Get a Big Discount on a Piece of Spanish Coast

Thursday, Dec. 20, 2007
The Costa del Sol, Spain

Read more about Spain in International Living Postcards--your daily escape

Following my last rubbishing of Spain’s most famous stretch of concrete coastline, some readers accused me of being unfair. So I returned to the Costa del Sol to see if I was being unreasonably harsh…

Admittedly, the Costa del Sol ticks a lot of boxes for many European retirees and second-home owners. Along with the warmest climate on the Spanish mainland, it has a 12-month season. The towns and villages are clean, well kept, and offer an array of social and sporting activities that include some of the best golf in Europe. There are excellent international schools, an excellent public transport system, and English-speaking doctors and dentists.

This cosmopolitan life in the sun suits a lot of people. But a lifestyle buy is different to speculation.

Like much of Spain, there is a crisis in the Costa del Sol property market. Stupidly ignoring the laws of supply and demand, developers have been determinedly building homes for the past decade. As a result of this bad judgment, thousands of concrete-box apartments and shoebox “urbanization” houses remain unsold.

Off-plan “investors” believed the hype about flipping for quick profits, forgetting everyone else wanted to jump on the off-plan bandwagon, too. Now the speculators are stuck with bad buys they can’t unload. Last year, almost 800,000 new properties were built in Spain. The overhang from that is estimated to be 300,000 properties.

Despite this glut, new off-plan projects continue to be marketed.

Awaiting distress sales, most potential buyers are keeping their powder dry. A recently released report from Germany’s Deutsche Bank estimates that Spain’s property market is 30% overvalued. To make matters worse, the Costa del Sol recently received some bad publicity regarding corruption and money-laundering, following police investigations into town hall bribery that revealed that dozens of developments had been built illegally.

Most of these builds are now being legalized retrospectively. For speculators, the Costa del Sol is as enticing as a stinking pile of week-old shrimp. The late November edition of El Mundo Inmobiliario, a property listings magazine for Malaga province, contains nothing remotely tempting.

It’s understandable that many commentators in the British and Irish media are advising readers to offer vendors at least 20% less than the asking price.

Torremolinos, along with Fuengirola, offer the most architecturally brutal structures of all the Costa del Sol’s resorts. Yet most apartments are still being marketed in the €2,129 to €2,937 ($3,070 to $4,236) per-square-meter range.

If the Costa del Sol sounds like your idea of heaven, my advice is that you don’t rush. There’s a lot for sale, and that’s likely to be the case for quite a while. Although I’m always wary about making forecasts, I’d be amazed if Spain's properties here don’t get a lot cheaper.

Steenie Harvey
Roving Europe Editor, International Living

Editor’s Note: So where should you look to invest your dollars in 2008? Fear not, dear reader, we have the answers--the January 2008 issue of International Living will tell all. Subscribe to International Living magazine now.

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