Roxtar Group | April 23rd 2020

Marbella COVID-19: How the Pandemic Impacts the Property Market

We May Be Facing the Deepest Global Recession in History

By Ernesto Jonsson, Executive Director


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Marbella COVID-19 Real Estate Marked Report

The impact of the coronavirus pandemic in Spain will lead to a temporary but significant slowdown in Marbella’s property market. On the other hand, it will supply the Costa del Sol with new investors, seeking opportunities and focusing on the recovery of one of the world's top holiday destinations. Meanwhile, provoked by the lack of market transparency, buyers and sellers create market-disruptions based on diverse perspectives and expectations. Will the market suffer or become more balanced, evening out vast price differences?


As the global economy suffers from an immediate and temporary halt in all activities, real estate professionals and owners must prepare for a significant short/medium-term slowdown. Provided that the outbreak is controlled within a reasonable time, the adverse effects are already a reality for this year's market. Spain's tourism industry will feel the most significant impact, accounting for around 11% of Spain's GDP.

Ranked as one of Spain's top tourist destinations, Marbella potentially will also be one of the top losers in the aftermath of COVID-19, accompanied by other local Costa del Sol micro-economies. Without the implementation of new temporary banking-mechanisms, the result could be similar or even worse than after the financial crisis of 2008. Such an outcome will bring national and local industries to a halt, including the real estate business.

Views of the La Concha mountain from Puerto Banús harbor in Marbella

The market is already experiencing a considerable drop in prices, triggered by multiple associated industries. Most homeowners have started adapting; however, many sellers may retreat from the market for the time being. One-third of consumers are already gone, and while market demand declines rapidly, new trends arise, where more than half of real potential buyers are now bargain-hunting. The COVID-19 aftermath will reshape the Costa del Sol real estate market dramatically, leading to multiple distress sales in years to come.


Previous events have taught us many things, and perhaps the most relevant lesson is that once the critical stages are over, recovery will be prominent and more significant than expected. The future will also offer great opportunities, and from a buyer's perspective, the sellers clouded outlooks for the foreseeable future might provide enough motivation to accept aggressive offers.

ECB Issues Low-Interest-Rate Parachute to Help the Economy

With very little data available, however, enough to provide leading indicators, we can assert that significant changes to Marbella's real estate market are already here. While the 2008 crisis arose slowly from within the system providing about four years of adaption, COVID-19 gave us only a few days to act. Interest rates and finance borrowing are at historic lows.

Christine Lagarde, European Central Bank President

President of the European Central Bank, Christine Lagarde (Ralph Orlowski/Reuters)

The accommodative approach of the European Central Bank's (ECB) and other central banks' monetary policies suggests that the low-interest-rate environment is likely to continue. Many governments have activated further fiscal easing, and the combination of both should support various markets. Oppositely, we could be experiencing a much stronger blow to economic growth. Measures taken by the central, not to mention our local administration as well as the financial sector, are much more proactive than in 2008.


For the time being, the crisis has yet not changed the risk criteria for mortgages in Spain. The banks have kept their eligibility criteria stable, and the current situation has not had an impact on what they offer to their clients. New applications are perhaps being analyzed more carefully, but without a radical change in the mortgage granting policies so far.