Gecko Towers – 25th August 2020
Last weekend I was reading the Sur in English, a long standing title distributed widely on the Costa del Sol alongside its original Spanish edition, that appears daily and its weekly, Russian edition.
There was an interesting article that announced “Bubble bursts on Costa’s luxury property market in the wake of Covid-19”. It detailed the findings of a report that suggested the luxury end of the market, seemingly properties in excess of €5m, “is showing signs of a drop in prices of up to 20%…”
The report continued that owners of properties in this sector, many of whom are business bosses, were accepting discounted offers as they needed to release the cash tied up in bricks and mortar to resource their businesses that had suffered due to the pandemic. All completely understandable.
This property-price correction was seen as “particularly favorable” for buyers. As, of course, it would be; they’d get more bang for their buck.
The Sur in English readership may see this and many similar reports in all manner of online publications and conclude that in fact the whole market, not just the luxury sector, is poised to suffer a major fall in prices. Indeed, they may well hope that it does. However, it does nothing to manage expectations. If your interest in buying in the Marbella region is simply driven because you believe you may get a bargain, you are unlikely to be entirely satisfied by purchasing in this market or indeed any other.
As anyone who values properties on the Costa del Sol knows there is little in the way of comparable information to seek to arrive at a value for property A by looking at the purchase price-performance of property B. I am familiar with a long standing Marbella property professional who has laboriously tracked the asking and purchases prices of many hundreds of properties in his agency’s core region where there is little in the way of publically available statistics.
I don’t have a crystal ball but we may all be guilty of a very human emotion. If we repeat something often enough it may come true.
I cannot tell you how many times in recent months I have been authoritatively told that the market is ready for an material price correction. It may well be, but I am not seeing it manifest in the price lists of developers or the majority of agents with whom I am in regular contact with. Demand drives sales and if demand falls prices may well fall to a point where the available demand is satiated – simple economics.
Buyer may want prices to fall because they want to secure a better property within their price range. Wanting something to happen doesn’t automatically secure it – ask any Arsenal fan!
Those who choose to sell have two choices. They can either confront whatever demand there is for their property and price accordingly, following the input of their estate agency advisors or they can price at an unrealistic level and be surprised that they receive little or no interest.
Here I would cite as a reliable authority for the latter approach being the view of the property developer “Adnan”, from the first series of the Netflix series “Selling Sunset”. His property had a likely value in the region of $45m but he was insistent that it should be marketed at $75m. His broker/agents advice was ignored. They were torn as to whether they should handle the sale or simply restrict their marketing to a “pocket sale” whereby they’d only approach likely fellow agent with fully qualified buyers. They feared a critical backlash from being seen to be promoting a property that was clearly over-priced.
The conviction that your property simply must be worth more than you are being told it is, embraces two ideas.
Firstly, that demand in your sector of the market is entirely elastic. It can cope with excesses in asking prices for unique properties where budgets are equally elastic and the potential buyer cares little for the mid to long-term value of the property.
Or a dreamlike quality that suggest that the seller is in truth disinterested in idea of selling! When I first visited Marbella many years ago I was told, with an appropriate level of pomposity, that the whole of the Marbella property market was always for sale. It was only ever about offering the right price…..
Should you be interested in discussing the legal process involved in buying a property in the Marbella region, we would be delighted to assist you. Our team of bi-lingual, highly experienced and wholly independent team of Abogados are ready to help you.
Please call me, Mark FR Wilkins, during usual business hours on +34 600 343 917 or, if you prefer, please e-mail me at mark@roslegal.es
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