The real estate prices in Marbella increased by 20%.

Introduction to real estate prices in Marbella

Real estate prices in Marbella – If someone purchased a property in Marbella or its surroundings in 2021, after one year, they could have experienced significant raise in real estate prices in Marbella . In certain premium zones, prices increased by 30-40%, but even more remote regions saw much higher price growth compared to previous years. Between 2014 and 2020, one could expect an average annual value increase of 4-5% on the Costa del Sol, but in the last two years, real estate prices skyrocketed.

This can be attributed to the fact that in recent years, the typical property buyer on the Costa del Sol has the following characteristics: they come from a developed European country, have substantial wealth and/or passive income, and can oversee their business from a distance. They don’t need a mortgage to purchase their dream home.

real estate prices in Marbella

Experts have indeed found from analyzing 30 years of data that an increase in interest rates eventually leads to a decrease in real estate prices, but this is not the case here.

The general market rules stating that rising interest rates have a restraining effect on the real estate market do not apply to buyers in Marbella. More than 90% of buyers make purchases without the need for a mortgage. There is no noticeable slowdown, and in fact, the increasing demand (e.g., new construction properties being sold before they are even built) acts as an additional driving force for prices to rise.

What does the Tinsa analysis say?

From the report titled “Properties on the Coast, 2023,” prepared by the aforementioned real estate valuation and advisory company, it is revealed that the Balearic Islands have the most expensive vacation homes, with an average price of around €6,000/m2. In the province of Malaga, the same property type costs around €3,400/m2, while in Tenerife, the average square meter price is €2,900/m2. Within the province of Malaga, certain areas of Marbella, Estepona, and Benahavís have even higher prices, ranging from €8,000 to €10,000/m2.

According to the Tinsa analysis, real estate prices in Marbella, specifically second home prices, have risen by 40-50% in recent years. The trend remains strong, and there are no signs of exhaustion at the beginning of 2023. The market is being driven by foreign demand, which has significantly surpassed the levels seen before 2020. In the most dynamic regions, there is strong demand from buyers with high purchasing power, who are less affected by the increase in inflation and rising financing costs.

Not surprisingly, real estate prices in Marbella, specifically in Benahavís, leads the list of Spain’s Top 10 cities with the highest average property prices, where La Zagaleta, one of Europe’s most exclusive luxury residences, is located. Here, the average property price is 1.8 million euros. Marbella takes the third place, with locations like Nagüeles, the Golden Mile, and Nueva Andalucía, where apartments cost an average of 1.3 million euros at the end of 2022. Estepona, Mijas, and Benalmadena also hold prestigious positions on the list.

Rental prices are also higher on the Costa del Sol, as this analysis shows.

For those considering long-term rentals and searching for “Marbella apartments for rent,” they will mostly come across old listings, many of which are just attempts by the advertisers to attract clients for themselves (we’ve also written about such real estate scams here). If the search is for “apartments for sale in Marbella,” the previously extensive offer has now reduced by half, with much smaller availability.

The reasons behind the increase in rental prices and more information can be found in another post.

Not only did the real estate prices in Marbella rise significantly, but the number of property transactions also surged: in 2022, nearly 700,000 real estate transactions were concluded in Spain, which is more than double the transactions that took place in 2013. In coastal cities, there were far more transactions relative to the population compared to other regions in Spain. In Marbella, there were 4,628 property exchanges in 2021, and in 2022, this number increased to 5,514, indicating a 20% growth. The yearly changes in real estate prices and the variations in the number of sales compared to the previous year show an interesting pattern.

A visualization method for the changing of prices

After extensive research, the analysts at Move2Marbella came across this visualization method, which, upon closer examination, is not a random scribble but a representation that simultaneously illustrates the yearly changes in prices and the number of transactions in two dimensions. The two coordinates divide the chart into four sections, representing the four phases of the real estate market: Slowdown, Withdrawal, Stabilization, and Expansion.

Real estate prices in Marbella

When real estate prices in Marbella rise, but fewer properties are sold compared to the previous year, the market is in the slowdown phase, which inevitably leads to a decrease in prices. This is a recession, similar to what we experienced around 2008 and 2010, and the Covid situation pushed the real estate market in Marbella back into the recession phase. This was followed by a rapid stabilization, characterized by an increase in the number of sales, and real estate prices in Marbella quickly caught up in the following year and started to rise. This led us to 2021 when the number of transactions and real estate prices in Marbella significantly increased. In 2022, real estate prices in Marbella rose more than the number of transactions compared to the previous year.

What will happen in the Marbella real estate market this year?

The question arises of what will happen in the Marbella real estate market this year and in the coming years, which we cannot precisely answer. However, based on the first few months, we can observe that while there is a noticeable slowdown nationally, the buying interest in real estate prices in Marbella and its surroundings remains strong, with fewer properties for sale and an increasing number of buyers coming to the region. How much further will prices rise? One thing is certain: if someone is considering a real estate investment in Marbella, they should not hesitate for long, as prices have not yet reached their peak. Feel free to contact us for personalized advice as well.