The Magic of Marbella
Why Marbella will continue to attract purchasers of property for years to come
By Christopher Clover, Managing Director of Panorama, Marbella’s longest established Real Estate Agency
Marbella is the quality capital of the Costa del Sol. It is no longer a resort town, but now, a full blown resort city, with a census of 140,000 residents off season and double that, or around 280,000 inhabitants, including the “floating population” of non residents who do not appear in the official figures. This figure more than doubles in the summer peak season period.
What is it that continues to draw people from all over the world to come to Marbella, not only for tourism, but also for purchasing real estate, commonly known as “residential tourism”? What does the future of this city and the Costa del Sol hold?
A Twelve-Month Season lends great strength to the Property Market
In the mid to late 60’s, Marbella was beginning to be associated with high-profile tourism. The official population jumped from 18,000 in 1965 to 29,000 in 1970, indicative of the beginning of this trend. The key locations at the time – apart from the Old Town – were the Marbella Club, Puerto Banús, Nueva Andalucía, Los Monteros and Guadalmina, the last three with their respective golf clubs, all of which were built betting on the future of residential tourism. Many business people and celebrities called Marbella their home at the time, including the founding fathers; Prince Alfonso Hohenlohe (whose family had founded the Marbella Club in the early 50’s), and José Banús (many called his vision of Puerto Banús and Nueva Andalucía “crazy” at the time!), Manolo Lapique, Ignacio Coca, and other big names such as Jaime de Mora, the von Thyssens, the von Bismarcks, Mel Ferrer and Audrey Hepburn, Guy de Rothschild, Terry von Pantz, Deborah Kerr, Jean Negelesco, Ray Milland, and many others.
The wonderful microclimate of Marbella, its strategic location, and the warmth of its people made Marbella unique in Europe, a special place for special people, which was in fact the slogan Panorama used when it opened its office in Marbella in 1970.
At that point in time, Marbella had most of the ingredients to eventually become a major, quality holiday and residential destination with a twelve-month season, rather than simply a summer holiday resort. However, there were less than 30,000 residents in the late ‘60’s, and for a town to be operative year-round, with enough business for luxury shops, boutiques, restaurants, night spots, leisure and amusement facilities, a minimum nucleus population in the winter “off-season” months was required of around 150,000 inhabitants, between registered residents and residential tourism.
This was finally achieved three decades later, between 1996 and 1997, when the “off-season” took on a life of its own, transforming Marbella into the only resort city with a 12-month season on the Mediterranean Basin. It is precisely this 12-month season, combined with other factors, that has led to the explosion of growth in the property market since that time.
There are many other reasons why the property market will remain extraordinarily solid, in Marbella and the whole Coast, for many years to come:
- A strong and stable multi-source market:
The property market in this area is pan-European and stretches well beyond Europe itself. This multi-source market allows for greater resilience, stability, depth and strength than in less established resort areas. When one nation’s economy is down – such as the German economy today – others are thriving, such as the United Kingdom’s. As the German economy is beginning to recover, the return of German purchasers for second or retirement homes in the Marbella area will not be far behind. And of course, one should also take into account the importance of new markets of Eastern Europe and other areas.
- A wealthy national market investing in Marbella:
Spain is the fifth economic power in Europe today and the eighth in the world, a far cry from the “poor cousin” it was perceived as when it joined the European Union in 1988. The national wealth created in the last decade has contributed directly to the growth of Marbella as the first resort city for Spaniards themselves, in addition to the rest of Europe, lending great strength to the foundations of the market. Marbella, Torremolinos and Benalmádena alone absorbed 65% of Spanish tourism last year.
- Hundreds of thousands of Europeans want to own properties:
Several important studies have been published over the last two years including many by the most important Spanish Banks and even the Regional Government (Junta de Andalucía), who in their introduction to the new Regional Plan (POT, see below), confirm the prediction that hundreds of thousands of Europeans will buy on all Spanish Coasts in the years to come, based on already well established tendencies, and the statistics of the last decade.
Even if only a fraction of these people purchase, there is sufficient demand to keep the property industry healthy for years to come.
- Concern About Crime, but the Coast remains a relatively safe haven
With so many successful and wealthy people from all over the world residing on the Coast all or part of the year, professionals of crime have inevitably followed to target their wealth. The rise of crime on the Coast is an obvious concern to all members of the Spanish and international community, and one that the Town Hall of Marbella has taken a firm stand in lobbying for more central government support. Recently, the organized crime squad in Málaga has been reinforced with dozens of new specialist agents working along with their international counterparts, resulting in drastic measures against crime and money laundering, as witnessed recently in the press.
Fortunately, it can still be said that street safety is relatively secure in Marbella and surrounding coastal cities, as it is a still a pleasure to see people of all ages walking out at night, unfortunately a rarer sight in most other areas of the world.
In support of the above, the head of the new anti-crime squad of the National Police, recently interviewed in the Diario Sur stated, that “The Costa del Sol is a really secure area, if we start comparing it with the 300 homicides per year in Naples, or the 70 per year in Madrid” or the delinquency in other major areas of Europe and the world.
- Interest rates remain at record lows, with no sign of increase in sight, and investment in real estate remains an increasingly viable alternative to the stock market:
Both factors have resulted in strong encouragement of property investment not only in Spain but also in most areas of the Western World, with the red-hot market now in Florida and many other regions. Spanish banks are now very finely tuned to the requirements of the foreign purchaser, and very competitive in the mortgage market.
- Investment vs. first-use consideration:
Although there has been a great amount of straight investment purchasing, resulting in many fortunes being earned as a result over the last eight years, it is important to remember that the majority of second or retirement homes are being acquired with the intent of being used by their owners, at least for part of the year, as well as for classic investment purposes. This also lends strength to the market.
- Regional Master Plan intends to improve Coastal Infrastructure and order growth:
In addition to the debate over the General Plan of Marbella, which will no doubt result in a more environmentally sensitive General Plan, there is the a newly proposed Regional plan called the POT (Plan de Ordenación Territorial) sponsored by the Regional Government, principally intended to plan for a cohesive global infrastructure as well as environmentally sensitive development criteria, for the Western part of the Costa del Sol, including the nine municipalities between Fuengirola and Manilva, as compared with the uncoordinated and fractured development policies depending on each Coastal city’s own General Plan that have been the rule until today. The territorial plan covers not only future property development, as well as the plan for the continuation in improvement of the coastal railway, extending it from Fuengirola to Manilva, but also covers roads, sewage treatment, water, reserve spaces for cultural, educational, sporting facilities and green zones.
There is a consensus amongst local professionals that the Plan is too invasive in the sense that it tries to impose some criteria which corresponds strictly to local government. It is felt that the Plan has been too hastily presented, with not enough public debate or awareness, and no plan for funding the infrastructure. What it has done, however, is to open up a dialogue between the various authorities and affected parties which will no doubt result in a better consensus between the municipal authorities, residents and Regional Government, therefore benefiting future generations.
- The increasing popularity of Spain itself:
The strength of the property market has also been aided by the outstanding resurgence of Spain on the International scene, whether through food, film, music, business, architecture, sports, or even foreign policy. The Spanish voice is being heard, and Spain is winning over the world. The Spanish economy is the strongest in the Euro Zone, with a growth rate of four times the average of its partners. No substantial change in the management of the economy is expected with the new Socialist Government. After September 11th, tourism actually increased on the Costa del Sol, in part due to the so-called “refuge effect” of the Coast’s being perceived as a safe haven from the potential threat of terrorism in big cities.
- A cosmopolitan character:
A particular aspect that has made Marbella so popular is its cosmopolitan character. Marbella is home for tens of thousands of people from every corner of the world, part or all of the year. It is precisely this marvelous mixture of cultures, traditions, languages and professions that creates the realmagic of Marbella: the friendliness and peace of the people that live here have an incredibly positive influence on the property market.
David Searl, the dean of Costa del Sol authors, who has been writing about property for longer than he would like to remember, has just written an article entitled “The Boom is Over… Long Live the Boom!” indicating that although the days of 20% and more price increases are over, the market remains very healthy indeed, and “you could even say it is booming!” He concludes: “We can sum up the reasons why Costa del Sol property will remain a good investment in two words. The words are Florida and California. These two sunshine areas are the fastest growing places in the United States of America. People move there to retire or to live and work away from the colder northern weather. The Costa del Sol is in exactly the same privileged position compared to the rest of Europe and always will be.”
With so many different basic indications in favour of continued growth, most of which are unique to this area, the future of the property market in Marbella certainly appears to be well assured, both for buyers and for sellers. However, the next few years are going to be critical for the success of Marbella in consolidating its growth, avoiding too much high-density development, and preserving high levels of the quality of environment. If Marbella is going to continue to appeal to the quality sector of tourists and residential tourism, both the public and private sectors must take the necessary care to ensure that high standard planning, architecture, landscaping, management and services play a central role in the growth of the area over the medium and long term. Recent events confirm that this is happening.
© 2006 Christopher Clover
Christopher Clover is graduate cum laude in Economics of the University of Virginia (1969); a permanent resident of Marbella since 1973; and the founder, owner and Managing Director of Marbella's longest established Real Estate Agency, PANORAMA, with offices opposite the HOTEL MARBELLA CLUB, in the HOTEL PUENTE ROMANO and in the HOTEL NH ALANDA.
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