The property market on the Costa Blanca has experienced a remarkable upturn over the last five years. Price increases of up to 40% are not uncommon, especially in popular areas such as Denia, Javea and Moraira. The market is strongly characterised by international buyers, particularly from Germany, France and Scandinavia. The COVID-19 pandemic has further fuelled the trend towards properties with more space and a better quality of life. There is a clear boom in the luxury segment, while new construction projects and developments are catering to the high demand.
In our expert interview with Andreas Schaich, we find out what challenges buyers and sellers can expect in property transactions in this region and how the current economic and social situation in Spain is affecting the market. Schaich also provides valuable tips for anyone looking to buy or sell a property on the Costa Blanca. He emphasises the importance of professional support from experienced estate agents and advisors in order to meet the complex requirements and make the buying process a smooth one.
How do you see the development of the property market in Denia/Costa Blanca
in the last five years?
Over the last five years, the property market on the Spanish Costa Blanca has changed significantly, influenced by a variety of factors such as economic development, tourism, the pandemic and the general demand for property in coastal regions. Here are some of the main trends and developments:
Price increases:
- Property prices on the Costa Blanca have risen continuously in recent years. Between 35 - 40 % are not uncommon. This is partly due to the high demand for holiday properties and second homes from both international and national buyers.
- According to reports, prices have risen particularly sharply in popular areas such as Denia, Javea, Moraira, Alicante, Benidorm and Torrevieja.
International buyers:
- The market is strongly characterised by international buyers, particularly from Germany, France, Scandinavia and, more recently, Ukraine. The Dutch have a very strong share of the luxury property market.
Pandemic effects:
- The COVID-19 pandemic has temporarily affected the property market, especially during the strict lockdowns. However, the market recovered quickly as many people were looking for properties with more space and a better quality of life.
- There has been an increasing trend towards more rural and less densely populated areas along the Costa Blanca.
- The luxury segment is also experiencing an enormous boom. High-quality villas in the first sea line or with sea views are in demand like never before. The price is often irrelevant. The only thing that matters is which product is immediately available and can be purchased.
New developments and construction activity:
- There are numerous new construction projects and developments to meet the growing demand. Modern apartment complexes, villas and terraced houses are increasingly being built to meet the demands of international buyers.
- Sustainability and energy efficiency are playing an increasingly important role in new construction projects.
Rental market:
- The rental market has also experienced a positive development, as many people who cannot afford to buy or do not want to live in Spain permanently are opting for rented accommodation.
- Short-term lettings, particularly via platforms such as Airbnb, have also increased, resulting in higher profitability for investors.
Financing and investments:
- Financing options for property purchases have improved, with favourable mortgage rates and better conditions for foreign buyers.
- Investments in property are still considered safe and lucrative, which attracts many investors.
Overall, the property market on the Costa Blanca is showing robust and positive development, driven by high demand, particularly from abroad, and continuous investment in infrastructure and new construction projects.
From your experience - what are the biggest challenges for buyers
but also sellers when buying property in this region?
At the moment, many buyers are being carried away by the buying boom and are losing sight of the price/performance of the property. Many properties have defects and then have to be extensively renovated or refurbished. This is often very costly and involves a lot of nerves, as buyers usually do not speak Spanish and have to rely on recommendations. In the end, the renovated property is still old in terms of substance but now has almost the same price as a comparable new build with the best energy properties.
Nevertheless, many buyers shy away from a new build, as they have to wait up to 2 years for planning permission, as is the case in Denia, for example. Added to this is the actual construction time. Sellers are on the sunny side of Spain at the moment, as demand is very high and supply is very low. This means that if a house was built by your parents in 1980 and is now being sold, it can quickly fetch 3-4 times the purchase price at the time. Therefore, when buying or selling a property, we recommend using companies that have been active in the market for years and that also have the appropriate connections to banks, insurance companies, notaries, construction companies, property management companies, rental agencies, etc. or that offer these services themselves.
How is the current situation in Spain (demonstrations against tourism
in some regions / housing shortage for locals...) on the property market on the Costa Blanca?
As foreigners in particular are currently buying very heavily into properties that are partly or exclusively used for holiday rentals, there are two sides to the coin. Many Spaniards are of course happy to see the economy being boosted and this contributing to general prosperity. Unfortunately, however, not all Spaniards can benefit from this. Tourists drive up prices and Spaniards who cannot benefit from the upturn fall behind. A good example is affordable housing for young families. It is becoming increasingly difficult to find an affordable flat as hardly any property buyers are looking for a permanent rental at a fair price, they all just want to rent out on holiday where yields of 6-8 % can be achieved. This makes housing so expensive and scarce that some Spanish families have to spend more than 60 - 70% of their income just on housing. There is not much left to live on. It is precisely in this section of the population that the climate against foreign property buyers is becoming harsher. However, this is certainly not a peculiarity of the Costa Blanca, it can be found everywhere in the world where the property market is on the up. This is why some towns are also considering restricting rental licences.
In your experience, which areas on the Costa Blanca are currently in particularly high demand and why?
I think both the northern Costa Blanca with the higher price level and the southern Costa Blanca are experiencing a boom and are equally popular. It is therefore difficult to single out individual towns. The towns of Denia, Javea, Moraira and Benissa are particularly popular in the luxury segment at the moment. Villas between 1.5 million and 9 million are being built there, with no upper limit.
It feels like prices are continuing to rise... How do you see the price trend?
and the demand for property over the next five years?
I think as long as supply remains as tight as it is at the moment, prices will remain stable and continue to rise. As only what is sold is being built at the moment, there will no longer be an oversupply of property and thus a property crisis. Only a significantly greater supply or an unforeseeable situation such as war, a pandemic or similar could currently slow down the price increase.
What expert tips can you give our readers who are interested in buying
or are you interested in selling your property here?
When buying and selling a property in Spain, there have been so many legal changes, new requirements and regulations in recent years that only a professional with many years of experience and good connections can fulfil them. I therefore advise you to consult an experienced estate agent / tax consultant / lawyer / architect when buying / selling a property. These costs are well invested. Lean back and leave the brokerage, management, letting, administration etc. to a professional.
Even better if you can get as much as possible from a single source. Companies that have been working for generations or have been in business for many years usually have a large network and can help you with all your questions. Take a look at the references on Google and in the companies' social media and ask which services are included. Then nothing can really go wrong.
