Real estate on the Costa del Sol - a secure investment

4th August 2022

SUR in English recently hosted a webinar during which experts discussed how smooth the purchase of a property can be

Southern Spain's Costa del Sol, which stretches across the coastline of Malaga province, is renowned for its sunshine, great food, vibrant people and starkly contrasting landscapes. These factors have all played a part in helping fuel growth in property development during the last 50 to 60 years.

In 2022, two years after the Covid-19 pandemic brought everyone's lives to an abrupt halt, the real estate market has got back on its feet and is now catering for new types of buyers. These face not only the dilemma of what kind of property to buy but also other legal aspects that are intrinsically linked to purchasing on the Costa.

People will always need somewhere to stay and to live, and the Costa del Sol offers a perfect place to do that. SUR in English sat down with three experts very close to the real estate market to get their insight into what buyers should be looking to get out their purchase.

Javier del Carpio is the director of Small Oasis Manilva and is in charge of a 500-unit project valued at 130 million euros which includes luxury townhouses and apartments. Setareh Mohregi works at Gilmar Real Estate, a firm that has over 38 years of experience with 35 offices all over Spain helping international buyers to move. María de los Ángeles Toribio is a registered lawyer in Gibraltar and Spain working for Attias & Levy, assisting on the Spanish legal side and dealing with real estate matters.

The best place to live

Following the harsh lockdowns that most of the world suffered throughout 2020, outdoor space is now more sought-after than ever before. The Costa del Sol is the perfect place for people to purchase their dream homes, and it even offers different types of lifestyles.

"The Costa's inland is a very good place to live, but near the beach as well. There are pros and cons," said María de los Ángeles, lawyer for Attias & Levy. "If you choose to live near the beach, you could get worse weather during the winter; the sea salt will make some of the property's material worse after a few years and you won't have a lot of privacy," she explained.

"Living inland means you may have different amenities and different neighbourhoods. If you move inland and you can go to the beach every day, that's the best [option]."

Small Oasis' Javier del Carpio underlined how living in his property complex offers the best of all worlds. "In Manilva, you have the peace, the quiet, the beauty and the serenity but you're still minutes away from both Marbella and Sotogrande."

In agreement with her two colleagues, Setareh Mohregi from Gilmar Real Estate believes that living on Spain's southern coast is a privilege, as you can get a taste of all areas and there are over 70 golf courses to choose from.

"It's been proved that the Costa del Sol has a microclimate because of La Concha mountain. It's a miracle because we can enjoy both the beach and the inland," she said.

Setareh Mohregi also explained how some areas are in a world of their own. "You have a nice area in inland Marbella called La Zagaleta. It's as if you were in another country. When you drive up there you can see deer and you're totally immersed in nature."

House buyers tend to differ, depending on their nationality, on what kind of property they want to purchase. Whereas Spaniards are often comfortable enough to invest in secondhand homes, foreigners – especially Swedes, Dutch and Britons – prefer to either buy off-plan or brand new. That can be explained by the fact that those foreigners are more certain of their purchase because it's new, even if that means not seeing the property beforehand.

Tastes have changed

Setareh Mohregi believes that the taste of the new buyer has changed. "They like to have more comfort and bigger outdoor spaces. Inside they need an independent space to be able to work remotely. We have to try and convert holiday tourism into residential tourism."

She also lays out the types of property Gilmar has on the table for their clients, which the firm has been adding to their website over the last six years.

"We have different price ranges. We have developments in golf areas and luxury villas, which clients are now willing to buy," said Setareh Mohregi.

The profile of buyers has also changed since the pandemic began. Previously there were older people purchasing their future retirement homes, whereas now the clients are younger and they come from tech companies or the pharmacy sector, and took advantage of the situation created by the Covid-19 pandemic.

Javier del Carpio, of Small Oasis, believes that the game has changed for developers and that they have to reconnect with what the market is striving for.

"We are catering to that [luxury] market. As developers, we need to diversify our risks," he said. "Needless to say, the highly affluent client is looking for comfort, technology and peace of mind. Our 500 units have smarthome technology, high-quality fibre optic as well as coworking spaces for people to use."

The reason for purchase is also important, as investors will want to use their newly bought properties in different ways - as a retirement home or a permanent home.

"The moment you have a property with a unique feature, it will make for a better resale. If all houses are blue and you buy the pink one, it stands out," he said.

Things to consider

Despite the dreamy views these luxury homes can offer and the attractive lifestyle they can facilitate, buying a home on the Costa del Sol is not as straightforward as it seems, with various things to consider from the moment you start looking for somewhere through to exchanging contracts.

María de los Ángeles advises that, from a legal perspective, buying a property off-plan or brand new is not the same as buying secondhand.

"The most important thing is that there is a good agreement and there is no clause in relation to [possible] delays." There were clients who, because of the pandemic, got a reduced price or discount on their off-plan purchases, but she maintains that a "good agreement" is the main thing between all involved parties.

Javier del Carpio also offers his knowledge on the matter, as he warns that some people don't understand the implications of new developments and the possible issues that arise during the purchasing process.

Process can take time

"It's important to consider that we don't control the town halls, and the delays aren't pertinent to what we do," he said, as he said that procedures in Spain can take a long time.

Clients have to be in the best hands possible, Gilmar's Setareh Mohregi believes. "They need to choose good lawyers and agencies to help them. We have a special department that guides them through the whole [purchasing] process. Clients go in-hand with lawyers and they won't be alone in the biggest investment in their lives," she said.

Setareh Mohregi also says that it's a big deal for people who want to buy a home in Spain, which is why Gilmar helps clients by calculating what their return on investment is going to be.

"Buying a house is a big economic factor and investors wish to get the highest return on investment, especially if they are only looking to live in the property for a month a year," she said.

Another important aspect to take into account is the direct ramifications of Brexit and how that is affecting British people's will to buy homes in Spain. María de los Ángeles Toribio knows that most of her clients are looking to buy on the Costa del Sol as an investment.

"With Brexit, clients are looking to be in Spain no more than 90 days [a year]," she said. María de los Ángeles also stated that 95% of the clients are looking to buy to invest in order to live in Spain for three months and then obtain a benefit for the rest of the year, though they also need to find the best solution in terms of paying tax.

"Because they have to pay a quarterly tax to Hacienda, [clients] need to look to see how to get benefits without paying as much," she said.

Despite Brexit making purchasing a little harder for British people in Spain, it has brought about an alternative solution to those wishing to spend more time on the Costa del Sol.

"There is now a visa called 'visa nómada'," María de los Ángeles Toribio said. "It's not one for tourists, but it allows you to work from home in Spain if you are looking to move here."

The three real estate experts also had some wise words about what potential buyers can do to ensure that the purchasing process is as smooth as possible.

Javier del Carpio, of Small Oasis, believes that when looking for a new home, people often have a very broad search area. "You need to invest in taking a trip down to the Costa del Sol. Marbella, Estepona and Manilva are all very different. You might fall in love with Marbella but hate Malaga."

Del Carpio also said that people have bought homes after going on a virtual tour, though that's an option he doesn't recommend. "We focus a lot on experiences: what is it that makes you feel good in a location? What is the process of signing the deed? [Clients] need to be well informed, they need to come to the area and select a strong legal team."

Similarly, Setareh Mohregi believes that it's safe to buy with Gilmar Real Estate because they operate under Spanish law, with all their properties legally supervised, as well as having founded an organisation to increase the buyers' trust in estate agents.

"We've created the Leading Property Agents of Spain (LPA) to professionalise our sector and to see which agencies are prepared to stay with their client in this very important process of their lives," she said.

Mohregi also pointed out that this non-profit organisation will promote the Costa del Sol, the transparency of real estate agents and their knowledge. "We are ambassadors for our areas and we need clients to be in good hands," she explained.

Understand the process

María de los Ángeles Toribio, of Attias & Levy pointed out crucial information that all clients should consider before deciding to take the time to purchase a home on the Costa del Sol.

"To buy a property can be stressful; it can take a few weeks or three to four months," she said. Toribio explained that clients need to know the ins and outs of the process and whether or not it's going to be as straightforward as they initially think. "We need to be sure that buyers are working with professionals."

Clients are also always interested in what amount of their money goes to Hacienda, with taxes varying depending on what kind of home you buy. "Taxes are different depending if you're buying off-plan, new or secondhand." Buying anything new will cost up to 10% in taxes, while second-hand is slightly lower at 7%.

Moreover, clients need to know that mortgages might not always cover the full cost of the house. They usually range between 60-70%, though the final percentage depends on the property itself.

"The estate agent has to explain, step by step, the whole process. The best thing to do is to hand the client a document with the processes and convince them that you are the best ones for them," María de los Ángeles said.

She remained adamant that buyers must be as informed as possible at all times, and that there are even some real estate agents who don't guide clients through the whole process.

Participants in the webinar discussed the option of buying an off-plan home. It's important to know that the process can be long, Javier del Carpio explained. When a buyer is looking to purchase off-plan or a property that had been abandoned before being completed, it's important they understand the status of the home's licences - such as the First Occupancy licence (LPO) - and the processes which developers are planning to go through to address those circumstances and issues, as most of them include in their plans the timeframes set out by the local town halls to complete the houses. These problems are more prominent in smaller developers and they may not even be aware of the time constraints that they are under to deliver the final product.

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