Marbella is one of the most popular and well-known resorts in Spain, famous for its stunning scenery, rich historical heritage and the lifestyle it represents. Marbella has also attracted the attention of investors, who have recognized the enormous potential of real estate investment. In this article, we take a look at what makes Marbella an excellent property investment destination, why you should consider investing in one, and how to avoid scammers and fortune hunters.
EXCELLENT GEOGRAPHIC LOCATION
Marbella has an ideal geographical location. It is located in the southern part of the Costa del Sol, where you can enjoy the pleasant weather of the Mediterranean Sea on the beautiful sandy beach for most of the year. The balanced weather is unique in Europe, the microclimate of Marbella is unparalleled. In addition, it is easily accessible from Málaga International Airport, which is connected by numerous direct flights to major cities in Europe, and it is even now possible to fly to Málaga without a stopover from New York. All these factors attract tourists, investors and potential tenants, which increases the occupancy and value of the properties.
QUALITY LIFE IN A LUXURY ENVIRONMENT
Marbella is the epitome of stylish wealth and luxury. The city's exclusive clubs, restaurants, shops and golf courses have made it a popular destination for the rich and famous. The number of tourists and visitors is increasing every year, as a result of which the demand for luxury properties in the city is increasing. This attractiveness contributes to the increase in investment value and the high rental potential of the properties.
ADVANCED INFRASTRUCTURE
Marbella has a well-developed transport network that ensures convenient transportation in and around the city. High-quality private and public health and educational institutions, high-quality restaurants and entertainment venues, as well as well-equipped shopping centers with an international range of goods can be found in Marbella, which ensure a comfortable and high standard of living. In addition, the city has countless sports and recreation facilities, such as golf courses, tennis clubs, padel courts and fitness centers.
HIGH VALUE INCREASE POTENTIAL
In recent years, the real estate market in Marbella has seen significant growth. During the post-crisis recovery, real estate prices rose continuously - by 5% per year - and in the last two years they increased by 20-30%. Real estate prices will continue to rise as a result of ever-increasing demand and diminishing real estate supply. This makes it an attractive opportunity for real estate investors looking for long-term growth.
WHAT INVESTMENT OPTIONS ARE THERE?
Many people ask me what is the best property investment on the Costa del Sol? What counts as a good investment is highly subjective. I can say that the real estate in and around Marbella is stable in value, even during the economic crisis of 2008, the prices did not decrease, only the rate of increase slowed down. For example, someone who bought a two-room apartment in Nueva Andalusia for €200,000 8 years ago, today this property costs €300,000. Living in Marbella is a good "investment" in itself: living a quality life, eating healthy, taking advantage of the sports opportunities provided by the city, enjoying the proximity of the sea, to name just a few of the advantages. You can't compare an investment here with the yield of a property bought in another country, here the buyer gets a way of life, a calmer, more balanced life.
REAL ESTATE INVESTMENT 2023
One of our German investors bought a property five years ago, which he sold after renovation. Emboldened by this, he bought and sold the apartments one after the other. By 2023, he will already renovate eighteen apartments and sell them quickly. If you look at the business model you work according to, you can easily calculate how much your profit is. He only buys properties directly on the beach and in a good location. Previously, you can get apartments to be renovated for €600,000, now around €800,000. The amount spent is usually €150,000 – €200,000. In each apartment, he installs underfloor heating, new coverings, doors and windows, a wine cooler, and even a sauna and jacuzzi in the penthouse apartments. In addition, the apartments have a wonderful view of the sea. We usually sell properties within three months. The apartment he bought for €800,000 and spent €200,000 on it cost him a total of €1 million. We can usually sell the renovated, elegantly furnished apartment for 60% more, for 1.6 million euros.
When someone buys a property, they have to pay tax at the time of purchase, the amount of which is currently 7% of the purchase price in Andalusia. If someone buys for investment purposes, only 2% of the tax is payable, but for this activity a business must be created, the maintenance cost of which is €6,000 per year. According to my calculations, when someone buys real estate for investment purposes, it is only worth paying €6,000 a year to maintain the company if he saves more tax by paying 2% tax instead of 7% when buying. In the case of a property worth around €400,000 – €500,000, it is already worth setting up a company and buying through it, with reduced tax.
You can read more about this topic in our previous article here.
HOW MUCH DOES THE OWNER KEEP?
When we sell the property, we usually do it with the help of another real estate agency. In Spain, the owner pays a 5% commission, which is usually divided between 2, sometimes 3 offices. The owner receives an invoice for the real estate agency's commission, which can be deducted from the profit. Staying with the previous example, if a commission of €80,000 has to be deducted from a profit of €600,000, the 21% profit tax must be paid on the remaining amount. €400,000 remains after taxes. I think that realizing €400,000 with an investment of €1,000,000 in half a year is considered a fairly good investment.
Unfortunately, in the case of properties with a lower price range, the profit indicator is not so attractive. Even if the investor spends €30,000 or even €40,000 on a €200,000 apartment, this property can never be sold for €400,000, so the return on the investment will be much lower. It is also important to note that the demand for investment properties is huge. Swedish, Norwegian, Danish and German companies are eager for something to hit the market.
GENERATE PROFIT WITH SHORT TERM SPENDING
Another common question is how much profit can be generated if someone buys real estate and sells it in the short term, e.g. He publishes it on Airbnb. In general, we can calculate that the property can generate 6-8 percent of the invested value as profit. In such cases, the primary consideration is to be close to the beach and within walking distance to shops. If it has a sea view, it's only good, but the location is more important than that. They often offer apartments for sale near a golf course (I even saw them in a shopping center in the capital) and often even add the promise that they can offer a guaranteed income for the property. However, the reality is that they only guarantee 6% in the first year, and from the following year, 70 percent of the profit belongs to the owner, and 30 percent to the property management company.
It is a misconception that all golf course properties can be rented out of season. In the case of properties next to golf courses, you can count on a 3% profit. There are thousands of vacant properties next to golf courses in the off-season, golfers also prefer to live in the city, close to the beach, shops and stores, since after playing golf they prefer to go to a local pub, night club or go to our favorite restaurant for dinner, so that then they don't have to drive you home to the apartment next to the golf course.
IN A NET OF LIES
Several well-known agencies offer properties for sale that we know for sure were already sold years ago. When the prospective buyer calls the office, they claim that the property is still for sale, only because of the enormous interest, they ask the buyer to send €5,000 to the office's account. According to the promise, the office will "pre-book" the property for the buyer. The moment the €5,000 arrives on the office's account, the buyer is informed that, unfortunately, the property has been sold. They add that the buyer should not worry, because he did not lose the money. They promise that it will be included in the amount of the reservation when they find a suitable property. With this move, the buyer actually committed himself to the real estate office.
SELF-NOMINATED EXPERTS
The reservoir of frauds is inexhaustible. There are those who claim that too many people come to inquire and that it takes a lot of work to take the customers around, and ask for money to drive the customer around the city. In one package, he offers a tour for a few hundred euros, as promised, he will show the restaurants and cafes in the area, but if the prospective buyer is willing to pay more than that, they will even show him real estate. I think it is important to point out that a serious real estate agency does not ask for an honorarium or even a commission just because it shows properties (the seller pays that). Whoever falls for this deserves it. Some people can claim with amazing confidence about themselves on Facebook, e.g. that they are real estate agents, experts, brokers. And these people are always the loudest, the most active on social media, they have plenty of time to post and comment. Armed with loud expressions, people are being dumbed down, without control anyone can be an expert.
CONCLUSION
Many people are relocating part of their wealth to Marbella and its surroundings in order to realize a large profit. Up to 40% profit can be obtained if the investor is able to enter the luxury real estate sector. In the case of smaller investment amounts, the profit will also be 15-20% smaller, and we can definitely count on a 5% increase in value per year. In the last 2 years, this increase in value exceeded 20-30% in some regions and the rising trend will continue in 2023. It is worth treating with criticism, the claims that are thrown at us by social media, it is worth informing the self-proclaimed experts, who usually "understand" everything. In our office, which has been operating successfully for more than a decade and operates within the framework of a registered business form, my colleagues and I work to help you find the home of your dreams and to the best of our ability. Move2Marbella and its team are experienced, honest and discreet. Thank you for trusting us.
