Why the luxury homes market is booming on the Costa del Sol

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Since Europe’s nobility and A-list celebrities first discovered the Costa del Sol in the 1960s, this part of Spain has always been about luxury living. Not for nothing do Benahavis, Marbella and Estepona make up the Golden Triangle, home to some of southern Europe’s most exclusive property, the majority with seven-figure price tags. Joining them is Sotogrande, another magnet for fine homes.

While the top end of the market might have suffered during the 2006 economic crash, it turns out to be a very resilient sector when it comes to pandemics. Despite Covid-19 (or perhaps, because of it), the luxury homes market is currently booming on the Costa del Sol.

The reasons behind the surge in activity, particularly this year, are myriad. But as we shall see, they all share a common factor: lifestyle. And in the so-called California of Europe, this comes as no surprise.

Costa del Sol luxury home market fast fact

Benahavis had the highest average price for homes in Spain in Q1 this year. Marbella and Sotogrande took fourth and sixth positions respectively in the Idealista ranking.

Reason 1 – more remote working and in the sunshine

Almost overnight, millions found themselves working from home rather than the office. This fundamental lifestyle change brought a shift in property trends. Suddenly, a home office became uber desirable.

Add to this the year-round sunshine on the Costa del Sol and it’s easy to see why the world’s richest want to work from home in luxury on the Costa del Sol. Particularly when remote working in Marbella or Sotogrande combines to perfection with easy connections to the world’s business centres.

Reason 2 – extensive choice of luxury homes

As soon as you enter the municipality of Marbella from the east, there’s a decided uptick in the feel to the real estate. You step into a world of fine homes that stretches all the way to Sotogrande in the west.

Many carry multi-million-euro price tags and the majority offer cutting-edge design, quality, finishes and features. In locations such as La Zagaleta, Sotogrande, the New Golden Mile in Estepona and Sierra Blanca in Marbella, a high-net-worth individual (HNWI) is literally spoilt for choice.

And much of what’s on the market is new. Some of the world’s richest REITs have turned their attention to developing luxury homes on the Costa del Sol this year. A sure sign that demand is there.

Reason 3 – ultra-high-net-worth millennials have discovered the Costa del Sol

Once the refuge of wealthy retirees, the Costa del Sol is now a hot spot for affluent millennials. As younger HNWIs have turned their attention to the area, they’ve discovered that places like Marbella and Sotogrande are perfect for bringing up a family since they offer world-class international schools, private hospitals, and outdoor living at it’s best.

Reason 4 – they know what they want

Discerning buyers tend to know exactly what they want and HNWIs within the luxury homes market on the Costa del Sol are no exception. Many of them are already familiar with the area and those that aren’t, have taken advantage of lockdown to do their research. They’ve had months to explore different districts to find their chosen spot.

They’ve also used the time to prospect properties. And thoroughly. Real estate agents catering for the higher end of the market on the Costa del Sol have upped their game and now offer in-depth online viewings. Nowadays, 3D walk-throughs, live visits and detailed videos form part and parcel of showcasing a home.

Many HNWIs have already made their purchase, often based on thorough online viewings. Many others have shortlists of luxury homes to view in person as soon as travel restrictions lift.

Reason 5 – always a safe investment

Our final reason why the luxury homes sector on the Costa del Sol is booming lies in the nature of the asset. Real estate forms the backbone of all successful investment portfolios for two main reasons:

  • The underlying trend in property prices is always up regardless of lows and highs in a particular cycle.
  • Property is literally as safe as houses.

Taking this as their premise, REITs have turned their attention to the Costa del Sol over the last 18 months. And as a result, the area has become a hotspot for foreign investment funds.

For example, the US REIT, Värde Partners, now has 20% of its funds on the Costa del Sol, its second-largest market. Earlier this year, the French Firce Capital invested in La Fuente development in Marbella as part of its new ‘premium’ fund. And the German Deutsche FI has invested in three high-end residential developments on the Costa del Sol since September 2020.

Now find your luxury home

At Pronova Estates we’re experts in the luxury home sector on Costa del Sol and specialise in the exclusive new-build market as will as resales. Our experience give us the edge when it comes to finding a fine property with the right potential for investors and second-home buyers alike. Get in touch to find out what we can do for you.

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