Engel & Völkers Licence Partner Marbella > Blog > Covid-19 and the Marbella property market

Covid-19 and the Marbella property market

Whatever prospects the world thought it had for 2020, by March, the previously little-known Coronavirus that had played out on the margins of the news suddenly became a very stark reality – temporarily changing a way of life we have always taken for granted and putting most of our plans on hold. Now, after almost two months of lockdown regulations, it appears that Spain is among the first countries to have turned the corner and to be able to slowly roll back the social distancing regulations and associated restrictions on mobility and economic activity.

The Covid-19 crisis enveloped us so quickly that it took much of the world by surprise; one minute we were going about our usual lives and all of a sudden we were restricted to our homes, our freedom of movement was severely curtailed by an invisible enemy that authorities around the world scrambled to deal with. The emergency services and healthcare systems struggled to cope with the number of new cases arriving daily, and the economy suffered as movement and economic activity all but ground to a halt.

There’s no denying it, the economy will take a hit, here in Marbella as in most parts of the world, as tourist numbers will be reduced and we’ll have had to endure two months of severely restricted business activity and a few months during which things will gradually return to normal. But adversity fosters innovation and even opportunity, and many have adapted to the new situation wonderfully well, working remotely and using modern technology to provide as normal a service as possible. In real estate, this includes virtual tours and live video presentations of homes.

On the other hand, the lockdown has increased the importance of larger homes that offer more personal space, with ample exterior areas, private pools, as well as communities and environment with low density. Many of our clients with houses in Marbella regretted not flying in when they could as Marbella has proven to be a much safer place with very low cases of infection and high quality health care.

A plan to return to normality

The ability to adapt and create flexible structures has helped many businesses to moderate the impact of the Coronavirus measures, and as we slowly emerge from the restrictions such innovations are likely to create a new evolution in the way we work, communicate and promote properties. The tourism and hospitality sectors are hard-hit, but will bounce back too, focusing strongly on domestic tourism this year as well as a surge of pent-up demand that will hit the market as the limitations on travel and movement are lifted, and hotels and restaurants open again.

At the end of April, the Spanish government presented a roadmap back towards normality in which the lockdown restrictions that have been in place since mid-March will be rolled back in two-week stages starting at the beginning of May and, if all goes to plan, concluding by the end of June, when we will have regained a semblance of normality and will be able to work, travel, socialize and also visit restaurants and cafés, albeit with some of the social distancing regulations still in place. The summer will, therefore, become a period of recovery and rebuilding.

Impact on the Marbella property market

Based on a survey from other agents and the experience in our own offices on the Costa del Sol, the drop in activity within the Costa del Sol’s real estate market has actually been far more limited than one might have expected. This is partly due to the fact that many agents – ourselves included – have been innovative enough to find new ways of servicing the clients and providing them with information and virtual viewings of properties, so based on this kind of interaction the indication is that interest in Marbella property remains solid.

Many potential buyers continue to look for homes and gather information this way, with physical travel restrictions limiting their ability to buy, but while much of this pent-up demand will flow into transactions in the weeks and months to come, some also believe that property prices will drop as a result of the Covid-19 crisis, and this will cause them to hold off and see if they can catch the optimal moment. However, it still remains to be seen if prices will drop significantly, as of yet there has been no indication of this. 

Price movements and market dynamics

Much will depend on if there is a recession and if so, how long and intense it is. If we can come out of the lockdown in May and have shops, restaurants, cafés, hotels, and businesses gradually open for business in the course of May and June, much of the lost activity can be recovered and the negative impact on economic growth can be limited. In such a scenario, the property market of the Costa del Sol will also have sufficient momentum to avoid a major drop in prices, though a little correction may be just what the market needed, as home values have grown strongly over the past few years and there’s nothing quite like good value to animate buyers.

This region has a great economic resilience that has shown itself time and again, building on the consistently strong demand for its lifestyle and setting, be it for holiday experiences or property. There are parts of Marbella, such as the Golden Mile, where there is more demand than supply, but even if property prices do drop in other, less consolidated parts of the Costa del Sol, this will only serve to inspire a new group of buyers and investors. With excellent medical facilities and open spaces, ours was one of the regions least affected by the Covid-19 crisis, and it will also be one of the first parts of Spain to recover.

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Engel & Völkers
Licence Partner Marbella
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