How would you sum up the property market in your region during 2016?
2016 has been more challenging than the previous 3 years. There has been a slowdown in sales particularly at the high end of the market. The Supreme Court’s ruling to cancel the Marbella General Plan has had a negative effect on the number of new projects being launched in Marbella itself, due to difficulty at best, or inability at worst to obtain building licences. However this has only affected areas controlled by the Marbella Town Hall and as a result the surrounding areas of La Cala de Mijas, Benahavís and Estepona are benefitting and overall there has been a significant increase in the launch of new off-plan projects – thanks to investments made during previous years – particularly of mid to low priced projects. There has also been an increase in the supply of renovated re-sale homes with modern designs, particularly in the Marbella area, reflecting the need for sellers to become more competitive and offer better quality properties.
The prospect of Brexit has had a significant effect on the numbers of enquiries from British buyers, most notably from the start of 2016 when the uncertainty began. Since the referendum, UK buyers have dropped off due to the weakening of the Pound. There is still some movement at the lower end of the market (around €200,000) and some buyers who had higher budgets have now reduced them. In general buyers are younger than in previous years and prefer contemporary modern designs. This has been reflected by the pace of sales of new build / off-plan projects compared to re-sale homes. However towards the end of the year, as the numbers of new projects has increased, even off-plan sales have now started to slow down, particularly in secondary areas.
Price is now becoming a determining factor as competition increases.
“Resale homes are still selling well in prime locations, however in secondary locations, (generally further back from the coast), a very competitive price is the deciding factor. Towards the latter half of the year there has been a significant increase in the numbers of sellers discounting prices, particularly British sellers who can now afford to reduce the price without affecting what they will make in sterling. Even certain developers are now starting to reduce prices and tighten their margins to compete with the increased competition.
How does it compare to 2015?
2016 has seen fewer enquiries and sales than in 2015. All agents in the area have experienced this. UK-focused agents have been the most affected whilst Scandinavian and Belgian agents are less affected. 2016 saw an increase in supply of mid and lower priced projects mainly outside the Marbella district. Sellers are discounting prices again compared with 2015 where they were holding out.
What are the notable trends?
There is a continued demand for modern homes, which is why new projects have sold well compared to re-sale homes. Developers are also offering increasingly interesting payment terms to attract buyers. There has been a big reduction in the numbers of British buyers. Scandinavian and Belgian buyers are now the most important nationalities in the market in Marbella and we are also seeing some Spanish buyers returning to the market. We are now seeing fewer sales for investment purposes (buying to flip) and more for lifestyle reasons. The areas outside of Marbella have been picking up, such as La Cala de Mijas, Benahavís and Estepona. There have been fewer sales in Marbella due to the General Plan cancellation. Nueva Andalucía continues to be popular with Scandinavians.
Has anything surprised you this year?
The continued preference for off-plan projects rather than better value re-sales (even though mostly are in secondary locations). It seems that most buyers cannot be bothered to renovate (unless for investment) despite the now significant price advantage.
What have been the main challenges?
The Marbella Town Planning issues and the political and economic uncertainty in the world. In particular Brexit has definitely had a negative impact, despite the large number of great new projects being released.
What do you expect will be the key trends for 2017 in Marbella?
An improvement in the political stability of Spain and resolution of the Marbella Town Hall planning issues (with licences being granted again) will again bring confidence back to the market. The increase of new projects is leading to increased competition and developers are increasingly focusing on prices and payment terms and value for money. We also expect to see re-sale prices coming down, subsequently resulting in some very good deals becoming available, particularly for the larger and second line properties. Finally there are some exciting new major projects due to be launched in the New Year such as the New Port and a New Commercial Centre near to San Pedro, both of which should have a positive impact on the areas closest to them.