Andalucía Property Market 2018

A report covering the property market in Spain in general is here. And if you would like to download this report to read later the pdf version is here.

Introduction to the Andalucía Property Market

The aim of this report is to bring together the facts and figures about the Andalucía property market in 2017. I’ll also look forward and make some predictions about 2018. There’s a lot of variation in the current market and it’s vital to have the up-to-date statistics. In fact, Andalucía is a perfect example of the fragmented property market in Spain right now. There are areas of price growth and lots of activity, others are flat and barely off the bottom. It really is a two-speed market and what you see depends on what you are looking at and where.

The domestic and international sectors of the Andalucía property market really do operate completely independently of each other. And the separation is even more pronounced since the 2008 global crash. The domestic market is totally bound to what is happening in the Spanish economy. In particular, purchasing power remains weak domestically because unemployment is still so high. On the contrary, overseas buyers tend to be cash-rich and are benefiting from prices still 20% and more below the pre-crash levels. In the context of the overseas market I’ll look at who is buying, where they’re buying and what they’re buying. I’ll also touch on the fantastic fixed rate mortgages currently on offer in Spain.

Andalucía’s overseas tourism market is important because it broke the 11m barrier for the first time in 2017. As a result property owners can generate significant rental income, from both long and short term lets. So I’ll give the yields you can expect and also how to rent legally.

Why Andalucía?


Andalucía really does have something for everyone, with lots of options for property buyers. It’s so much more than a sun ’n sand summer destination, everywhere in the Mediterranean is good for that. But much of the Med goes into hibernation outside the main summer months and very few places can claim to have a genuine 12-month season. However, it’s buzzing all year long in the micro-climate areas on Andalucía’s southern Mediterranean coast. That’s where you find the mildest winter temperatures on the European mainland.

Meanwhile, on the Atlantic coast there’s some of the best wind and kite surfing conditions anywhere in the world. Head into the Sierra Nevada for Europe’s most southerly and sunniest ski-resort just 45 minutes from the coast. And it’s also one of Europe’s highest resorts with slopes between 2,100m and 3,300m above sea-level. These altitudes mean it rarely closes before May. So, with Mediterranean and Atlantic coasts and inland Sierras, Andalucía has the most varied climate of any region in Spain. But this variation means property buyers need to think carefully about the right location for them. It’s hot everywhere in summer, but it’s a very different story in winter. Even on the coasts, being outside one of the special micro-climate areas can mean a temperature drop of up to 10ºC in winter. Get it wrong and you could freeze.


For sports enthusiasts Andalucía is the dream location. Horse-riding on the coasts and in the sierras, tennis year-round, scuba diving, wind and kite surfing, rock-climbing, trekking, walking, cycling and mountain biking, snow skiing. They’re all there, with the perfect climate in which to enjoy them. The climate was the main reason that Marbella was chosen to host the tennis Davis Cup tie between Spain & Great Britain in February 2018. Another Andalucían destination, Granada, was also in the running but would have meant an indoor match. Marbella means outdoors on clay in temperatures around 22ºC. Temperatures will be even higher in April for the second of five Ironman events to be held in Marbella annually until 2021 and hotter still when cycling’s Vuelta de España starts in Málaga city in August. The second stage sets off from Marbella and the third from Mijas.

But for Andalucía the biggest sport of them all is golf.


Andalucía has 102 golf courses. In fact 25% of all Spain’s courses are in this one region and 47 of those are in Málaga province. That’s why the Costa del Sol also brands itself the Costa del Golf. Just over the border in Cádiz province there are seven courses in the Sotogrande area. Valderrama is the most famous, probably the best course in Europe and one of the best in the world. Who can forget the Seve Ballesteros Ryder Cup in 1997, played on this course?

Without doubt, golf is the one of the reasons for the 12-month season on the Costa del Sol. The benefit to the economy is that most of the more than half million golfers come between October and May. In comparison, Mediterranean coasts without a thriving golf sector are relatively quiet and many bars,restaurants and businesses close. The golf sector currently generates around €1bn to the Andalucían economy and the daily spend of golfers is about twice that of summer visitors.


I think it is true to say that Andalucía has been a bit slow to highlight alternatives to the coasts for property buyers, but that is starting to change. Some of Europe’s finest, and oldest, cities are in Andalucía. Cádiz is thought to be the oldest continuously inhabited city in Europe, settled by the Phoenicians over 3,000 years ago. By region, Andalucía has the highest number of UNESCO World Heritage sites in Spain with eight. And Lonely Planet chose Seville as its No 1 city to visit in 2018.

Great access

Good access boosts property markets. One airline serving a minor airport 100 kms from where your property is located doesn’t really cut it. If that airline decides to pull out there are implications for both rental potential and sales prices. Arrivals into Málaga airport topped 17m for the first time ever in 2017 and it is one of the few cities in the world with flights to all five London airports. There are also four excellent regional airports at Seville, Jerez, Granada and Almería, plus Gibraltar, with flights all over Europe.

In addition, the number of non-stop long-haul flights is increasing, with routes to Istanbul, Tel Aviv and JFK and Norwegian have permission for a Málaga – Buenos Aires service in 2018. It’s no coincidence that buyers from the United States, China and several South American countries increased by between 20% and 30% in 2017, compared with 2016. When it becomes easier to get somewhere, more people go there.

The Domestic Property Market

The most important word in the context of the domestic property market in Andalucía is unemployment. It’s still dire and way above the national average. And until more people, particularly the young, are in full-time, permanent employment, purchasing power will be affected. While job prospects remain poor, growth in the domestic property market will remain depressed. Although job creation is improving in Spain most are temporary and part time. And nowhere is this more true than in Andalucía. That’s not surprising considering the importance of the tourism and agriculture sectors, both of which rely heavily on seasonal workers. As a result, unemployment in Andalucía always rises sharply at the end of summer.

At the end of 2017 only 7% of all new contracts signed in Málaga province were permanent, 93% were temporary. And many of the permanent contracts weren’t actually new. Rather, they were renewals of a previous contract rolled over, not actually a new job. Even worse, there was a rise in the number of contracts of five days or less. About 25% of all contracts were of this type. The harsh reality is that five of the EU’s ten worst unemployment hotspots are in Spain. Unfortunately, Andalucía is one of the five.

So, while Spain’s unemployment dropped to a national average of 16.5% during 2017, not all regions were so lucky. In Andalucía it was still above 25% heading into 2018. At it’s worst in 2013, it was 36.9%, about 10% higher than the national average. And that is normal as unemployment in Andalucía tends to be well above the national average, even in good times.

However, it’s the age group under 35 that’s been hit the hardest. Nationally, unemployment for the under 35s peaked at 55.8% in 2013 so closing 2017 at 38.2% shows progress. However, some regions did much worse in the recession and one of those was Andalucía. For example, in Cádiz province unemployment among the young peaked at 69.2% in 2014. And even at the end of 2017 the Andalucía average for this demographic was still 57.9%. So, progress is painfully slow across the region and the immediate future is not much better. It’s now a decade since the global banking crisis hit and I think it is no exaggeration to say that it’s been a lost decade in employment terms for all age groups in Andalucía, with many more years to come.

The Overseas Andalucía Property Market

But when it comes to the overseas property market everything looks so much brighter. About 65% of all property purchases in Spain currently happen in a handful of locations. Andalucía is one of them. And these few locations have one thing in common; they are where the overwhelming majority of overseas buyers head for. In all of them, the proportion of foreign buyers is way ahead of the national average for market share. Based on the notarial returns for the first half of 2017 overseas buyers represented 19.4% of the total market nationally. However, in Andalucía, foreign market share is much higher and the overseas buyer represented 28.1% of the total. And at the higher price levels foreigners dominate the market, with 75% market share of purchases above €1m.

In 2017, 18% of all foreign buyers in Spain bought in Andalucía, the second highest proportion in Spain, the highest being 26.5% in the Costa Blanca region. And these statistics translate into startling differences in actual numbers. Andalucía welcomed 8,995 foreign buyers in the first half of 2017 while Cantabria had just 152. The fact is the property market is barely ticking over in regions that don’t attract large numbers of foreigners. Activity is low and prices flat and, in a few cases, still falling. In contrast, the regions with an overseas sector are enjoying strong growth and rising prices. And in the most prime areas demand for quality property in the best locations is outstripping supply.

However, as with the two-speed property market, domestic versus international, there’s also a two-speed market within the regions attracting international buyers. For example, Andalucía had the highest number of total purchases in any region in Spain in every month in 2017. However, when you look at the individual provinces it’s very clear that activity levels vary a lot within the region.

Andalucía’s Hotspot – That would be Málaga

Nationally there were a total of 513,814 property transactions in 2017. Of these, 103,688 were in Andalucía. So, one in five of all purchases in Spain in 2017 took place in this one region. However, there are eight provinces in Andalucía and when you look deeper into the statistics it’s clear activity is not evenly spread. On the basis of the year so far, 33.5% of all transactions happened in just one province.

Not surprisingly, that province is Málaga, location of the Costa del Sol, also known as the Costa del Golf. Then when you look at individual municipalities it’s clear activity is concentrated in just a few locations within the province. Of 27,763 sales in Málaga province, 12,703 (45.7%) occurred in just four locations: Málaga city itself, Marbella, Estepona and Mijas. And 30.5%, or 8,485 purchases, were in just two: Málaga and Marbella. Of all purchases in these two locations, foreigners bought 34.4% of Málaga sales and 67% of Marbella’s. (Source: Ministry of Development – Ministerio de Fomento) When you translate foreign activity into numbers you see 2,262 overseas buyers in Málaga province in Q3 2017 against just 19 in Jáen province. Even in Almería there were only 384.

Building licence approvals shot up by 60.9% in Málaga province in 2017, closing with 4,895 projects approved. And the building licences are for projects in the same places where most sales are happening now. Málaga city and the Costa del Sol account for 80.9% of the approvals so they are just going to get busier still, relative to other locations.

Therefore, it’s clear overseas buyers had a big impact on the market in Andalucía in 2017, particularly in Málaga province. And, in my opinion, nothing much will change in 2018. Overwhelmingly, foreigners bought in the coastal regions, particularly the Costa del Sol in Málaga province. Outside of this main area of activity, numbers picked up in Sotogrande (Cádiz) and also in the Almuñécar area on the Costa Tropical (Granada) to the east of Málaga city. The market for inland properties is tiny and is now a niche market for a certain type of foreign buyer, often looking for a property with a lot of land. In Gaucín, for example, only fourteen properties in total changed hands in 2017, and this village is probably one of the most in demand in the whole of Andalucía.

Málaga City

For a certain type of buyer Málaga city is definite worth a look. Almost all the 17+m overseas visitors who fly into the airport don’t visit the city. They turn right or left as they leave the airport and head along the coasts. That’s a shame as Málaga city has undergone something of a transformation in recent years and there are some great property options to suit all budgets. It is possible to find apartments in the historic city centre for under €250,000, great for weekend breaks and excellent rental yields. There are frontline beach apartments with amazing panoramic views of sea and the city from the €1m level. Many houses and townhouses are within walking distance of the city centre and the beach for a range of budgets. It’s a city with great beaches, great food, culture and history and more overseas buyers are taking a serious look.

What and How Much?

Resale prices are one thing while prices for new-build projects are quite another. Secondhand property continued to dominate the Andalucía property market in 2017 with resales accounting for 93% of purchases. This statistic reflects the almost total collapse of property construction in the region following the 2008 crash. During the building frenzy between 2002 and 2006 some 20,000 licences were approved annually in Málaga province alone. 2006 beat them all with an annual total of 45,000! By 2014 that figure had fallen to just 798 for the whole year! However, project approvals rose in 2015 to 2,454 and 3,041 in 2016 then jumped 60.9% to 4,895 in 2017. That’s the best result in nine years.

It is important to remember that there is a time lag between licence approval and a project being sales-office ready. Consequently, the projects approved in 2017 are unlikely to become available for sale before 2019/20. So, the low number of projects approved in the past few years is still impacting the supply side in 2018. As a result, demand for new-build properties in Málaga province is outstripping supply, with serious implications for prices. According to the Notaries average prices for new-build properties rose 11% in September 2017 but only 3% for resales. However, based on what I see happening in the prime locations on the Costa del Sol, the differential may be even more extreme than the national picture.


Marbella, the sixth most expensive town in Spain, is a good example of the new-build versus resale price conundrum. Although prices in the municipality have been rising since Q1 2014 they are still in the region of 15% – 25% below peak levels. With thorough research it is possible to identify well-located properties for between €3,000 and €4,000 per square metre, depending on condition, location and other variables. A big issue is always how motivated the seller is. Although there isn’t the same level of financial desperation we saw previously it is still a factor in some cases. The fact is that just before prices crashed buyers were paying between €6,000 and €7,000 per square metre for the best locations, no more.

Nevertheless, even in 2016 people were actually paying these peak 2006 prices for new-build in the Marbella area. And that’s in spite of the fact that larger and higher quality resale properties in the same location were available at €3,000 and less per square metre. However, it got even worse in 2017 with €9,000 per square metre being paid in some cases. I find it inexplicable that buyers are paying 30% more than pre-2008 peak prices just because something is new. The fact is that resale prices in the same area are still approximately 20% below the top.

I think there two reasons for this imbalance. Firstly, it seems new-build property attracts overseas buyers like moths to a flame. They just want it even though larger and better quality properties are available 30% cheaper just round the corner. And secondly, the scarcity of new-build projects coming through the system is such that prices can be grossly inflated. This trend should diminish as more new stock come through but that is some way off.

In the meantime, I worry that some buyers are paying such inflated prices they may never see a return on their investment. While I can accept some purchasers don’t mind too much about not making a profit I’ve yet to meet one happy to make a loss. New may be nice but when you come to sell it will have to relate to resale price levels. The fact that you paid double the going resale rate at the time won’t mean you can ramp up your asking price over and above what the market can stand.

The Andalucía Property Market and Tourism

There are several categories of overseas buyers. Firstly, permanent residents and second home owners who don’t intend renting at all. But there are large and growing groups for whom the tourism numbers are very interesting. Some purchase buy-to-let investments, not for their own personal use at all. Then there are those who want the property to pay for itself, generating income by renting when there are absent. And then there are what I call accidental landlords. No intention of renting out when they purchased but changed their minds when they saw the potential.

The fact is that Spain’s tourism statistics are nothing short of astonishing. At the very peak of the boom market pre-2008, the all-time annual record was 59m overseas visitors. The 2017 total was 81,786,363 and it would have been well over 82m but for the Catalan crisis. Compared with 2016 Cataluña lost 455,656 tourists in Q4, a sharp reversal of the first nine months of the year which were all up. Nevertheless, Spain still overtook the U.S. to become the second most visited country in the world.

There are several reasons for the surge in overseas visitors. Without doubt, some of the increase is due to instability and safety fears elsewhere. Firstly, rightly or wrongly, the country is still perceived to be relatively safe. Secondly, Andalucía has worked hard to improve its marketing as a year-round destination. Marketing now highlights culture, architecture and cuisine, great for city and weekend breaks, not just the traditional summer family holidays. This has helped extend the season beyond the summer high season months. As a result, numbers increased in every month throughout 2017 and much greater potential for rental income throughout the year.

Property and Tourism Link

So, what does this have to do with the property market? Well, according to Ministry of Tourism research about 35% of this 12m will not have stayed in hotels. Some have their own homes, or stay with family and friends, but a serious number of overseas visitors rent privately. So I was interested to see an announcement from the Andalucían Tourism Ministry in September 2017 that the number of beds available for private rentals in both Málaga and Marbella overtook the number of hotel beds for the first time.

As a result, rental yields performed very strongly in 2017. Across the board, top quality, prime-located properties were 100% occupied in high season. A friend of mine, a permanent resident in Marbella, received such a big offer for his stylish beachside home in August that he moved out. And that was without offering it for rent. Subsequently, he moved out again for an irresistible two month let. In the same area a similar house achieved US$450,000 from a six month let. Former clients who renovated a house I found them in the hills behind the coast have become ‘accidental’ landlords. They bought a permanent home, no intention of renting, but they couldn’t not believe the income potential. Not only have they seen 100% high season occupancy but regular lets throughout the year and a three month winter let.

There is high demand for both long and short term rentals. However, it is absolutely essential that the location is the best and the property must be in 5* condition. Items once considered luxuries, such as free wifi, flat screen t.v. and satellite, are now standard requirements. It doesn’t have to be a grand detached villa, there is just as much demand for smart two bedroom apartments in the right location.


I was initially concerned that yields would start to reduce in 2017 as purchase prices rose. However demand is so outstripping supply that doesn’t seem to be happening. In general, an apartment or townhouse can achieve 8%-10% gross if available for short term lets throughout the year. A similar property let long term can achieve 5%-7%. At the top of the market a beachside property can gross 10%-12% and more in the short term market. In all cases, location and interior finishes are key.

When I am working for a client whose brief requires reliable rental income I target certain areas and ignore others. In addition, I look for a type of property and reject others.  Get the location wrong, even by just a few kilometres and income may be halved.  Get it right and you can expect some of the highest yields in Spain. As well as pinpointing the right location in a particular area you need to be in the right region. This is because some have legislated against short term holiday lettings, pressured by the powerful hotel lobby and disgruntled locals.

Relative to other regions in Spain, Andalucía’s legislation is not draconian and there are currently no prohibited areas. But if you are one of those thinking that renting out your property makes good sense so it isn’t left empty for long periods and helps to cover running costs, the days of leaving a set of keys at the local bar and crossing fingers that no emergencies will arise are over. You need to be ‘rental ready’. Read more about renting legally here.

Brits, Brexit and Mortgages

The British have always been the single largest group by nationality buying in Spain by some margin. And Andalucía is one of their preferred destinations. Almost one in three overseas tourists to the region are from the U.K. and one in four property buyers. Both these figures are above the national average. So, no surprise that the result of the Brexit referendum caused concern. Would Andalucía’s most important market disappear? Well, it seems not. In spite of a much weaker GBP£ throughout 2017 tourist numbers from the UK increased in every month of the year, by as much as 10% in some months. The number of British property buyers is down slightly but more than made up for by foreign buyers from elsewhere. Consequently there’s been no adverse impact on the overall market.

In the context of purchasing plans I’ve yet to hear anyone from the UK mention uncertainty about conditions that may apply to British citizens post-Brexit. The British have been the most active foreigners buying property in Spain since long before either country was in the EU. And this continued throughout the period when the UK was in but Spain wasn’t. I cannot imagine a scenario in which Spain will allow anything to damage their most important market post-Brexit. However, the GBP£ lost 18% of it’s value between January 2016 and December 2017 and my reaction is to ask why hasn’t it been more damaging.

I think there are two main reasons. Firstly, property is still relatively affordable in Spain. It’s true prices are rising in prime areas but they are still well below peak levels. And secondly, many British buyers are taking advantage of fixed-rate Spanish mortgages as a hedge against the weak GBP£.


The Spanish mortgage drought is definitely over, although the banks scrutinise applicants much more carefully than previously. It seems to me if you actually need a mortgage to be able to buy you may struggle. In contrast, the banks are very keen indeed to lend to international buyers who don’t require a mortgage. And most foreign buyers in recent years have been cash-rich and didn’t need a loan to purchase.

One of the first questions I ask my clients if whether they are cash buyers or if they need finance. It’s always better to get an indication of borrowing potential before starting a property search. When the answer comes back that they are cash buyers I always ask if they are aware of the fixed rate mortgages currently available in Spain. Most are not. However, once they knew all my recent clients who intended to buy with cash opted to take a loan. The typical response has been ‘where do I sign’?

Euribor is the interest rate used to fix the majority of Spanish mortgages and it’s been negative since February 2016. It closed 2016 at -0.080% at which time fixed rate mortgages accounted for 28.6% of all new loans. At the height of the recession fixed rate mortgages had all but disappeared from the market. Then Euribor fell throughout 2017, going lower each month to a new historic low, closing the year at -0.19%. And by year end the proportion of fixed rate loans had grown to 40%.

Fixed Rate Loans

As a result of the Euribor fall, long term fixed rate mortgages are available, subject to status. The broker I recommend tells me the majority of international buyers are opting for fixed rate over variable rate loans. My advice to current cash buyers, irrespective of the currency they are in but especially if they are GBP£, is to protect as much capital as possible and take a Spanish mortgage for as much as they can get.

There a range of products to chose from with fixed terms from 5 – 30 years, interest rates between 1.7% and 2.75% and up to 70% LTV. There are a lot of variables, such as country of residency, amount required, location of purchase but most have no restrictions on nationality or purchase price. A good broker is essential. Several recent clients have secured loans of up to €1m, representing 50% LTV, at 2.4% fixed for 20 years. Status is scrutinised very carefully but in general the process is

straightforward and quick. In the case of some of my clients we have even had banks competing for the business. What’s not to like?


In my view, the same issues that impacted the property market in Andalucía in 2017 are still here in 2018. High unemployment and lack of well-paid permanent jobs will keep purchasing power in the domestic sector weak. Record numbers of overseas buyers will push demand even higher and put upward pressure on prices in prime areas. In fact, I think 2018 will be the first year since the crash when some buyers won’t be able to find what they want where they want it within their budget. Consequently, the price rises that were confined to the most prime areas will start to ‘ripple’ out into adjacent locations. In addition, record numbers of international tourists will ensure excellent rental yields continue.

My advice to buyers in 2018 is not to obsess about new-builds, especially if they are not located in prime positions. Many are not. Look at equivalent resales first, calculate the price per sq.m. to include any renovation if it’s needed. Then you can take an informed view on what makes the best financial sense. The result will almost certainly be a lower price, a bigger property and, most important of all, a superior location. A thorough search can still uncover some real deals and although they are harder to find there will always be some sellers more motivated and realistic than others.

If you intend spending time in Andalucía in the winter check where the sun will be.  With the wrong orientation many properties will be dark and cold. If there is vacant land nearby then find out with absolute certainty what can be constructed. It would be a shame to lose that view. The selling agent saying it is green zone is just not good enough.

Buyers entering the market now can expect substantial capital growth in the medium term, say 2 – 5 years. However, in the case of those paying inflated new-build prices, artificially inflated because of lack of stock, I’m not sure I can see them breaking even in the foreseeable future. In the worst of cases, I think some may never go into profit. But when it comes to resales in the very best positions buyers will find in many cases there will be more than one buyer chasing the same property. There is definitely competition in the market for quality in the right location. Having said that, there were also many substantial price reductions throughout 2017. That’s because many vendors have become over-excited by signs of recovery and were too ambitious with their asking prices. In my view, it will be the same throughout 2018.

Finally, before buying always ask two questions. Firstly, if circumstances change and I need to sell quickly am I buying at the right price now or will I have to take a hit? As I’ve already mentioned, some of the prices buyers are paying for new-build properties in 2018 make me think some will never see a return on their investment. And secondly, is this a property for which there will always be demand irrespective of market conditions? If we’ve learnt one thing from the shambles of recent years it is that there are properties and locations for which there will always be demand no matter how bad things are. It always has been, still is and always will be about location.
©Barbara Wood

For more information about locations in Andalucía please go here. A report covering the property market in Spain in general is here. And if you would like to download this report to read later the pdf version is here.

« Back to Market Reports