Costa Blanca property market report

When we talk about investment in Alicante, we immediately think of buying an apartment or a house on the Mediterranean coast. The Costa Blanca, located by the Mediterranean Sea, is the name given to the province of Alicante, which is a geographical area formed by almost 250 kilometers of beaches, cliffs and coves.

Tourism is one of the main activities in the area. Only Alicante – Elche airport welcomed almost 14 million passengers in 2019! It is also an area visited by the Spaniards themselves, especially people from Madrid and other places in the central peninsula that prefer the white coast as a second home destination for vacations. Among the best-known locations are Benidorm, Denia, Jávea, Altea, Santa Pola, Alicante, Torrevieja, and Orihuela Costa.

This coastal area of Spain is one of the most visited areas by foreigners. According to the statistics of AENA (Spanish Airports and Air Navigation), among those that stand out are:

But this whole region does not live only on occasional tourists in the summer. The good quality of life and climate has developed "residential tourism". That includes numerous residents from England, Germany, Belgium, Holland and other countries of northern Europe on the entire coast, reaching to equal or exceeding the native population in some municipalities. The most common buyers belong to the middle class and aged between 50 and 65 years. These people are either close to retirement or retired and are ready to invest their savings in an apartment, townhouse or bungalow.

Costa Blanca is only comparable to Madrid and Barcelona in the demand of the real estate, leaving Alicante in third place. Without a doubt, it has been a fundamental region to improve both tourism and the real estate market in Spain that continues to grow and recover after the 2007 crisis.

In Costa Blanca purchases have increased in 2018 for more than 10% and have improved the sale deadlines in new construction promotions. Also, the construction of a new holiday home is extended in the whole area by local promoters with their own resources.

The market is divided between new and used, with a balance between the holiday rental and purchase real estate in Alicante and Santa Pola. The offer is mainly second-hand in Guardamar and Torrevieja, while in Orihuela and Pilar de la Horadada is mostly new.

The situation has improved mainly in Los Arenales, La Marina and Santa Pola with a large number of constructions in progress. The holiday property market of El Campello is almost full and without new offers. In Alicante, the area pending development in San Juan, of which a large number of homes are designed for a primary residence. In Gran Alacant, a good part of the offers is also in demand as a primary residence.

New developments have been started in Los Arenales, as well as in La Marina and Gran Alacant, with hundreds of homes in progress. Luxury homes can be found in the first sea line of Cabo de las Huertas.

The vacation home stock is residual in Guardamar del Segura and in Pilar de la Horadada, and scarce in Torrevieja and Orihuela Costa. The properties that sell the best are townhouses of about 100 m2, average quality in Guardamar and Torrevieja, and with medium to high quality in Orihuela Costa and Pilar de laHoradada. The offer of apartments being renewed with the construction of new promotions.

Torrevieja and Orihuela Costa lead the number of works licensing in the whole Valencian Community!

The buyers of holiday homes in this area are both national and foreign. Los Arenales is more oriented towards international customers. Among nationals, buyers from Elche, Madrid, Castilla-La Mancha, Castilla y León, and the Basque Country are the most active. Concerning foreigners, the property here is bought by people from Western Europe, Scandinavia, Great Britain, and Russia.

The demand is shared between domestic and foreign buyers in Torrevieja and Pilar de la Horadada, while foreign demand has greater prominence in Orihuela Costa and Guardamar del Segura. Foreigners are the main buyers of townhouses in Torrevieja, while their presence is strongly diluted in the apartment market.

In Alicante, there is a lack of finished plots, with the exception of San Juan, which is in active development. La Marina, Los Arenales, Santa Pola still have some ready-for-construction plots. There has been an increase in the price of land in recent months, mainly in the area of La Marina and Los Arenales and Santa Pola due to the General Plan of El Campello of 2011 that has been cancelled, leaving in effect the General Plan of 1986, which has paralyzed the works and has done many slowdowns with evoking of its legal requirements. Some transactions with plot purchases were recorded in Torrevieja, Orihuela Costa, and Pilar de la Horadada while in Guardamar del Segura this activity is limited. Slight increases in the price of land are detected in all locations.

The northern part of Costa Blanca features these resorts: Dénia, Els Poblets, Jávea, Benitachell, Moraira (Teulada), Benissa, Calp, Altea, L'Alfàs del Pi, Benidorm, Finestrat, and Villajoyosa.

The holiday home market is clearly recovering in Dénia, Jávea, Moraira, and Benissa. Except for Finestrat, which accumulates a very high number of plots ready for construction, all the towns have an attractive holiday market but lack of ready plots (especially Benidorm).

The best-selling properties are apartments in gated complexes of Dénia and Jávea, between 70 and 100 m2 of surface area, of 2-3 bedrooms in the beach area, especially in the second beach line, of medium quality and old. Old independent housing of 250 m2 is in demand, both on the beach and in the mountains. Detached single-family houses in Benissa and Moraira, with a surface area of 300 m2 and located on a mountain overlooking the sea are also popular.

However, in Benidorm, the rental market is much higher than the purchase. The usual type to let is 2-3 bedroom houses, with community development, and medium-high qualities. The construction of new apartment projects in Dénia (200 homes), Jávea (300) has begun. On the other hand, in Benissa and Moraira, projects for single-family housing are offered above all.

In Dénia and Jávea, the type of housing that is being built is multi-family blocks in a gated complex with average to high qualities, of 2 or 3 bedrooms and an area of 90 to 110 m2. In Moraira and Benissa, the detached single-family dwelling with high qualities of 300 m2 built surface predominates, in plots of 800-1000 m2.

Promotions paralyzed in Finestrat have been reactivated, although in small size. The new projects are located in Calpe and Alfaz del Pi mainly, and to a lesser extent, in Villajoyosa. They are usually with community urbanization with less than 100 property units offered. Apartments with 2-3 bedrooms (80 to 105 m2 built), community development and high average quality. The developers are usually local promoters with their own resources.

The holiday home buyers are both domestic and foreign. They come from the Valencian Community and the Community of Madrid, in the first case, and England, Germany, and Russia among the latter. In Benidorm, buyers are mainly foreign.

The market of plots begins to develop a regular activity. There is no shortage of plots in the beach areas, however, in urban areas, vacant land is scarce. Also, the stock of land is smaller in the first line of the beach and could absorb quickly if the pace of sales continues to recover.

However, Benidorm has a lack of ready land. Villajoyosa is almost 100% full in main holiday areas like La Cala, although it still has ready plots. Price increases have been detected in the land, mainly in Benidorm, due to the absence of ready land. The paralysis of the Armanello district (due to legal issues) affects development that is essential for the expansion of this area.

The existence of homes in less popular locations with lower qualities explains that in some municipalities the average price has decreased in 2018, despite the trend of increase in holiday homes prices.

Nowadays in some countries, it is considered more profitable in the long run to rent housing than to buy it. Adherents of this point of view say that money invested not in a purchase, but deposited in a bank, will ultimately bring more income.

The rental market, in Torrevieja and Orihuela Costa, is less relevant than the purchase and is almost irrelevant in Pilar de la Horadada. The most popular properties in Southern Costa Blanca are 2-3-bedroom apartments, with community urbanization and medium-high qualities.

The rent is usually less popular than the purchase in the Northern part. The most popular housing for rent is an apartment in a gated complex, with medium-high qualities, of 2 and 3 bedrooms, between 89 and 110 m2, within walking distance to the beach.

However, the rental sector was growing steadily during the year 2019 following the trend of recent years. Beach destinations away from large cities such as Alicante or Benidorm have experienced a high occupancy rate during these years, even during the low season, with a growing demand for rental housing.

What can influence the price of Spanish property in Costa Blanca?

Everything indicates that the growth trend will intensify, since new construction promotions are being carried out, which, in many cases, are almost fully sold before even finishing the works.

There are two areas of greater expansion in Costa Blanca South, Los Arenales del Sol, and Gran Alacant which present a high number of promotions underway with excellent conditions.

Prices are stabilized in Guardamar del Segura and in Torrevieja. The trend will continue this year with slight upswings in the larger buildings (townhouses and single-family houses) in Guardamar and in the prominent complexes in Torrevieja. Orihuela Costa and Pilar de la Horadada show an improvement in the prices of holiday homes and the tendency is to consolidate the improvement and reach slight increases. With regard to the evolution of prices, experts predict large differences depending on the area.

This year there will be many owners who will put their home in the holiday rental market to obtain better returns during the months they are away, thanks to the legal security and the guarantees offered by the companies managing tourist homes in Costa Blanca.

During the year of 2018 the 500,000 homes sold was surpassed, a figure that was not reached since 2008. One of the great objectives of the year 2019 was to consolidate the positive growth trend above 10%. As for the price of housing, it is estimated that it will continue to grow during 2020, in a careful but visible manner in the main tourist destinations on the white coast.

The coastal homes will continue to be attractive for investment by foreign buyers, especially from the European Union, namely from Belgium, Holland, and France. According to real estate experts, the effects of "Brexit" will be offset by a greater interest of these European buyers in coastal destinations to buy a second home or acquire real estate as an investment.

Real estate investment expectations for the year of 2020 are really high in Costa Blanca, with properties such as apartments and villas in beach areas with guaranteed profitability, both in terms of the growth of the sector and great rental possibilities.

Despite the United Kingdom's intention to leave the EU with the controversial Brexit, the real estate sector of the Costa Blanca remains stable and climbs up, once the first impact that caused the fall of the first months has been overcome.

However, the British are still loyal to this region and are the most numerous international clients, both of the developers and of the real estate agencies in Costa Blanca, reaching almost 20% in 2018 of all the purchases by foreigners that took place in the province of Alicante.

In a period of uncertainty, the number of transactions decreases. This is usually the case in an unstable situation where both sellers and buyers suspend the process.

Miracles do not happen; the Spanish market does not "suddenly" offer fabulously cheap deals. Due to the possible Brexit effect on the Spanish market, no one will significantly reduce prices, since the decrease in the activity of buyers from the UK will be temporary. There are no alternatives to the Costa Blanca market, with all the advantages of travelling and living on the shores of white sands, not in a single European country.

With consolidated housing prices and an increase in demand in Costa Blanca, a gradual reduction in the stock of homes for sale is taking place. It also means that it is increasingly difficult to find "bargains", especially in high seasons. Lack of housing is due to the shortage of land to build on, especially in major cities or in the first beach lines.

All in all, the tendency towards the development of new urbanizations away from big cities is obvious. Concerning the prices, in Costa Blanca, they go up steadily and the construction boom is in full swing.