Spain: Can the visit of a Very Important Person revitalize the real estate market of a place where the property sector has witnessed an uncontrolled building boom and has been negatively affected by the resulting real estate scandals? That was what happened in Marbella after the visit of the American First Lady, Michelle Obama.
The value of villas has decreased by 20% in five years, but Marbella – that was the paradise of international jet set in the 70s and in the 80s – is casting a glamour over property investors again. Local real estate agents and tour operators believe that the “Michelle effect” will help encouraging American tourists and investors to go to Marbella and make a real estate investment.
Marbella – that is set between the Straits of Gibraltar and Malaga, between the coasts of the Mediterranean Sea and the slopes of Sierra Blanca – was the favourite destination of Arab sheiks, stars and famous singers. In the latest years, home buyers and property investors have kept themselves at a distance from the real estate market of Marbella, due to the scandals related to the uncontrolled building development that has largely disturbed the natural heritage and the landscape.
The excessive urbanisation has not spared this beautiful region of the Costa del Sol that boasts a pleasant climate all year round. Despite the Ley de Costas – Coastal Law – luxury properties, de luxe villas, condominiums with small flats and terraced houses have been built on the hills, on the borders of golf courses, within 100 metres of the high water mark – stealing beaches from the general public and making them private – and even on the edge of motorways. Small one-bedroom apartments here are sold for 87 thousand euros, the price of an apartment with two bedrooms rises to 135 thousand euros and an apartment with three bedrooms costs 157 thousand euros.
The regional government has approved a new plan to contrast corruption in the real estate market of Marbella and put the saga of the Marbella planning scandals to an end. Planning regulations have often been ignored and numerous building licences have been granted for projects on land that was not designated for development. Many of the illegally-built properties are destined to demolition.
Nonetheless, the real estate market cannot be limited to these new and ugly buildings that very often have remained unsold. The luxury market cannot experience such a drop in prices. The 20% fall in the price of villas is mainly due to the property speculation that has characterised the years before the housing bubble.
The construction of new apartments and villas has been stopped and there are only a few properties for sale in the best residential areas of Marbella – Nueva Andalucía, Milla de Oro and Puerto Banús – where prices are over 300 thousand euros and the value of the wonderful villas facing the Moroccan coast is comprised between 1.5 and 6 million euros, but can even reach 20 million euros! Indeed, the most expensive villa in Spain is located in Puerto Banús: this 4,600-sqm villa costs 25 million euros.
Low range homes only have experienced a dramatic fall – up to 50% – in prices. They are above all badly-built houses that are located in a low-interest area where there is not a property demand.
Luxury properties located close to golf courses are highly demanded by investors coming from Russia. Prices start from 287 thousand euros for an apartment with 2 or 3 bedrooms in Estepona – the original price was 400 thousand euros. Rentals go from 500 euros to 730 euros per week for a one-roomed flat and 896 euros for a sea-front suite. In Zagaleta, the value of nine-hole luxury is comprised between 4 and 9 million euros.
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