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Investing in Spanish Property During COVID – This Advice Can Earn You More Money

May 30, 2020

To say we’ve been through the ringer in the past year would be a gross understatement. We’ve had to deal with Brexit and peoples fears about the property market and investing in property on the Costa del Sol; then just when we had you convinced that Brexit wouldn’t make a deep impact of the Brits buying property, we get hit with a virus. Of course, this isn’t just Spain or Marbella property currently on the back burner, this as you know is a global pandemic. However, the question remains, how has Covid-19 affected property investments?

In this article, we take a close look at the property market and crunch the numbers a bit to see if the long-term effects are as doom and gloom as it seems.

Smart Investors are Looking to Diversify Their Portfolio During This Time

Believe or not, real estate in Spain is still fashionable and a good investment. Even though many cities remain in lockdown, the Spanish government has implemented phases just in time for the summer. Believe us when we say, the collective sigh of relief across the Costa del Sol could be heard in Morocco.

Incredibly, and what pushed us to write this article, we’ve noticed an uptick in property information requests from our website. We’ve even had an uptick in our social media accounts with more views and likes. Basically, we are getting attention again, and diving a bit deeper, we quickly found out why.

One thing you must understand is before Covid, the Spanish economy was only getting stronger. We reached a peak back in 2018 that put us on the road to success. Tourism was off the charts with record breaking numbers for 5 years in a row. By the end of the year in 2019, we had a major growth in the property market, and according to statistics released by the Central Bank of Spain in November 2019, the return expected on the residential Real Estate market in Spain was 8,5%+.

[Source: https://www.bde.es/bde/en/areas/estadis/]


Everything that was good about the Spanish property market, particularly on the Costa del Sol, was because property investments here were growing substantially thanks to the Spanish economy, the increase in rental prices, the progressive revaluation of properties and the continuing boom in tourism.

Okay, so now you’re probably asking on how earth could there be good news considering our current global situation?

We’re so glad you asked! Keep reading to find out about “the secret weapon” that for some reason, many have forgotten about!

The new build-to-rent trend on the Costa del Sol and why investing now makes more sense than ever

Oops, we might have made a mistake with that last statement above. It’s not to say many have forgotten about new developments on the Costa del Sol, in fact, quite a few are very much aware of the potential return even during these Covid times. Smart investors are picking up as many as they can across the Costa del Sol to take full advantage of rentals for next summer and the summer after. Each new development, as you might already know are built in phases; our exclusive new developments for sale show how many phases are completely sold out, and with good reasons.

The benefits have investing in new developments in Estepona, as one prime example, heavily outweighs the cons. Consider the following:

# 1 – Choosing a new build property on investment objective

Here’s the thing about buying property in Spain – depending on the property type, your investment will fluctuate on a normal resale property or a small apartment you might invest in for short term rentals. There are several litigating factors that come into play, such as what we are seeing now with a global pandemic. With new builds you get several options, like fully furnished, with one or two bedrooms, all ideal for vacation rentals and those investors aimed at a more executive target. Besides those benefits, you can also opt in for a fully managed resort type investment – this means, someone else carries the burden of marketing your new build property in an urbanisation by the beach.

The most touristic regions, such as the Costa del Sol, are also an excellent option worth considering for both types of investment. The reason lies in the growing demand for second homes in beach areas and the proliferation of holiday rentals.


Featured: New Development in Fuengirola


#2 – Most of the new developments in the Marbella area are close to the beach

In Estepona for example, several new developments started last year that are in close proximity to the beach with a few even being beach front. Estepona is one of the biggest growing communities on the Costa del Sol. Where many investors tend to go for the larger cities, Estepona presents an opportunity for a very particular tourist enclave. If you prefer to buy with the intention of selling, then yes, opting for bigger cities like Malaga, Madrid or Barcelona would be the logical choice.

However, if you want to take full advantage of vacation rentals, places like Estepona, The New Golden Mile, Marbella, Mijas Costa and more is the absolute best option. These areas are known the world over, we see that just with our previous tourism numbers. People love vacationing here, they love being close to everything including golf, beaches and shops.

The most touristic regions, such as the Costa del Sol, are also an excellent option worth considering for both types of investment. The reason lies in the growing demand for second homes in beach areas and the proliferation of holiday rentals.


Featured: New Development, Benahavis


#3 – Prioritising properties in good condition

Many property investors are well aware of what to prioritise when it comes to buying property in Spain. Good condition or relatively new is what most will go for, for the best possible return. New builds for sale on the Costa del Sol, of course, already has those qualities. One thing worth remembering is the cost of a complete home makeover can cost you around 450-500 euros/m2.

Finally, when calculating the profitability: in order to estimate the initial investment, you have to consider more than just the initial purchase price. You also have to add the taxes, the expenses of the operation and paying out to do up the house (painting, electrical appliances, furniture, etc.). Only once all you take all these costs into account can you calculate the profitability of your potential real estate investment in Spain. When it comes to new developments, you are already buying or investing 40% below market value. This still stands today even during these times. Each of the new developments across the Costa del Sol, have not increased prices.

In conclusion, times may seem tough, and for most of us it is and will continue to be for a little while longer. However, tourism will continue in the foreseeable future. Even now Ryan Air announced it will continue flying between Spain and the UK starting in July. Supply and demand will look completely different for the next few years, you will see things become a lot more affordable in terms of utilities and even mortgage rates here in Spain.

This is why it is so imperative to invest now, and we highly recommend you start with a new development investment. 

Please contact us for further information

Our Details

Avocado Homes
Unit 25 2b El Vicario
La Mairena
29610
Elviria
Malaga
Spain

Tel: +34 654 584 146

Email:
avocado-homes.com

CIF No: 291094719890