There is no doubt that Malaga province has an extremely buoyant property market and there is a high demand for all types of property for sale on the Costa del Sol. Property valuation company, Tinsa, reported that in 2024 the province saw a 13% rise in property prices, a substantial increase compared to the 4.4% average increase experienced across the Spanish Peninsula. In fact, Málaga is only second to Soria (in the Castile- León region) which saw an impressive increase of 15.3%.
2025 upward trajectory
Statistics from the Ministry of Housing in Spain show that since 2014, the price of property for sale on the Costa del Sol has consistently risen year on year, (except during 2020, due to the Covid 19 pandemic). And although there were fewer property transactions in 2024, compared to the previous year, property prices are still increasing due to the lack of supply. There simply aren’t enough houses being built to satisfy the consistently high demand.
Investment property
The situation is exacerbated by the tourist industry, where speculative property purchases earmarked as short-term making money holiday lets, are reducing the stock of properties available for local residents. As a result, these buy-to-let property sales are pushing up prices. A recent article in the Sur in English illustrated the uptick in property prices, as small studio apartments in the centre of Malaga city are now selling for over 400,000€.
Non-EU buyers’ tax
Throughout 2024, there has been a ground sway of feeling against tourist rental properties in the popular coastal regions, such as the Costa del Sol and Alicante, which are both popular areas for foreign buyers looking to relocate or for second homes that will give them access to the wonderful Spanish sunshine lifestyle.
The Spanish Prime Minister, Pedro Sánchez, has taken the bull by the horns, by proposing a new rate of property sales tax of up to 100% to be levied on non-resident non-EU property purchases. This measure is designed to limit the number of HNWI sweeping in from overseas and snapping up properties as holiday homes, investments or holiday rentals. The purpose is the turn the tide, so that more properties will be available to purchase or rent by local residents. Of course, these measures will not affect EU buyers, as they will only be liable for the current buying costs which in total average between 10 to 15% of the property value.
Overview
The price of residential property in Marbella increased by 13.53% during the period between December 2023 and October 2024, increasing from 4,731€/m² to 5,371€€/m² (indomnio.io).
Eric Muller, co-founder of Andara Villas, explained that as high-end real estate agents and property developers, the team has witnessed first-hand the high demand for luxury real estate in Marbella and its environs. The recent cost-of-living crisis has had very little effect on the market for Marbella property, as a large proportion of sale (40% of purchases are mortgage free) were carried out in cash, with no need for credit (APCE – Association of Developers and Builders of Spain).
We expect the high prices to continue for the foreseeable future, as there is a serious imbalance between the demand for property, particularly the luxury villas for sale in Marbella and similar premium destinations. In simple terms, there aren’t enough new buildings and there is a scarcity of prime plots of land, particularly in sought-after areas on the Costa del Sol, yet there is a constantly growing appetite amongst wealthy international buyers and local buyers.
Marbella is currently working on a new General Municipal Development Plan (PGOM) to address the issue of land scarcity, by proposing to rezone 13 million square metres of rural land for residential use. However, there is still an issue with a lack of labour and high building costs, which will continue to hinder further development.
As a high-end property developer, Andara Villas, is working to address the problem of supply on the Costa del Sol. The company recently announced a luxury villa project on Marbella’s Golden Mile both of which has recently been issued with licence, and as a result is now offered for sale. The plot is located in one of Marbella’s most prestigious post-codes and have been designed by Archidom Studio.
Spanish Economy
In addition, demand amongst local buyers is increasing to the buoyant Spanish economy, which has inflation under control, GDP growth, higher rates of employment, lower interest rates, which is allowing greater access to credit.
Regardless of the proposed government policies to restrict foreign (non-EU property ownership) the expat population shows no sign of abating. Overseas buyers are also benefiting from more robust global economies and access to lower interest rates.
As if the Costa del Sol isn’t popular enough… there are also feasibility studies taking place to ascertain the possibility of extending the current railway across the entire length of the Costa del Sol and a new arterial road, to make the flow easier between the region’s most highly populated areas.
When viewed together, it looks like the demand for property will continue in its current upward trajectory throughout 2025.
If you are looking for property on the Costa del Sol, or are interested in luxury villa development project on the Golden Mile Marbella like Andara Villa 2, please contact [email protected].
