 2018. throughout all its The absence of new developments forced municipalities. demand to turn to the second-hand product, which since 2008 grew steadily, although the The number of transactions start of new developments in recent years is has increased in recent years reviving sales of newly built supply. thanks to the arrival of new buyers, mainly from France, New Construction , Switzerland and The current asymmetry in the residential Norway, who have CASARES ESTEPONA growth of the different municipalities on MARBELLA progressively taken up the TORREMOLINOS the Costa del Sol is a clear reflection of the slack of the English market, BENALMÁDENA different local strategies and the appeal which has been weakened SOTOGRANDE of each town, its economic, tourist and recently by the uncertainty ALCAIDESA MIJAS COSTA political situation. of Brexit, although it remains loyal to the Costa del Sol and Thus, while Marbella continues to have Transactions Newly built housing recovers weight in the number of transactions is still the main foreign buyer. problems due to its PGOU (General Urban Development Plan), Estepona has taken New properties Second-hand properties New properties share of total advantage of this situation by improving On the supply side, new 18,000 60% New

the process of granting licences and other total construction has grown 16,000 considerably, with more than urban development procedures, which 50% has favoured new construction in the 14,000 properties

200 developments under transactions municipality. way in 2019. 12,000 40% ) The supply of new residential construction 10,000 The rapid growth in the 30% has begun to grow in 2019, after 12 years transactions 8,000 units

number of homes on offer, Costa del Sol ( of continuous adjustment. As reflected in 6,000 20% share together with the strong Dynamism, new players, increased residential transactions and the historical series, multi-family housing increase in prices and 4,000 new buyers has the greatest weight compared to 10% (%) political instability, both single-family housing, with the latter being 2,000 of Property nationally and in the main The Costa del Sol includes rail system, and the urban and itself among the most dynamic in concentrated in municipalities such as 0 0% European economies, could the main municipalities of inter-urban bus network. the country. Marbella or Sotogrande. be the key factors in the the province of Malaga and 2011 2017 2012 2015 2013 2018 2016 2014 2010 2007 2005 2008 2006 2009 2004

moderation in the number of part of the east coast of Cadiz All this is combined with a The number of transactions has 2019* visits, as well as a more stable (Sotogrande and La Alcaidesa). wide national and international maintained the upward trend that Source Ministry of Development | *Q3 Provisional data rate of sales detected since education offer, two international began in 2011 for the whole of the the second half of 2019, Without a doubt, the sun and airports ( and Malaga- Costa del Sol, while in the rest Initial supply The initial supply of new housing grows since 2006 although in general the coast the beach continue to be the Costa del Sol) with a large of the country the upturn took continues to progress at a essential elements of Costa del volume of passengers - more than place in 2013, mainly due to the Multi-family Single-family good pace. Sol , to which we must 68,000 and nearly 20 million, strength of tourism, international add other attractions like culture, respectively - which provides an demand, the climate, and its 35,000 conventions, health and wellness, extra attraction to the varied ability to position itself as a 30,000 golf, sailing and leisure, among hotel and golf offer in the area. residential destination in new others. The confluence of all markets. 25,000 these elements has made this Residential area a perfect destination to live, The difficulties experienced The latest available data show 20,000 work and enjoy every month of by the Costa del Sol and the that in 2018 it closed with 19,382 15,000 the year. country as a whole following transactions, 6.65% below the the worldwide financial crisis market peak (recorded in 2007, Housings 10,000 José Luis Bravo The Costa del Sol has a are now a thing of the past. The 20,762 transactions) and 96% Residential Coordinator, population of more than half a real estate market in the main above the 2011 minimum (9,889 5,000 Andalucía million inhabitants (529,496, INE municipalities on the coast transactions), according to the 0 2018) with an extensive network and in the provincial capital Spanish Ministry of Development. of infrastructures, like the AP7 has performed excellently in 2011 2017 2012 2015 2013 2018 2016 2019 2014 and A7 motorways, the N340 recent years, especially in the It should be borne in mind, 2010 2007 2005 2003 2008 2006 2009 2004 highway, the medium-distance residential segment, positioning however, that, as is the case at Source Savills Aguirre Newman Research savills-aguirrenewman.com/research 4 5 savills-aguirrenewman.com/research LIVE WORK ENJOY COSTA DEL SOL Newly built multi-family housing Newly built multi-family housing

29% The municipalities with the 20% 17% highest initial supply were Estepona (29%), Marbella (20%) y Mijas Costa (17%)

Distribution of average prices Average new multi-family housing prices values of impact were Benalmádena (€2,055 Evolution of the average price New multi-family housing per sq m), Sotogrande (€2,061 per sq m) and Manilva (€2,176 per sq m). 3,000

Delivery of Housing Units 2,500 Most of the new multi-family housing being marketed in the municipalities of the Costa del Sol is expected to be delivered in 2020, 2,000 accounting for 46% of the total supply. 1,500 At the end of 2019 there were 2,500 turnkey CASARES homes on the market (28% of the total). €2,322 per sq m 1,000 €378,728 Demand Side According to in-house estimates, foreigners 500 ALCAIDESA MARBELLA represent about 80% of home buyers €4,515 per sq m €3,079 per sq m FUENGIROLA compared to 20% Spanish nationals (the €505,688 0 €540,790 €3,128 per sq m percentage may vary depending on the €441,754 TORREMOLINOS 2014 2015 2016 2017 2018 2019 €2,413 per sq m municipality). ESTEPONA €299,811 Source Savills Aguirre Newman Research | Luxury homes were excluded from the sample in 2018 | All product on sale being €2,293 per sq m Brexit has caused a decline in British buyers, on the market for more than five years was removed from the analysis in 2019 €350,260 although they continue to be the largest Distribution of the initial supply Estepona led the offer of the Costa del Sol BENALMÁDENA group of foreign buyers on the Costa del MANILVA €2,055 per sq m Sol. Scandinavian buyers did not lag too far 35% €2,176 per sq m MIJAS COSTA €269,019 behind, and Belgians, French and Germans 30% €231,478 were also very active during 2019. €2,438 per sq m 25% €320,388 SOTOGRANDE Trends 20% €2,061 per sq m The current trends in multi-family housing 15% €392,744 involve open plan spaces with spacious, divider-less rooms and large terraces to enjoy 10% the views and the good climate all year round. 5%

Kitchens are the focus of attention for both 0% Source Savills Aguirre Newman Research domestic and foreign buyers, who seek open spaces with minimalist designs, light tones and central islands. Manilva Casares Marbella Estepona Alcaidesa Fuengirola

Multi-family housing In terms of exterior construction, there is a Costa Mijas Sotogrande Torremolinos Concentration of supply, price growth, emergence of new product types and clear preference for the use of clear materials, Benalmádena modern and simple aesthetic lines. Common growth in construction costs Source Savills Aguirre Newman Research areas tend to be larger and include swimming pools, garden areas, and in many cases gyms Delivery of housing units 2020 is the year with the most deliveries 2019 was marked by the consolidation of Supply Prices or running tracks. the newly built residential market. The Multi-family housing continues to attract The average price on the Costa del Sol was 5,000 residential market has not stopped growing attention in the main municipalities of the €374,560, with an average value of €2,494 In addition, home automation and security over the last few years, driven not only by Costa del Sol. per sq m for newly built multi-family homes are becoming more and more common 4,500 large domestic and international developers (for an average housing of 150 sq m). aspects and are becoming complementary 4,000 and funds, but also by the return of the local In the last 12 months, the initial supply (the elements that are perfectly integrated into developer. sum of all the newly developed properties on The highest average prices were in homes. 3,500 sale, regardless of whether they have been Alcaidesa (€4,515 per sq m), Fuengirola 3,000 The reactivation of the development activity, sold or not) was concentrated in Estepona, (€3,128 per sq m) and Marbella (€3,079 specifically of residential products, has Marbella and Mijas Costa (29%, 20% and per sq m). This situation reflects the 2,500 brought with it an increase in construction 17% respectively). These areas also had the peculiarities of the residential offer in the 2,000 costs. This situation, in which developers highest number of new developments on offer municipalities of Alcaidesa and Fuengirola. 1,500 and builders are involved, has generated in comparison to the previous year. Leaving these specific situations aside, fierce competition in the prices of tenders Marbella would be followed by Mijas Costa 1,000 and work contracts, leading in some cases La Alcaidesa, where only one project (€2,438 per sq m) and Torremolinos (€2,413 500 to the paralysis of projects due to a lack of has been detected, is worth mentioning, per sq m). qualified labour or the flight of workers to as is Fuengirola, where a single project 0 other sites. commercialised in phases concentrates 60% At the other end of the spectrum, the Turn Key 2020 2021 2022 of the initial supply of this municipality. municipalities with the lowest average Source Savills Aguirre Newman Research

savills-aguirrenewman.com/research 8 9 savills-aguirrenewman.com/research Newly built single-family housing Newly built single-family housing

55% 55% of the offer of 26% The municipalities with the single-family housing are 23% 16% highest initial supply were independent villas Marbella (26%), Mijas Costa (23%) y Estepona (16%)

Distribution of average prices Average new single-family housing prices buyer, construction often begins at the time Evolution of the average price New single-family housing of booking, without the need to achieve a minimum of sales of the residential complex as a 3,500 whole. This situation affects the time of delivery of the work, being unevenly distributed over the 3,000 marketing period. 2,500 Trends As in multi-family housing, the current trend 2,000 in single-family housing is towards open, minimalist spaces, clear lines and spaces CASARES 1,500 integrated with the terrace areas. €7,005 per sq m €3,336,183 1,000 As far as common areas are concerned, single-family housing developments do not 500 MARBELLA usually have shared spaces, although luxury FUENGIROLA €3,087 per sq m residential complexes may have a wide range 0 €1,361,223 €1,712 per sq m of services more typical of a luxury hotel. €397,451 TORREMOLINOS 2014 2015 2016 2017 2018 2019 €2,361 per sq m ESTEPONA €613,750 Source Savills Aguirre Newman Research | Luxury homes were excluded from the sample in 2018 | All product on sale being €3,683 per sq m on the market for more than five years was removed from the analysis in 2019 €941,415 Distribution of the initial supply Marbella led the offer of the Costa del Sol BENALMÁDENA MANILVA €2,392 per sq m 30% €992,736 €1,260 per sq m MIJAS COSTA 25% €382,467 €2,336 per sq m €592,463 20% SOTOGRANDE €2,245 per sq m 15% €537,134 10% 5% 0% Source Savills Aguirre Newman Research Manilva Casares Marbella Estepona Alcaidesa

Single-family housing Fuengirola Mijas Costa Mijas Sotogrande Torremolinos Extension to new municipalities, price growth, focus on prime housing Benalmádena Source Savills Aguirre Newman Research

Delivery of housing units The turnkey dominates the market In 2019, single-family homes concentrated developments. Sotogrande, where new projects and Marbella (€3,087 per sq m). almost all of the activity in the prime or luxury involving this type of housing were detected The municipalities with the lowest levels were 800 segment, as is usually the case. The market as early as 2018, is very close to the values of Manilva (€1,260 per sq m), Fuengirola (€1,712 per continues to be very active in the municipalities Estepona (15%). sq m) and Sotogrande (€2,245 per sq m). 700 of Marbella, Estepona and Casares. Prices Delivery of Housing Units 600 However, during this last period we have The average price on the Costa del Sol was At the end of 2019 there were 619 turnkey single- detected developments in municipalities that €1,011,904, with an average impact value of family homes on the market, accounting for 28% 500 are very oriented towards multi-family housing €3,008 per sq m (for an average housing of of the total. (as is the case in Torremolinos). 336 sq m). 400 It should be noted that, due to the high 300 Supply The highest average prices were in Casares degree of exclusivity of this type of housing 1,468 single-family homes are currently being (€7,005 per sq m), Estepona (€3,683 per sq m) and the possibility of customisation by the 200 marketed on the Costa del Sol. 100 The initial supply was concentrated in Marbella, The latest single-family housing developments are mainly Mijas Costa and Estepona (26%, 23% and 16% concentrated in the luxury segment, and in some cases include 0 respectively), municipalities where the supply a wide variety of services Turn Key 2020 2021 included the largest number of residential Source Savills Aguirre Newman Research

savills-aguirrenewman.com/research 10 11 savills-aguirrenewman.com/research Costa del Sol outlook Costa del Sol outlook

Costa del Sol outlook What we should expect from the Costa del Sol in 2020 Developers 2018-2019 The Costa del Sol's residential market aimed at non-dependent elderly people continues to be one of the area's main who have welfare and leisure services in economic drivers. the complex. Eco-friendly residences have also been identified, which focus on the Over the last year, land sales for housing quality of life, health and well-being of their construction have not slowed down. This is residents, and which also aim to respect the evidenced by the entry of new players, mainly environment. Finally, some developers have international, and the return of the local already shown their interest in naturist or developer. Although it is true that there is a LGTBI-centred developments. high concentration among the top developers, as the top 19 market more than 5,600 homes The Costa del Sol is positioned as a and account for more than 51% of the total multicultural, multilingual place open to the initial supply on the coast. world, where the residential market must satisfy the needs of a wide variety of owners Prices are expected to grow moderately (3%- and tenants who increasingly want to enjoy 5%) in 2020. this area of Spain for longer, breaking the seasonal trend. A certain stability is also expected with regard to the addition of new projects, in line The luxury segment deserves a special with the moderation in demand, both for mention, as it is one of the fastest growing main and second homes. sectors worldwide. On the Costa del Sol, this segment has always been concentrated BENHAVIS The market is expecting the emergence of mainly in the municipality of Marbella new residential models such as coliving and and Casares. Over the last year we saw its the increase of short term rental housing expansion to other parts of the coast, such as with the attending decline in long term rental Estepona or Fuengirola. CASARES housing, as is already happening in the city of ESTEPONA Malaga. However, super-luxury assets are still TORREMOLINOS confined to the six most exclusive MARBELLA MÁLAGA The yield performance of the short term developments on the coast, some of which FUENGIROLA rental market still raises doubts due to the are considered to be the most exclusive in SOTOGRANDE absence of regulations governing this market. . BENALMÁDENA The arrival of new residential product models Moreover, the market is constantly evolving. has been detected, such as senior living, Although mainly focused on single-family MIJAS housing, in recent years there has been a shift towards luxury and super-luxury The average price of new multi-family housing. The product is large construction is expected to in size and meets high quality standards, grow by 3-5% by 2020 accompanied by a wide range of services for the owners, approaching the concept of branded residences.

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Arturo Díaz Pablo Méndez José Luis Bravo Executive Director Executive Director Residential Coordinator | Andalucía +34 91 319 13 14 +34 91 319 13 14 +34 952 06 27 82 [email protected] [email protected] [email protected]

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Pelayo Barroso Gema de la Fuente Jonathan Pino Research Research Research | Andalucía +34 91 319 13 14 +34 91 319 13 14 +34 952 06 27 82 [email protected] [email protected] [email protected]

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