Roxtar Group | April 23rd 2020
Marbella COVID-19: A Buyer’s Market as Never Before
Second Homes Are Non-Essentials That Tend to Go First
By Ernesto Jonsson, Executive Director
Views of the famous Golf Valley and the La Concha mountain in Nueva Andalucía (@lars.sts)
One thing is sure; Marbella’s real estate market is shifting. Even though a good majority foresees big drops, and the lesser half is preparing for required price reductions, many sellers are expected to carry on as before, without reducing asking prices. Given the circumstances and the discount expectations growing on the buying side, an apparent mismatch has arisen, and buyers tend to win such disputes or move on to the next property.
An essential number of sellers are also considering taking their homes off the market to wait out the crisis, which most buyers may not be expecting. Bargain-hunting in a smaller pool of motivated sellers might not be the outcome one should wait for, and that considered, buyers might have to be ready to act quickly on occasion.
It's Going to Be Different Now
In recent years, the Costa del Sol has successfully attracted permanent residents. But in times of crisis, most people tend to liquidate assets to meet obligations, and second homes are non-essentials that tend to go first. As a direct reflection of that, large numbers of potential buyers in Marbella are indicating that they will wait for bargains to appear. On the other hand, many have no change in their purchase plans, while others will leave or seek new opportunities elsewhere. The next six to twelve months will be critical, not to mention stressful, and we are all about to enter a new chapter that will strengthen our resilience and shape our communities in the foreseeable future.
The streets in Málaga city center are empty due to the coronavirus (CNN)
One of our most notable concerns is the potential impact on consumers' purchasing power through a reduction in their disposable income, making access to mortgages in the current climate more complex. With the volatility and low-interest rates the financial markets are currently experiencing, we believe that the positioning of real estate investments will be restored shortly.
What to Expect for the Next Six to Twelve Months
Spain will experience adverse effects in the real estate market on short and medium terms, provided that the outbreak is controlled within a reasonable time. Most people and professionals expect demand to recover fully in between one to two years. But with no significant number of buyers around at the time, the real estate market is put on hold for about six to 12 months.
Most buyers will wait for prices to go down in search of bargains to appear, but we suspect that even the hardiest of buyers will be looking for a "coronavirus discount". Sellers will carefully have to consider immediately reducing price expectations to find buyers, as the market will be full of opportunities. Lowering asking prices too slowly can make you miss out on the chance to make a quick sale. Industry professionals must unite and be ready to accommodate current market trends, proactively coming up with alternative measures for both short and long- term solutions for their clients.