The luxury real estate market will continue to grow in the second quarter of 2024

Pure Living has prepared a market report that analyses the performance of the luxury real estate market in 2023 and forecasts for the coming months.

1. Introduction

   – Marbella, a Luxury Destination

Marbella, at the heart of the Costa del Sol, stands as the epitome of luxury, internationally renowned for its unique blend of traditional Andalusian charm and cosmopolitan character. The Mediterranean climate, boasting over 300 days of sunshine per year, golden beaches, and the natural surroundings complement a sophisticated lifestyle, drawing visitors and residents from across the globe.

The heart of Marbella is its charming old town, with narrow cobbled streets and squares filled with orange trees, where traditional white houses, high-end boutiques, and gourmet restaurants intertwine, exuding Andalusian essence at every corner.

Yet, the crown jewel of Marbella remains the exclusive Golden Mile, home to some of Europe’s most expensive villas nestled among luxury five-star hotels and a burgeoning gastronomic scene attracting top global brands.

To the coastal beauty, add the golf offering that captures some of the world’s best courses, attracting top international golfers.

A mix of sport, shopping, and premium gastronomy is complemented by top-tier nightlife. Local companies with an international vision have, in recent years, positioned Marbella on par with cities like New York, Miami, or Dubai.

A city framed by beautiful natural landscapes, from mountains to the beach, Marbella represents a unique balance between traditional charm and utmost luxury. A destination offering a distinctive and unique lifestyle.

   – Market Analysis Objectives

The purpose of this report is to provide a comprehensive and detailed analysis of the luxury real estate market in Marbella for the year 2023, with a look towards trends and expectations for 2024. This report aims to offer valuable insights for investors, developers, potential buyers, and other key industry stakeholders, highlighting market dynamics, buyer preferences, and emerging investment opportunities. Furthermore, the report seeks to identify and explain the drivers influencing the market, including economic shifts, regulatory changes, and developments in the supply and demand of luxury properties.

   – Scope

1. Analysis of current trends. Assessment of the current trends in Marbella’s luxury real estate market, including prices, demand, and the types of properties most sought after.
2. Buyer profile. Identification and analysis of buyer profiles, including nationalities, preferences, and motivations for purchasing in Marbella.
3. Key market developments. Review of the main areas of development and benchmark real estate projects, highlighting the most coveted areas.
4. Economic and regulatory impact. Analysis of the impact of the global and local economy, as well as changes in policies and regulations affecting the luxury market.
5. Innovation and technology. Exploration of the role of technology and innovation in the luxury real estate sector and the influence of new wealth on the local scene.

2. Real Estate Market Analysis in 2023

– Summary of Market Performance in 2023

In 2023, the luxury real estate market in Marbella has maintained its strength and appeal, demonstrating resilience amidst a global economic uncertainty. The year began following the trend of 2022, which had seen strong demand in its first half and a slight slowdown towards the end. Despite this changing environment, Marbella continued to attract international buyers, particularly from Europe, with significant interest from British, German, French, and an increasing number of Polish buyers.

Buyers in 2023 have shown a clear preference for high-quality, ready-to-move-into properties, seeking features such as security, privacy, resort services, and sustainability. The most demanded areas have continued to be the Golden Mile, La Zagaleta, and Nueva Andalucía, although there has also been growing interest in emerging areas like El Madroñal and Estepona centre.

As for prices, there has been an increase, especially in high-end properties, reflecting the ongoing demand and Marbella’s status as a coveted luxury destination. Changes in tax legislation and the global economic situation have influenced the market, but have not significantly diminished its dynamism. Overall, the luxury real estate market in Marbella in 2023 has proven to be robust, with sustained demand and a preference for luxury properties that combine exclusivity, comfort, and sustainability.

– Price and Demand Trends

The luxury real estate market in Marbella in 2023 and the outlook for 2024 showcase a landscape of growth and robustness, driven by sustained demand and an increase in prices. Here is a detailed summary of the observed trends and expectations for the next year:

1. Increase in Sales. Sales of luxury properties in Marbella grew by up to 20% in the highest segment of the market during 2023, compared to 2022. This trend was reflected across Spain, where real estate investment increased by a third from the previous year, reaching more than 17.5 billion euros.
2. Market Composition. The luxury market in Marbella has been less sensitive to the rise in interest rates, with less than 10% of luxury transactions being carried out through mortgages.
3. Buyer Preferences. Buyers are looking for ready-to-move-into properties, with a focus on new or refurbished homes, resort-like facilities, and villas in gated communities with security. In addition, there is a growing demand for ‘branded residences’ offering additional services and facilities.
4. Prices. Housing prices have increased by an average of 15% between June 2022 and 2023, with the price per square meter reaching a record of 4,233 euros. In the most exclusive areas, prices of luxury apartments and villas range between 6,000 and 25,000 euros per square meter, depending on the location and features.

– Trends for 2024

1. Price Forecasts. Prices are expected to continue increasing, albeit at a more moderate pace compared to the last two years. Forecasts for this first quarter of 2024 indicate an increase of between 4% and 5%.
2. Market Flexibility. Experts consider the Marbella real estate market to be flexible and not very sensitive to changes in interest rates, due to the involvement of very high-income segments and the predominance of foreign buyers.
3. Sustainability of Demand. Although the rise in interest rates has made buying a home more expensive in general, demand in the luxury segment is expected to remain strong, driven both by economic factors and the desire for a lifestyle change.

– Impact of the Global Economic Situation on Marbella

1. Resilience Amid Global Economic Uncertainty. Despite uncertainties and global economic challenges such as rising interest rates and inflation, the luxury real estate market in Marbella has shown notable resilience. Less than 10% of luxury transactions in Marbella were carried out through mortgages, indicating that most buyers in this segment have the capability to acquire properties without financing, making them less sensitive to changes in the global economic landscape.
2. Increase in Real Estate Investment. Real estate investment in Spain grew by a third from the previous year, reaching more than 17.5 billion euros. Marbella has experienced an increase in real estate activity, reaching record home sales figures in 2022, a growth that continued into 2023.
3. Sustained International Demand. Despite the global economic situation, Marbella continues to attract a diverse international clientele, driven both by economic factors and the search for a lifestyle change. The Polish market, for example, has shown notable growth, along with buyers from Eastern Europe, motivated by the situation in Ukraine and other global factors.
4. Impact on Tourism and Local Services. The boom in residential tourism and real estate investment in Marbella has had a positive impact on the local economy, primarily benefiting the service sector and hospitality. This economic growth has been reflected in job creation and a municipal budget for 2023 that is the highest recorded to date.
5. Expectations for 2024. Forecasts for 2024 suggest that the Marbella real estate market will continue to be dynamic, with a continuous but moderate increase in prices and sustained demand in the luxury segment. This indicates that Marbella will remain relatively insulated from global economic fluctuations, thanks to its constant appeal as a luxury destination and the strength of its real estate market.

• Marbella has proven to be a consolidated and attractive destination in the context of the global economy, with a luxury real estate market that continues to thrive despite external economic challenges, supported by strong international demand and a positive impact on the local economy.

  The luxury real estate market drives the local economy.

3. Buyer Behaviour

The profile of buyers in the luxury real estate sector in Marbella matches that of high-net-worth individuals, predominantly international, who choose the Costa del Sol for their second or third residence. This broad profile is detailed as follows:

1. International Character. Marbella attracts buyers globally, especially from Europe. In 2023, the British led the purchases, followed by Swedes, Dutch, Belgians, French, and Germans. There has also been increasing interest from Polish and Eastern European buyers, driven by changes in their national situations and the search for a lifestyle change. 90% of homes exceeding 2 million euros were acquired by foreigners.
2. Substantial Financial Capacity. A distinctive characteristic of buyers in this segment is their financial solvency. Less than 10% of luxury transactions are mortgage-based, indicating that most buyers have the capacity to purchase properties outright or without significant financing.
3. Select Properties. Buyers show a preference for new or renovated properties, ready to move into, that offer comfort and luxury without the need for renovation. There is also growing interest in branded residences that provide additional services and facilities.
4. International Prestige. A significant portion of buyers believes that acquiring a property in Marbella enhances their social status, with the destination’s prestige solidified internationally.

Changes in purchasing trends due to the pandemic and other global factors:

The COVID-19 pandemic and other global factors have significantly influenced purchasing trends in Marbella’s luxury real estate market. These changes are reflected in several dimensions:

1. 1. 1. 1. Increased Demand for Green Spaces. The pandemic led buyers to value spacious and multifunctional living spaces more. This includes outdoor areas like gardens and terraces, as well as indoor spaces that allow for remote work and home leisure. The demand for properties with additional features such as home offices, gyms, and entertainment areas has surged in recent years.
         2. Security and Privacy. Villas in gated communities with 24-hour security are the most sought after. Residents seek a controlled, private, and secure environment.
         3. Rise in Second Homes. Many buyers have sought a second or even third residence in Marbella, not just as a holiday destination but as a place where they can live for several months a year.
         4. Global Economic Factors. Economic uncertainties and interest rate changes have not deterred buyers in
            Marbella’s luxury segment, as most transactions are conducted without financing.

4. Established Luxury and Emerging Zones

– Established Luxury. Traditional luxury areas like La Zagaleta and the Golden Mile, where significant international projects are concentrated, continue to be the most sought-after by buyers looking for exclusive villas priced above two million euros. Considered one of Europe’s most exclusive residential resorts, La Zagaleta remains one of the most coveted areas. In 2024, the average price of a villa in La Zagaleta is around 9 million euros, potentially exceeding 35 million for properties in the most exclusive locations.

– Puente Romano, Seaside Luxury. The strategic and privileged location of Puente Romano, right on the beachfront and connected by pedestrian paths along the coastal walkway to Marbella’s city centre, ensures that Puente Romano remains one of the most sought-after, exclusive, and expensive areas on the Costa del Sol. The growing gastronomic offering, with over 30 restaurants and the addition of international brands such as Cipriani, COYA, FENDI, or Dior, has significantly increased housing prices. Currently, a seafront duplex penthouse with 6 bedrooms, 6 bathrooms, and a 200m^2 terrace exceeds 22 million euros in the market.

– Emerging Zones. Marbella East, where significant hotel projects are underway, El Madroñal in Benahavís, Los Flamingos, or El Paraíso are capturing important luxury residential projects, establishing them as new reference zones for both industry companies and buyers. Among the new destinations, the central district of Estepona stands out, where new projects have significantly raised the quality level of housing. The city’s transformation over the last decade has caught the attention of international investors and high-net-worth buyers who opt for the location for their second or third residence.

– Notable Developments and Projects

The luxury real estate scene in Marbella in 2023 has delivered remarkable projects reflecting the growth and transformation of the luxury sector in the area. Below, we highlight some of the most significant current milestones, high-end residential developments, and branded residences:

– Sierra Blanca Estates. Pioneers in the branded residences sector have introduced the concept with successful projects such as Epic Marbella by FENDI Casa and Karl Lagerfeld Villas, recently joined by their partnership with Dolce & Gabbana for the Marbella Design Hills project, which includes approximately 90 apartments of the highest quality.

– Elie Saab Villas. In 2023, the commencement of construction for the first Elie Saab villas in Spain was also announced, in collaboration with Urbania.

– Banyan Tree and Angsana Real de La Quinta. Slated for 2026, this development will integrate signature rooms and residences with exceptional amenities.

– Four Seasons. A project planned to start in 2024, includes a hotel with 165 rooms and suites, 260 private residences, and 40 villas under the management of Four Seasons.

– Marriott’s W Resort Marbella. A hotel and residential complex representing an investment of 200 million euros, including a luxury W hotel and residences managed by Marriott.

– Tierra Viva. An impressive development of 53 luxury villas in collaboration with Automobili Lamborghini, to be located in Benahavís.

5. Luxury Market Segmentation

– Trends and Most Sought-After Properties

Throughout 2023 and into the beginning of 2024, the luxury real estate market in Marbella has witnessed significant growth, marked by new trends in demand and the types of properties sought by buyers.

1. 1. Contemporary Villas and Minimalist Design. Villas featuring cubic shapes, large windows, and light tones remain in high demand. These properties boast meticulous and avant-garde interior designs, kitchens that are either integrated or semi-integrated with the main living area, spacious terraces and green areas, infinity pools, and unobstructed views of the sea or natural surroundings.
   2. Sustainability. Buyers in the luxury sector are increasingly concerned about the environment and seek sustainable properties with a low environmental impact, such as Passive Houses, a trend that is becoming more widespread.
   3. Natural Elements. In line with the above, buyers not only seek lush Mediterranean gardens and low-consumption landscapes but also want nature to be a prominent feature within their homes. Wood, stone, and decoration with natural plants are trends set to continue into 2024.
   4. Bright Spaces. Aiming for a sustainable home in harmony with nature, clients particularly value properties with abundant natural light and lighting systems designed to make the most of this resource.
   5. Turnkey Villas. While a few years ago, built and fully equipped projects ready for living were less demanded, in recent years, they have become one of the most sought-after products by buyers, ranging from apartments in high-end residential resorts to majestic newly built or newly renovated villas.
   6. Security, a Decisive Aspect. The Costa del Sol is known as one of the world’s safest luxury destinations, yet buyers are increasingly demanding in this regard, seeking properties in locations with extra security measures.
   7. Exclusive Services. Urbanisations or residential resorts offering additional services akin to those of luxury hotels, including sports, wellness, leisure, or even gastronomic options, will decisively shape the real estate market in the coming years. This trend is already evident in major residential projects under construction, such as EPIC Marbella by FENDI CASA or Design Hills Dolce & Gabbana Marbella

-Highest Value in the Market

The market price of a luxury property in Marbella or the Golden Triangle is not only contingent on its size and features but also significantly influenced by its location.

1. 1. The Golden Mile. With its established track record of prestige and exclusivity and easy access to luxury services, remains one of the most expensive locations for both new builds and resale or renovated projects. Properties with frontal and clear sea views are the most sought-after and command the highest prices.
   2. La Zagaleta. With its pristine policy of exclusivity and security and first-class amenities such as golf courses, clubhouses, or helipads, will continue to be among Europe’s most expensive areas in 2024.
   3. Sierra Blanca and Cascada de Camoján. Due to their closer proximity to Marbella’s core, their exclusive and established environment among high-net-worth individuals, and the availability of large plots, also command one of the highest price ranges in the area.
   4. Nueva Andalucía and La Quinta. With easy access to renowned golf courses and premium services and availability of both luxury villas and apartments, have seen a significant price increase in recent years, a trend expected to continue into 2024.

 6. Impact of Policies and Legislation

Impact of Policies and Legislation

The luxury real estate market is not immune to government, regional, and municipal legislation. Recent amendments have invigorated the market, attracting new buyers and investors, potentially increasing demand in the most premium segment.

1. 1. Wealth Tax Abolition. The decision by the Andalusian government to abolish this tax, which affected assets above 700,000 euros, makes Marbella more attractive to investors and high-net-worth individuals.
   2. Solidarity Tax. Contrary to the above, the Central Government introduced a new tax for assets exceeding 3 million euros, with reductions available for residents in Spain.
   3. Urban Planning Advances. At the start of 2024, Marbella’s city council approved the second amendment to its urban planning regulations. Resolving the legal limbo related to the PGOU (General Urban Planning Plan) will provide greater security to investors and developers, possibly stimulating real estate development and enhancing the city’s appeal.
   4. Benefits for Digital Nomads. The new Start-up Law and the digital nomad visa, which reduce bureaucratic obstacles, have increased the interest of remote workers in living on the Costa del Sol by 40%.
   5. The Key Role of Innovation and New Technologies.

7. Influence of Technology on the Real Estate Market

With the city of Malaga positioning itself as a national hub for innovation and new technologies, this sector is also significantly impacting the luxury real estate market.

1. 1. Virtual Reality. These technologies allow potential buyers to conduct virtual tours of properties from anywhere in the world, especially relevant in the luxury segment, where over 90% of buyers are foreign.
   2. Big Data and Predictive Analytics. The use of large volumes of data and predictive analytics is aiding real estate agents and investors in making more informed decisions. They can analyse market trends, buyer preferences, and other key factors to determine the best times to buy or sell properties.
   3. Digital Marketing and Social Media. Digital marketing strategies and the use of social media have become crucial for the luxury real estate market. Online platforms enable agents to reach a global audience, showcasing their properties through high-quality photographs, videos, and virtual tours.
   4. Blockchain and Smart Contracts. While still emerging in the real estate sector, forecasts suggest these technologies will become essential tools, making transactions more secure, transparent, and efficient.
   5. Online Investment Platforms. These tools are democratising access to luxury real estate investments, allowing small investors to participate in the high-end property market previously reserved for large fortunes or entities with significant capital.
   6. Personalisation and Tailored Services. Technology enables the provision of personalised services to clients, from property recommendations based on artificial intelligence to digital concierge services.

– New Tech Fortunes

Business development related to innovation and new technologies is creating new major fortunes. Many of these entrepreneurs seek to invest in the real estate market or expand their property portfolios, and the Golden Triangle has become the perfect destination for many of them. This trend is also becoming evident in Marbella’s luxury real estate market.

1. 1. Changes in Preferences and Needs. Buyers or investors from the innovation sector tend to look for automated properties that incorporate the latest in sustainable design, home automation, high-speed connectivity, and other technological comforts. This demand is expected to significantly evolve the properties offered in the market.
   2. Market Dynamisation. The arrival of new investors is contributing to the dynamisation of the luxury real estate market, already beginning to create specific opportunities for builders, architects, and other professionals in the sector.
   3. Impact on the High-Quality Rental Market. In addition to making substantial investments, these new fortunes establish their residence in Marbella for extended stays for flexibility reasons, seeking rental properties with large outdoor areas, spaces adapted for work, and high-speed internet connections.
   4. Diversification of the International Market. The international nature of these investors is further diversifying the market, and it is estimated that Marbella could become a reference destination for major technology entrepreneurs in the coming years.
      

8. Conclusions

Marbella has successfully established itself as a leading destination in the international luxury real estate market. The city now captures the attention not only of investors and high-net-worth individuals seeking a high quality of life but also appears on the project maps of the world’s most significant brands. Lamborghini, FENDI, Dolce & Gabbana, and Karl Lagerfeld have chosen the Costa del Sol for their inaugural real estate projects in Spain, marking a new chapter for one of the province’s most vital economic sectors.

Moreover, the notable increase in prices, which rose more than 15% between 2022 and 2023 to reach historic highs, is not yet over, with the upward trend expected to continue into 2024.
The supply of new or renovated properties remains limited, partly due to a lack of fully developable land. This scarcity, coupled with growing demand, confirms that prices have not yet peaked.
Marbella remains an attractive destination for international buyers, with the UK continuing as the primary market, but emerging markets like Poland and a noticeable intent from the US market to invest in the destination are adding to its allure.
All forecasts indicate that Marbella’s luxury real estate market will maintain the growth experienced throughout 2023 into 2024. Sustained demand, rising prices, and a shortage of supply suggest this trend will persist. Furthermore, the anticipated approval of the new general urban planning scheme in 2024 could impact the market, potentially opening up new development opportunities.

9. Sources and References

This report is based on a variety of sources, including:
– Interviews with local real estate experts.
– In-house real estate data from Pure Living Properties.
– Market data provided by governmental sources and real estate industry organisations.
– Information from leading developers in Marbella.
– News and specialised articles on luxury real estate on the Costa del Sol.