Demand for new housing projects up strongly

After a slump during the years of the financial crisis, construction has bounced back strongly, with 4,895 new property projects being approved in 2017 in the province of Málaga.

It’s a feature that reflects just how well the market has revived in recent years, representing as it does a 60% increase over the previous year, which in itself posted a highly respectable rise of 24%.

The city of Málaga itself saw an increase of 38% in the number of approved building units, with the main part of the Costa del Sol posting a 69% increase and the smaller eastern section, which is centred upon the resort towns of Nerja, Frigiliana, Le Herradura, Almuñecar, Torre del Mar and Velez Málaga, posting a hefty 87% increase.

The inland region is also sharing in this property renaissance, with the number of new-build country properties there rising by 71% in 2017 when compared with the previous year. Though the buoyant statistics can be partly explained by the coincidence of many different projects being launched within the same year, it does show just how strong demand and investor confidence are right now.

Investor and buyer appetite

The figures released by Málaga’s Colegio de Arquitectos, which also reveal a combined investment in the region of €825 million, are the highest since 2008, confirming what many industry experts are currently saying, namely that we’re moving back towards pre-recession levels in terms of sales, construction and prices.

The 2006 peak of 45,000 new homes is still some distance away, and many believe it would be neither desirable nor sustainable to reach such levels again. Instead, the head of the Colegio de Arquitectos, Francisco Sarabia, believes the ceiling to be between 20,000 and 25,000 per year.

As developers are now dependent upon private investors and only receive bank financing under very strict conditions, the market is now better protected against over-building and property bubbles.

Price increases, though solid, are at non-speculative levels, and investors are monitoring the supply and demand situation more carefully than before, keen not to over-extend themselves. Of the 4,895 properties for which planning permission was granted, 1,145 were for houses, representing an investment of €259 million, 3,625 were apartments, worth a combined investment of €555 million, and 125 were for subsidised housing, a property segment that had all but disappeared and is now slowly making an appearance again.

For builders, investors and homebuyers, therefore, the current state of the Costa del Sol market is healthy and encouraging.