If this is the case the next report by the Ministry of housing should reflect these positive trends as this was not apparent due the first trimester.

The local representative of the developer Myramar, Miguel Rodriguez Porras has stated that “We have seen an increase in sales as people are finally realising that many of the properties are not going to drop any further”. The developer has also confirmed that to date sales have increased four-fold compared to last year and has observed an increase in foreign buyers (British and Russians) for certain promotions along Mijas Costa looking for holiday homes.

The promoter also believes that in the following years VPOS (subsidized housing) will play an important role as in future up to 30% of future promotions will have to be reserved for this type of housing.

The greatest issue now affecting developers is financing. Even with all the properties sold it can take a year to get financing to start the projects.

It should be noted that this improvement in the new build market comes after one of the worst years recorded for many promoters. And although there are positive signs, only time will tell whether it will continue. And of course whether banks will start lending again at normal levels.

Regards
Andrew Bellés

Many of the current property searchers are cash buyers, or only require a small mortgage and are primarily looking at holiday homes mainly with the idea of using them during the holiday months, if they have children, or in low season if they have no children living with them.

As an interesting change many appear to have previously lived or rented long term within Fuengirola and know clearly what they are searching for.

Of course many are still looking for what they see as bargains, so are understandably looking for the best offer possible. But of these property hunters have healthy budgets and unlike last year, vendors are more open to listening to offers.

According to TINSA, a respected property valuation company, prices along the Mediterranean coast (Costa Blanca, Costa Tropical, Costa del Sol, etc…) are from July 2007 to July 2009, down 16.5%. But to clarify, this does not reflect current prices, simply the value that TINSA has given to the average square metre built. Current asking prices by owners are generally down but the figure varies greatly due to location, qualities, etc…

As a rule of thumb many estate agencies are quoting that prices are down anything from 20 to 50% down on asking prices. But again these are meaningless figures as in the past many agencies would quote a high sales price for a property simply to get the listing, or simply let the owner set the asking price. In both cases this simply helped flood the market with overpriced properties.

As it stands now, although prices in Fuengirola have held up reasonably well compared to many other areas, the average price per square metre in Fuengirola now stands at 2,250 euros per built square metre. But please note this is an average figure with higher quality, garage, pool, etc… raising the price.

The reason why Fuengirola has felt the property crisis to a lesser degree than certain other areas is due to the following. First it bypassed a lot of the property invest craze as there were fewer newly built properties and due to the fact that it is a well connected town with both road and rail lines leading out of the town. Although not a large town, with 8 kilometres worth of beaches, being quite flat as opposed to being on a slope as many areas/towns are and half-way between Marbella and Malaga, Fuengirola makes an excellent base for many tourist looking at a home. It is also very popular amongst the Spanish, who although speculated as much as the next person, were more in tune with average prices, etc… than many foreign buyers. The also chose to buy in towns as opposed to urbanisations in less accessible areas.

Regards
Andrew Belles

So let us start of where the stations will be (from west to east)
SAN PEDRO: the station will be south of the A-7, near the town centre and with parking facilities
PUERTO BANUS: the stop here will be situation in the Holanducía area, north of the old N-340
MARBELLA WEST: The station will be built between the underground car park at Jacinto Benavente and ‘El Piruli’.
MARBELLA: The station will be built in front of the ‘La Ermita’, industrial estate, close to the La Bajadilla fishing harbour.
COSTA DEL SOL HOSPITAL: Here the station will be alongside the A-7, on the north side, near the Costa del Sol hospital.
LAS DUNAS: the stop will be near Cerrado de Elviria.
CALAHONDA: The terminal, north of Puerto de Cabopino.

From there is will connect to Las Lagunas and then into the existing Fuengirola line. According to the Andalucian government 5.3 million currently use the inter-urban buses each year, with a majority travelling from Marbella to Fuengirola and from there onto the airport. In total they expect around 9 million less road users, which can only be a good thing.
Also a lot of the properties between Fuengirola and Marbella are going to be less isolated, a benefit for those looking for long term or holiday rentals.

So if you are looking for a long term property investment on the Costa del Sol, these will be the areas to aim for along Marbella and Mijas Costa as many of the property prices are depressed, with 2 bedroom properties selling for around 120,000€ and generating 4/500€ per month rent. Once the train line is finished the same property should rent for closer to 650€ as there will be more potential tenants for the properties.
At the other end though, people who are currently renting properties out long term, will have to offer more value for money as the train line will open up the supply of rentals available only a train stop or 2 away.

So if you are a property investor, keep you options open as whole new areas of the Costa del Sol are going to open up and grow in the coming years.

Regards
Andrew Belles

So why have properties along the Mediterranean coast been hit so hard compared to the towns and cities?

Quite simple really much of the market outside of the towns made up of second homes (holiday homes), which are not a priority when budgets are tight and secondly, because much of Spain’s property boom took place on the coast, so certain areas have a glut of ‘investment’ properties which help depress prices.

But let us also remember that Spain’s Mediterranean coast is 1.660 km long, so it is very hard to generalise. As a comparison Britain measures just over 1.000 km from the south coast of England to the extreme north of the Scottish mainland and according to the Nationwide building society house prices fell by 15.9% in 2008 in Britain.

So according to these general statistics, the Spanish ‘Costas’ are holding up better than Britain! But looking more in depth prices held up better in Scotland than England and London still has the highest average prices in Britain.

So what does this tell us about broad stroke statistics? Good for headlines and nothing more.

Anyway back to the Costa’s

Yes prices have dropped, and if anyone says otherwise they are giving out misleading information. But it has not been a uniform drop. The Costa del Sol has held up better than the Costa Tropical (west of Costa del Sol) and the Costa de la Luz (east of Costa del Sol). The same applies Andalucia, which has weathered the crisis better than Murcia.

Yet why is that? Well when investing in property became a popular “get rich quick” scheme back in 2004 it started mainly on the Costa del Sol, and as prices increase it branched out to other areas. And even on the Costa del Sol it was more localized to the area west of the Malaga airport with the Eastern end only playing catch-up several years later. Anyway people bought in these areas on the advice that it would be the new Costa del Sol or Marbella, solely on the idea of “flipping” the property and not on the final product or on the quality of the area.

It should also be noted that prices have held up a lot better within the towns, such as Fuengirola, Torremolinos, Benalmadena, La Cala, etc… than in Mijas Costa, Riviera, Calahonda, etc… as many of the properties are more primary residence and the surrounding infrastructure is of a higher calibre.

And even though prices might be at their 2005 average what is currently selling is being priced at a 2004 figure as I previously mentioned in The Spanish property Market 2008 and Beyond.

Regards
Andrew Belles

Of course, as I hope you realise, you cannot generalise about property as certain areas hold their values better than others. And of course when the property boom was in full swing many bought as inflated prices which as skewered figures to no end!
Quality and location is closer to the 2006 average, but as many who did buy ‘investments’ are starting to realise, their properties do not fall into either category.

There is also the situation where people who bought 10 or 20 years ago, can still sell for far more than they bought and still undercut similar newer properties substantially.
A good example of this is this 2 bedroom Mijas Costa apartment. At 99.000€ you will not find anything similarly priced. And with a small amount of reform you will have a property that will have you friends, who bought investments or holiday homes in the last 3 years green with envy. With only 10.000 of work spent on this property and renting at 500€ a month, you could be looking at a return of 5% per annum, which is higher than the average rental yield for Spain. And that’s not taking into account future selling price when the market picks up again.

Another example would be this 3 bedroom Fuengirola apartment for sale. A great holiday home or all year round residence with the beach only minutes away. Several large shopping centres nearby and of course the centre of Fuengirola is relaxing 20 minutes walk away. This sort of property with pool, gardens, underground parking and storage is still extremely hard to find in Fuengirola.

In both cases these apartments are the best prices properties in the community/area as the vendors realise that too attract attention in the current market you need to undercut your competition.

Regards
Andrew Bellés