Costa del Sol property market backed to ride the wave of Brexit
Not all statistics related to the Costa del Sol and wider Spanish property market since the UK electorate’s decision to vote in favour of leaving the European Union in June have been positive. Indeed, according to the Spanish Association of Land Registrars, there was a 16% year-on-year drop in the number of British home purchases inscribed in the Land Registry during the third quarter – the first decline in years.
A survey of Costa del Sol property professionals – including estate agents, buying agents, mortgage brokers, surveyors and lawyers – found declines in British demand in the region of as much as 80% since the Brexit vote, although between 20% and 30% was a more typically recorded figure.
Nonetheless, such falls have begged the question of whether we could be observing a permanent decline in the popularity of Spain as a British expat destination – to which one well-placed specialist in the expat property investment sector has responded with a resounding “no”.
Brexit impact tipped to be merely “transitory”
Peter Wells, Managing Partner of the European affiliate of a leading American equity fund, stated that “the referendum gives the UK a fresh start, and an opportunity for positive change.”
Describing markets, buyers and sellers as “perpetually in a state of flux”, Wells added: “As one group of buyers may recede, they are quickly replaced by another group. The Costa del Sol has seen a downturn of buyers from the UK, a phenomenon that I believe is transitory, but the market has seen a marked increase in buyers from France, due in large part to an increased tax burden imposed in the country.”
In reference to suggestions that a marked devaluation of the pound is leading many high end investors to disregard Marbella in favour of the London property market, Wells commented: “This phase will run its course, and will eventually re-balance. Our company will continue to grow both on the Costa del Sol and we will expand into other markets.”
Investment in Marbella continues apace
If one wished to see further evidence of the considerable level of confidence in the Marbella property market right now, they would only need to look to the many high-profile building projects to have been announced in recent months.
In November alone, for example, came the news that a British investment fund was planning to spend €25 million on five luxury properties in the sought-after Cascadas de Canojan development, with an expected completion date of 2018, as well as that the city’s largest-ever hotel is set to be built near the Real Zaragoza dunes. The latter, 600-bed complex will be constructed by a Hong Kong-based company and is expected to create 1,000 stable jobs when it opens in summer 2019.
While there’s no question that the most desirable Spanish property has become more expensive for British buyers since the Brexit vote, Wells has queried whether the effect on the market has been as profound as supposed, stating: “We are still seeing demand outpace supply in the real estate market and therefore, prices continue to increase – not only with our own product but across the Costa del Sol.”
Furthermore, with the Spanish economy on an upward curve and new-build property in high demand, Wells said that “investors can still look to make a profit on today’s purchases as domestic prices increase. In addition, profits upon sale will be worth more once sterling recovers and the funds are repatriated.”
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