Marbella property investment and lifestyle


Marbella is a popular and well-known resort in Spain, known for its beautiful scenery, rich historical heritage, and luxurious lifestyle. It has also caught the attention of investors who recognize the potential of real estate investment. In this article, we will discuss what makes Marbella an excellent property investment destination, why you should consider investing in it, and how to avoid scams and fraudulent schemes.

EXCELLENT GEOGRAPHIC LOCATION

Marbella boasts an excellent location in the southern part of Costa del Sol, offering a pleasant weather and beautiful sandy beaches for most of the year. The area’s microclimate is unique in Europe, providing a well-balanced weather. Additionally, the city is easily accessible from Málaga International Airport, which is connected by numerous direct flights to major cities in Europe. Even better, it is now possible to fly straight to Málaga from New York without a stopover. These factors make Marbella an attractive destination for tourists, investors and potential tenants, which in turn increases the occupancy and value of the properties.

QUALITY LIFE IN A LUXURIOUS ENVIRONMENT

Marbella, located in the southern part of the Costa del Sol, enjoys a pleasant Mediterranean climate and has a beautiful sandy beach that can be enjoyed for most of the year. Its unique microclimate offers a balanced weather that is unparalleled in Europe. It is easily accessible from Málaga International Airport, which has direct flights to major cities in Europe, and even New York, without a stopover. All these factors make Marbella an attractive destination for tourists, investors and potential tenants, which increases the occupancy and value of the properties.

ADVANCED INFRASTRUCTURE

Marbella boasts a well-developed transportation network, which provides convenient commuting within and around the city. The city is home to excellent private and public healthcare and educational institutions, high-quality restaurants, and numerous entertainment venues. Additionally, well-equipped shopping centers with a wide range of international products ensure a comfortable and high standard of living. Moreover, Marbella has numerous sports and recreational facilities, including golf courses, tennis clubs, padel courts, and fitness centers, providing ample opportunities for leisure and fitness activities.

HIGH VALUE INCREASE POTENTIAL

In recent years, the real estate market in Marbella has experienced significant growth. During the period of post-crisis recovery, real estate prices have continued to rise, averaging 5% per year. In the last two years, prices have increased by 20-30%. This trend is expected to continue, as demand for properties in the area continues to increase while the available supply of real estate diminishes. As a result, real estate investment in Marbella presents an attractive opportunity for those looking for long-term growth.

WHAT INVESTMENT OPTIONS ARE THERE?

Many people often ask me what the best property investment on the Costa del Sol is. However, what constitutes a good investment is highly subjective and varies from person to person. Nevertheless, I can say that real estate in and around Marbella has proven to be stable in value over the years. Even during the economic crisis of 2008, the prices did not decrease. Instead, the rate of increase slowed down. For instance, an individual who bought a two-room apartment in Nueva Andalusia for €200,000 eight years ago can now sell it for €300,000. 

Living in Marbella is a good “investment” in itself. The city provides its residents with a high quality of life, access to healthy food options, ample sports opportunities, and the proximity of the sea, among many other advantages. It is important to note that investing in property in Marbella cannot be compared with the yield of a property bought in a different country. The buyer gets more than just a property, but also a way of life that is calmer, more balanced, and fulfilling.

REAL ESTATE INVESTMENT 2023

One of our German investors purchased a property five years ago, which he renovated and sold. He then continued to buy and sell apartments one after another. By 2023, he will have renovated and sold eighteen apartments. If you take a close look at his business model, you can easily calculate his profits. He only buys properties directly on the beach and in good locations. Previously, he could buy apartments to be renovated for €600,000, but now they are around €800,000. The cost of renovation is usually around €150,000 – €200,000. In each apartment, he installs underfloor heating, new floor coverings, doors and windows, a wine cooler, and even a sauna and jacuzzi in the penthouse apartments. Additionally, the apartments boast a breathtaking view of the sea. Typically, the properties are sold within three months. For instance, the apartment he purchased for €800,000 and spent €200,000 on renovating cost him a total of €1 million. After renovation, the apartment can be sold for 60% more, for 1.6 million euros.

When someone buys a property, they have to pay tax at the time of purchase, which is currently 7% of the purchase price in Andalusia. If someone buys a property for investment purposes, they only have to pay 2% of the tax. However, to do so, a business must be created, and the maintenance cost of it is €6,000 per year. According to my calculations, if someone saves more tax by paying 2% tax instead of 7% when purchasing, it is worth paying €6,000 per year to maintain the company when buying real estate for investment purposes. In general, for a property worth around €400,000 – €500,000, it is already worth setting up a company and buying through it, with a reduced tax.

HOW MUCH DOES THE OWNER KEEP?

“When selling a property in Spain, we typically work with another real estate agency. The owner is responsible for paying a 5% commission, which is usually divided between two or three agencies. The commission paid to the real estate agency is invoiced to the owner and can be deducted from the profit earned on the sale. For instance, if an €80,000 commission has to be deducted from a profit of €600,000, the remaining amount of €520,000 is subject to a 21% profit tax. The owner will be left with €400,000 after taxes. This is considered a good investment, as earning €400,000 on a €1,000,000 investment in six months is quite decent.

However, for properties with a lower price range, the profit margin is not as attractive. Even if an investor spends €30,000 or even €40,000 on a €200,000 apartment, it cannot be sold for €400,000, resulting in a lower return on investment. It is important to note that the demand for investment properties is high, with companies from Sweden, Norway, Denmark, and Germany eagerly looking for opportunities in the market.”

GENERATE PROFIT WITH SHORT TERM SPENDING

Many people wonder how much profit they can make by buying real estate and selling it in the short term, such as renting it on Airbnb. Typically, the property can generate a profit of 6-8% of the invested value. When considering such investments, it is crucial to look for properties that are close to the beach and within walking distance of shops. While a sea view is desirable, location is even more important. Some real estate agencies offer apartments for sale near golf courses, sometimes even promising guaranteed income for the property. However, these guarantees are usually for only the first year, with 70% of the profit going to the owner and 30% going to the property management company from the following year onward.

It is a misconception that all golf course properties can be rented out of season. In reality, the profit margin for such properties is around 3% due to thousands of vacant properties near golf courses during the off-season. Golfers typically prefer to stay in the city, close to the beach, shops, and restaurants, as they often prefer to socialize and enjoy their leisure time after playing golf.

IN A NET OF LIES

Some real estate agencies are known to offer properties for sale that have already been sold years ago. When a prospective buyer calls the agency, they claim that the property is still available and ask the buyer to send a deposit of €5,000 to “pre-book” the property. Once the deposit is received, the buyer is informed that the property has been sold. The agency then promises to include the deposit in the amount of the reservation for a suitable property when one becomes available. This move actually commits the buyer to the real estate agency.

SELF-NOMINATED EXPERTS

Some people claim to be real estate agents, experts, or brokers on social media and offer tours of the city for a fee, promising to show restaurants and cafes in the area. However, a reputable real estate agency does not charge a fee or commission for showing properties since the seller pays it. It is essential to be cautious and not be misled by self-proclaimed experts who often have no real expertise in the field.

CONCLUSION

Many people are investing in real estate in Marbella and its surroundings to make a significant profit, with up to 40% profit possible in the luxury real estate sector. For smaller investments, the profit margin is 15-20% less, but the value of the property usually increases by 5% per year. In some regions, the value of properties has increased by 20-30% in the last two years, and this trend is expected to continue in 2023. It is crucial to be critical of claims made on social media and to seek help from reputable real estate agencies. At Move2Marbella, we have been operating successfully for over a decade and work to help you find your dream home to the best of our ability. Our team is experienced, honest, and discreet. Thank you for trusting us.