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, ensuring 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. 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 eight 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, and enjoying the proximity of the sea.
REAL ESTATE INVESTMENT 2023
One of our German investors bought a property five years ago, which he sold after renovation. Encouraged by this, he bought and sold apartments one after the other. By 2023, he will have renovated eighteen apartments and sold them quickly. He typically buys properties directly on the beach and in a good location. Renovations cost between €150,000 – €200,000. The apartments often have underfloor heating, new coverings, doors, windows, wine coolers, and even saunas and jacuzzis in penthouses. After spending €1 million, we can usually sell the renovated apartments for 60% more, for 1.6 million euros.
When buying a property, the tax is currently 7% of the purchase price in Andalusia. If someone buys for investment purposes, only 2% tax is payable, but for this, a business must be created, which costs €6,000 annually to maintain. If someone buys a property worth around €400,000 – €500,000, it is worth setting up a company to save on taxes.
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 divided between 2 or 3 offices. The owner can deduct this commission from the profit. For example, if a commission of €80,000 is deducted from a €600,000 profit, 21% profit tax is paid on the remaining amount. After taxes, €400,000 remains. This is considered a fairly good return on an investment of €1,000,000 in half a year.
For properties with a lower price range, the profit indicator is not as attractive. Even if the investor spends €30,000 or €40,000 on a €200,000 apartment, it cannot be sold for €400,000, so the return will be lower. There is also strong demand for investment properties, especially from Swedish, Norwegian, Danish, and German companies.
GENERATE PROFIT WITH SHORT-TERM RENTALS
Another common question is how much profit can be generated from short-term rentals, like listing on Airbnb. Generally, a property can generate 6-8% of its invested value as profit. The location is crucial, especially being close to the beach and shops. While properties near golf courses may promise returns, the real profit is usually closer to 3%.
IN A NET OF LIES
Several agencies offer properties for sale that were sold years ago. They request a €5,000 deposit to "pre-book" the property, only to inform the buyer later that the property has been sold. The money is promised to be applied to another purchase, committing the buyer to the agency.
SELF-NOMINATED EXPERTS
The reservoir of frauds is inexhaustible. Some so-called experts even ask for money to drive customers around the city, claiming to show properties for a fee. A serious real estate agency never asks for such fees. Some people on social media claim to be real estate experts without proper credentials, and they are often the loudest and most active online.
CONCLUSION
Many people are relocating part of their wealth to Marbella to realize a large profit. Up to 40% profit can be made if investors enter the luxury real estate sector. Smaller investments yield lower returns, but we can count on at least a 5% annual increase in value. Over the past two years, some areas have seen a 20-30% increase, and this trend is expected to continue in 2023. At our office, we are dedicated to helping you find your dream home. Move2Marbella has a decade of experience, and our team is honest, experienced, and discreet. Thank you for trusting us.
