3 reasons why the Costa del Sol and Sotogrande property markets are well-placed to ride out the economic storm in 2023
Let’s be honest with ourselves, because it has hardly been a secret; there has been a lot of very real economic uncertainty as of late. So, many of you may be wondering whether 2023 will be a year of downturn rather than positivity when it comes to all things Sotogrande property.
All the talk is quite familiar by now: people refer to high levels of inflation, spiralling energy bills arising from the war in Ukraine, and central banks hiking interest rates.
So, will the remaining 10 months of 2023 be quiet ones for the Spanish, Costa del Sol, and Sotogrande property sector, and perhaps not a great time to actually act on your interest in property in this part of the world?
Here at BM Sotogrande, we disagree with the talk of downturn or even doom. Here are just some of the reasons why we feel good about all the prospects for Sotogrande property this year.
The effects of the previous late 2000s economic slowdown
While the property market in Spain saw a severe drop in demand – and, associated with this, prices – for much real estate back during the crash of 2008 to 2014, the experience of that crisis has helped to make the sector much more robust this time around.
That earlier crisis saw Spanish property prices drop by more than a third. Since then, there has been a steady rise in prices for real estate in the country, although they are still generally some way below their 2007 peak.
The Spanish property sector of today, then, is a much more stable one – and although some experts have predicted a fall in prices during 2023 and 2024, such forecasts have been for 2% or 3% falls, rather than a crash.
Compare that to the average 9% decrease in prices that the European Central Bank has anticipated for the Eurozone as a whole, and the 5% to 10% drop in house prices that market analysts have predicted for the UK, and you can begin to see how strongly Spain’s real estate sector is holding up.
The cancellation of wealth tax has made the region even more attractive to property buyers
As we reported on the BM Sotogrande blog at the time, the devolved Andalucian government made the decision last year to effectively reduce wealth tax in the region to zero.
The wealth tax was one of the relatively few factors likely to deter a foreign investor from buying Sotogrande property, so its removal – with effect from 20th September 2022 – was excellent news for such would-be purchasers. It helps to make Andalucia one of the most alluring areas of Spain in which to live from a tax perspective.
Sotogrande property has historically been highly resilient
To a great extent, it could be argued that the traditional ‘rules’ surrounding the Spanish property market don’t quite apply in Sotogrande. By this, we mean that its longstanding status as a hugely desirable place to live for the elite has helped to shield it from the adverse effects of wider downturns, with demand and prices for property remaining consistently high.
So, if you are counting on the economic uncertainty helping to bring Sotogrande property onto the market at relatively ‘bargain’ prices, we would advise you not to bet on it. However, that means if you do decide to purchase a home in Sotogrande this year, you can expect it to represent a seriously resilient longer-term investment.
Are you eager to turn your hopes of owning Sotogrande property into action this year? If so, our team at BM Sotogrande would be pleased to support, advise, and guide you. Simply give us a call, send us an email, or visit us in person to find out more about how we can help.