From Perfect Storm to Perfect Mix
Buying Costa del Sol Property for the Right Reasons
From an elegant studio apartment in Puerto Banús as a weekend or holiday retreat to a luxurious villa in a private gated estate in Marbella for semi or permanent residence… property options on the Costa del Sol are diverse and cover a wide price spectrum…
The Costa del Sol real estate market is defined by different budgets, distinctive locations and a wide range of property styles. Home buyers also have their own individual requirements and preferences – with specific criteria and a personal vision of their dream property.
There are, however, a series of key decisions that apply almost across the board, regardless of the person or the property: buy what is affordable; buy what is the best available; and buy what works well for you today and into the future.
These basic and simple rules should never be broken; and they are complemented by other more flexible considerations such as the general market situation; the right timing; taking advantage of a particular opportunity; and ensuring great value for money.
If you follow these straightforward rules, any Spanish property purchase, at any time, will most assuredly work successfully over the mid and long term. We all buy and sell at whatever the appropriate time is for us – and we have to accept and adapt to the market situation as it stands at that time.
So how do we account for and ensure maximum benefit from the market’s more fluid rules?
Those who witnessed the boom-to-bust scenario in the Costa del Sol property market from the mid-1980s to the early-1990s would have discerned the approaching “perfect storm” again in 2005. A period of calm normality had followed the downturn up to 1998 then, during an extraordinary worldwide boom in property, the Costa del Sol market rose inexorably to a huge peak of selling activity in 2004.
It was plain to see that prices had crested beyond real value, supply was exceeding demand and the downturn was underway. It gathered pace in 2006 and the market was almost at a standstill by 2007, unsustainable at its previous levels. With decelerating market interest, dwindling sales, radically reduced construction and minimal new investment, the aforementioned “perfect storm” had reached the Costa del Sol long before the worldwide economic crisis.
In hindsight, it was a predictable, naturally-occurring event. Prices dropped from their false highs, developers hunkered down for one to two years, and banks faced serious repayment and solvency issues among their customer base.
What happened to the worldwide economy in 2007-2008 utterly changed the market. Who would have predicted at the peak of the market in 2004 that properties would be changing hands in 2012 at prices more akin to 2001?
People who followed the basic and simple rules for buying Spanish property did nothing wrong. They were hit in 2007-2008 by the worst economic recession in living memory (for most of us) and subsequently suffered from a property market beset by frozen activity and falling prices.
What is the "perfect mix" for the right buyer – and buying for the right reasons?
Prices at selected new developments are on the rise. If you buy into the right project, you are buying into the same upturn as the smart developer who knows it is well underway and has been able to weather the storm. The timing is perfect: values at today’s sales prices are outstanding for the future, and the opportunities are palpable. If you add to the mix such “rules” as buying a home that is affordable, is the finest option available and will work best for you, you are looking at an all-round great bargain buy. That is… a potentially significant investment at low risk.
All the key timing issues also apply to resale purchases. Someone else’s unfortunate loss is your gain and, if you are in the market today, there is an excellent opportunity to take advantage of that situation.
The low point of a property market does, in fact, last for far less time than people imagine. With buyers now more active and vendors more defensive, prices are gradually starting to rise, as they always do, albeit almost imperceptibly initially.
When the market goes low, the smart money says buy – but buy knowing what your buying criteria are and seek out someone who can help you benefit most from the fluid rules.
Find yourself the most proactive, market-immersed agent you can. The agent who is busy and to whom leading developers, banks and private vendors will gravitate – meaning they have the finest property portfolio… The agent who always aims to meet a significant number of buyers’ objectives rather than being wrapped up in selling to one unsuspecting buyer a month in order to survive.
An agent like VIVA, for example…