Why Brits are on a buying spree in the Costa del Sol

Space Real Estate

Our property experts in Marbella office are saying “People used to visit two or three times before deciding what to buy. Now they "buy" within two or three days.”
They are also  also experiencing this kind of urgency at the top end of the market. “We are seeing a lot of €10 million purchases — mostly Germans, Scandinavians and Dutch, but also British.”

The number of buyers contacting Spanish estate agents in April was 36 per cent higher than a year ago, according to the property portal Rightmove. In the first quarter of 2022, there were 2,603 properties bought by British buyers in Spain, according to the Spanish land registry — the highest number of transactions for Britons since 2018, meaning that we have overtaken German buyers to become the biggest group of foreign buyers after losing ground to them at the end of last year.

Interest in Spain’s golden visa — offering a residency permit with a property purchase of at least €500,000 to non-EU citizens — is still below pre-pandemic levels (the two biggest markets in 2019 were China and Russia), but there are now British applicants using it to circumvent the 90-day stay rule or to remote-work in Spain for a few months.

Agents report a more significant new wave of buyers from Poland, Lithuania and Estonia seeking “safe haven” purchases. “They are worried about being able to get their money out of their home countries if Russia expands its activity outside the Ukraine,” Vizetelly says. “They are spending €600,000 to €1 million.”

There’s also an unprecedented number of Polish buyers on the Costa Blanca, says Marc Pritchard from the developer Taylor Wimpey Espana. He says they are typically spending €270,000 to €320,000 on two-bedroom flats. “We haven’t sold this many properties [across Spain] in six months since the boom years of 2006/2007. Labour shortages and supply chain issues meant we’ve had to increase prices — it’s hard to get electronic goods [for kitchens] from Shanghai.”

The developer has recently started selling homes at Almazara Hills in Istan near Marbella (due to complete in late 2023) with two-bed flats from €350,000. For those with bigger budgets, the estate agency Cluttons is selling the remaining nine flats at Velaya, just behind the beach in Estepona.

The €4 million villas and €1.9 million penthouses were snapped up during the pandemic but two-bedroom flats are available for €792,000. “We expect them to be gone by the end of the summer,” says Margit Abel of Gilmar, Cluttons’ associate agent.

Soaring inflation in the UK means that British buyers are keen not to over-stretch their pound, so more of them are taking out mortgages to buy their holiday home. A 60 per cent loan-to-value is typical; this is the amount David Lancaster, 53, from North Berwick is borrowing towards a two-bedroom flat on La Cala Golf in Mijas. “I love golf with my two sons and always hoped to buy a place for retirement,” says the investment manager. “I flew out in February and thought the price [€265,000] was pretty good so thought why wait? It’s for family holidays, not to make us money.”

Other buyers want to make returns to cover maintenance costs. Fed up with the troublesome tenants in her UK buy-to-let house, Jenny Barling from Bedfordshire has sold it to buy a two-bedroom, two-bathroom flat in the Costa del Sol’s Calahonda, near Marbella. Located in a former timeshare block, the €168,000 property has sea views and access to two communal swimming pools. “I flew out in March to see it and knew it was the perfect holiday rental,” says Barling, 44. “I purchased it primarily as a investment, but I took the children there for half-term and it was magical.”

Investors are often funding purchases using money from their pension, from downsizing in the UK, or savings that built up during the pandemic. Mark Rawlings, the founder of Your Dream Home, says, “Let’s not forget property prices [on the Costas] are still below 2007 levels: a flat selling for €150,000 in La Duquesa now was €220,000 before the global financial crisis.”

Forest fires raged last month in the mountain village of Benahavis, 12 miles inland from Marbella, but that has not deterred Jessica Outten, who’s in the middle of buying a three-bedroom flat with her parents, with a 50 per cent mortgage, to rent out when they are not using it as a holiday home. “I soon realised that there’s no use setting your heart on something you’ve seen online becuse by the time you get out to Spain it’s gone,” says the 37-year-old, who works for Cosey Homes in St Helens, Merseyside.

At the top of the market, strong demand is driving up prices. “People want brand new interior and garden-designed properties so they can just turn up with a suitcase,” says Smadar Kahana. “Such a €10-15 million property on Cascada de Camojan [a gated community in the foothills of the Sierra Blanca] was selling for around €5 million four years ago.”

It’s a similar story on the exclusive estate of Sotogrande at the western end of the Costa del Sol, says James Stewart, an associate at the estate agency Savills. “Up until 2018, the top of the market here tended to be €7-8 million. Now it’s €9-14 million — for 1,500 to 2,000 sq m new homes or large prime golf plots where properties are being rebuilt.” He says the result of Andalusia’s regional election last Sunday is good news for high-end buyers: “The centre-right People’s Party won a majority and are expected to get rid of the wealth tax, as they have done in Madrid.” In Andalusia this is currently 0.2–2.5 per cent.

The low-key town of Costa de la Luz was Rightmove’s most searched-for Spanish location in April — with interest 16 times higher than a year ago. The long sandy beaches of nearby Islantilla are appealing, as are the prices; you can bag a two-bedroom house for about €150,000.

Beachside bargains can also be found at Isla Canela, where a new two-bedroom, two-bathroom flat costs €165,000. “Most buyers are families or the nearly retired looking for a holiday home on a quieter coast than Costa Blanca or Costa del Sol,” says Miguel Martinez, who sells homes at the resort.

The Costa Blanca remains the most popular choice for buyers seeking better value than the Costa del Sol — but prices are increasing, according to Karsten Ryder, the operations director at Vincent Real Estate. Ryder says: “Buyers see €50,000 to €60,000 resale properties on TV programmes and come over to find one, but we struggle to find these now. Owners know that the area is flooded with buyers so they have increased their asking prices to try to bridge the gap between what they bought their property for 20 years ago — €90,000 to €100,000.”

Ryder says Algorfa, a bustling Spanish town just seven minutes’ drive from the five-star La Finca golf resort is popular — you can buy a three-bedroom villa there for €140,000. “High house prices back home and domestic politics are big drivers for buyers.”

To avoid the recent chaotic scenes at British airports, simply choose a quieter time to fly, suggests retired Rhian Head, 60, who owns a holiday home in Villamartin on the Costa Blanca. “We always fly on a Tuesday, from Cardiff. We also keep a car in Spain as hire costs have gone through the roof. And avoid going in August.”