"Sotogrande records hikes of 45%/Sotogrande registra alzas del 45%


Housing prices come down, but not for the rich: Sotogrande records hikes of 45%



The fact that house prices are falling and will continue to do so, is a reality among buyers. However, the housing market bubble has not burst for higher end properties, which remain located along the most exclusive areas on the Costa del Sol.

A recent study by Aguirre Newman shows that in the municipalities considered as less exclusive (Torremolinos, Fuengirola, Benalmádena) in the residential market on the Costa del Sol, the average price per square meter has fallen 11.8% in the last year, while more exclusive areas (Mijas, Marbella, Estepona) have experienced a minimal increase of 0.4%.

However, this is not the case in elite areas of the Costa del Sol, where Sotogrande has taken the honor of becoming the most exclusive municipality. In the well known city of Cádiz, the average price of housing has risen by 45.1% and by 17.4% per square meter, according to figures from the consultancy firm. In the whole area (Casares, Manilva, Sotogrande, Alcaidesa) the square meter has risen by 5.6%.

According to the consultancy firm, these price increases are to be understood within a market which offers a high margin for negotiation. Nevertheless, there is no doubt that Sotogrande has now overtaken Marbella as the preferred choice for buyers with greater purchasing power. This was revealed by the 3,287 euros per square meter that is paid for a house in Cádiz, compared with 3,076 euros in the town of Málaga. On average, a home in Sotogrande is priced at 717,208 euros, compared with 540,658 euros in Marbella.

The fact that Marbella is losing favor with the wealthy, is a given. In addition, the popular area, otherwise a landmark of utmost luxury, discounts can easily reach 35% in negotiations between individuals, according to Aguirre Newman. However, "one of the reasons for not making the discounts official is to not discredit this municipality's commodity so that it can preserve the same halo of exclusivity that other areas of the Costa del Sol enjoy," stated the report.

By contrast, in Sotogrande the price per square meter has risen significantly due to the inclusion of three developments in Sotogrande Alto, which are priced significantly above average. The consultancy firm explained that despite the sharp price increase, all that glitters is not gold in the Cádiz municipality. So developments that appeared as sold out in previous years will come back on sale in the area of La Marina de Sotogrande with official discounts of up to 35%.

Housing in exchange for debt in Marbella

Among the intriguing findings of the report, it highlights an issue that has been detected in the area of Marbella where "people are apparently exchanging houses for debt" in some developments. The consultancy firm also highlighted the case of a development without first occupation licences which has sold 18 homes in the last three months for an amount exceeding 600,000 euros.

And in another case, a development has fully sold out- 100 houses in the last six months, which contrasts with the general market situation. "This suggests that the housing may have been sold in bulk to investors or may have served as payment in exchange for debt," say Aguirre Newman.

Also in the study area, composing of Marbella and surrounding areas, intact developments were found "completely finished, empty and with all the stock to sell” according to the study. They came on the market in 2007, when demand began to fall.

When the time comes to sign the presold houses over, the developer finds out that the owner, may not want to buy because they have been denied a loan or because it does not suit them in the economic uncertainty. Thus, the right to final purchase is not exercised. In the area of Benahavís, several developments in this situation have been analyzed.

In other areas of the Costa del Sol, the fall of average housing prices has been significant. Most notably in Torremolinos (-11.4%), Fuengirola (-10.99%), Manilva (-7.4%), Casares (-5.5%) and Mijas Costa (-3.4% ).