“Prices Are Absolutely Crawling On The Floor”—Why Now Is The Time To Be Shopping In This Crisis Market
Malaga is a wonderfully picturesque city on Spain’s Costa del Sol sandwiched between the looming Montes de Malaga and the azure Mediterranean and capital of the varied, culture-rich province of Andalusia. It’s also right in the middle of what is Europe’s most tourist-heavy stretch of coastline. And while you might expect to find the same endless nondescript white tower block apartments and hotels that scar much of the rest of the Mediterranean’s most popular locales here, Malaga has a whole lot more to offer.
When I stepped off a plane into the Andalusian capital last week I found a ribbon of great beaches, mountain trails that make for superb hiking, remarkable architectural sites, and art museums that befit the birthplace of Pablo Picasso. But the big surprise was that Malaga also offers a surprisingly authentic slice of Spanish life. Freshly landed fish sold in bustling, ancient markets…eclectic tapas in hidden old town eateries…
wild-eyed beasts being put to the sword in the bullfighting stadium…and flamenco spilling down cobbled streets through wooden-shuttered windows. Malaga is the postcard image of Spain-made life.
Yet Malaga is largely overlooked.
Why?
“Well,” explained English-born expat Barbara Woods when I met with her, “this was a right tatty dump 20 years ago!”
Today, things are very different. Malaga has received a makeover and now boasts great eating and shopping to support its historic old town and great beaches.
Another key factor has been the modernization and the expansion of the port. Malaga is the fastest-growing cruise destination in Europe. Throw in a rising domestic population and the 20 million visitors who fly into the city every year, and you can see why Malaga is a city on the up.
Meantime, as one real estate professional I spoke with recently put it, “Prices are absolutely crawling along the floor.”
I’ve been watching Spain closely. This is a difficult market to quantify. If you take a cursory look at overall figures for the Spanish property market you see declines that are predicted to continue for one to two more years. But these declines are driven by the domestic market in Spain’s heartland cities and suburbs.
Turn your attention to the coastal areas where foreigners buy homes, and a very different picture begins to emerge. The domestic market is declining because lending is still on the floor. But the overseas market, which is predominantly one of cash, is picking up. For this market segment, we are at the start of the correction.
Bargains abound. Prices on average have fallen by around 45% since peaking prior to the global downturn. That puts them right back to where they were in 2000. All the gains of the boom have simply unraveled. I believe, again, that we are at the start of the recovery and that a buyer today could look for strong capital growth over the medium term (the next 7 to 10 years).
Real estate investment is in large part about timing, and, right now, Spain is ripe for the picking. But to get a high-quality unit at a steal, you’ll need to move quickly.
Spain’s banks are recovering—slowly. They took quite a battering during the downturn and are not all that eager to take risks. Right now, lenders will give about 60% of value to overseas buyers—at a push.
Rob Carry
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