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How the worldwide economic crisis is affecting the property market in Spain's most important resort city Marbella.

How much have prices dropped from their peak prices?

The percentages stipulated in the following paragraphs are intended to be indicative in nature and are based upon the first hand experience of seasoned agents in the Marbella area who deal daily with buyers and sellers, including property developers.

* Properties most severely affected are the least expensive (under €700,000), comprising principally newly built properties but not excluding re-sales, in the less consolidated areas. They have gone down in price from their peak values in 2005-by generally 20% to 30%, but in some cases, even up to 40%.

* Properties priced from €700,000 to €2,000,000 have seen a 20%-25% decline from their peaks (again, less so in the prime locations) while those priced at up to €3.000.000 have suffered a lesser drop of 15%-20%.

* In the higher price brackets: fewer properties are for sale and although owners may be receptive to reasonable offers, in general they have the financial wherewithal to "hold out" if necessary. There are and will be some very good buys as, in some cases, even very wealthy owners simply want to "move on".

Very special “one of a kind” properties, with unique characteristics, qualities and location, have not been substantially affected by the crisis, provided their asking prices are sensible.

Other sales have been made between reasonable buyers (looking for a very good deal), and reasonable sellers, (looking to make a sale and move on, often to another property). Further sales are being made by those willing to trade up or down. These types of sales will continue throughout this difficult period.

 The demand factor is still there. The number of potential purchasers enquiring about and visiting properties for sale in this area has not plummeted, as worldwide property market stagnation might suggest. Viewings have dropped around 25% over last year's levels, as reported by the top agents in Marbella. However, enquiries via the Internet actually increased during the last quarter of 2008. What is selling is limited to either very sensibly priced properties or very special properties from the standpoint of location, quality of construction or architecture, or where a willing seller is ready to sit with a willing buyer and a good agent and see if they can realistically come together in harmony.

A recent Google study measured curiosity and Spain was clearly more interesting to Web surfers than any other destination, beating France into second place by more than a two-to-one margin.

Marbella property demand: Clearly there is a continuing and increasing demand of people who want to buy property in Marbella, waiting for the right time to move, and some of them will unquestionably act in the coming months. More than a few potential buyers, having located “the right property” for themselves and taken the decision to wait, will be disappointed when they decide to take action and find that their ideal property not only has been sold, but that there are no similar properties at similar prices on the market to replace it.

What else do we know for sure?

The off-plan purchaser has disappeared, for the foreseeable future, and will not be missed. Speculators of this nature only distort the market place. The end-user has taken his place, a good sign of a healthier market to come.

Quality locations hold value best: The three most important words in buying property “location, location, location!” remain true. Prime locations in the Marbella area and everywhere in the world are holding property values and selling far better than non-consolidated and secondary locations.

Buyer insecurity is history: With the recent provisional approval of the new General Plan of Marbella, which is due to receive definitive approval later this year, buyers will not be responsible for developer's sins, or failings of prior Municipal Governments.

Marbella property demands. Safe Haven seekers: Trust in banks and their investment products have declined. The stock market has burned so many people, that many will be unlikely to return. The logical alternative or “safe haven” for many will be that of well-located "bricks and mortar", bought at rock bottom prices, as among the most effective medium for future long-term investment, especially when coupled with usage and the well-known life style factors which make Marbella unique in Europe.

Sophisticated investor buyers who have seen the above rule work time and time again, are right now in the market, looking to pick up the highest quality real estate they can at the best price, and will continue to be present for at least another two years.

There is a tremendous amount of wealth concentrated in the Marbella area. Economically speaking, this area of Spain will be less affected compared to the rest of the country, due to the higher level of stability in the quality end of tourism, which is its number one industry, and in the so-called residential tourism resulting from the use of first and second homes by international part-time and full-time residents. Wealth attracts more wealth, and there are still lots of wealthy people in Europe who want to live all or part of the year in Marbella for all the well-known reasons.

The diverse international market base is the biggest factor, which distinguishes the Coast from the national market, and will provide strength for a quicker recovery.

British sellers are providing better deals: With the pound plummeting by over 25% of its value at the beginning of 2008, and over 40% since its peaks in the year 2000, many buyers are finding that the very best buys can often be found with British sellers, who count their assets in Pounds Sterling, and can afford to sell therefore for a lesser amount of Euros compared with Euro zone resident sellers.

What about the future?

It is for the above reasons, therefore, that it is probable that the market will start to lift off later this year. But, in the meantime, before this recovery commences, a gradually increasing volume of sales will be made, generally to buyers who have decided they do not want to postpone their plans further. Generally speaking, the type of properties they will purchase will be well-priced, or viewed as excellent buys for their location, price, condition and lifestyle factor, or rare and unique properties which cannot easily be reproduced. A good agent will have these properties on his books and knowledge and skill to help the buyer negotiate successfully with the seller.

There are of course conditions to securing a solid, long-term recovery. Apart from the obvious financial liquidity necessary for the beginning of a world economic upturn, these comprise: transparent, corruption-free and efficient local governments (this is certainly happening now in Marbella with the brilliant management ability and transparency of Marbella’s new Mayor Ángeles Muñoz and her team; better public services and communication along with increasingly good infrastructure, which has already been ensured by the Regional Government and recent municipal grants by the National Government to the Town Halls; and greater care of our environment for which, finally, all levels of government are bearing the responsibility, as is apparent in the new territorial plan and urban plans for this part of the Coast.

Provided the above comes to bear, and there is solid evidence to this end, Marbella will not only come out of the current recession stronger than before, but will set the standard for other quality resort cities worldwide.