Cloudnine Spain Blog

Market Update Knight Frank report: Is Marbella Transitioning to a Buyers' Market? (October 2022)

Market Update Knight Frank report: Is Marbella Transitioning to a Buyers' Market?

Real Estate Marketing Consultant Alfredo Bloy-Dawson asks Cloud Nine director Sean Woolley about the real estate market in the Marbella & the Costa del Sol area, and reviews a report from Knight Frank titled “International residential property: price growth slows as sales begin to fall”

Listen to the podcast version here

Link to the youtube video here

The transition from a sellers’ to a buyers’ market is gathering pace and buyers have gone from a fear of missing out to a fear of overpaying.


I’ve got Sean Woolley, managing director of Cloud Nine Spain who’s going to give us a little bit of a market update as a result of an article that was published yesterday by international prime residential firm, Knight Frank. It seems to be telling the story of a shift in the market.

Hi Alfredo. Thanks for having me along. Yeah, interesting report, actually. When I clapped eyes on the headline, I thought “Oh my goodness”. ‘Cause it says, “International residential property: price growth slows as sales begin to fall”. 


So Sean, what does this article really mean for real estate in the Costa del Sol?

What they’re saying is that market indicators suggest that buyer sentiment in international property markets is weakening and sales are slowing. So I’ve just picked out a few things from this report. What they’re saying is that the transition from a sellers’ to a buyers’ market is gathering pace. And buyers have gone from a fear of missing out to a fear of overpaying, which I think is a really good quote actually because definitely we saw after the, well during and after the pandemic, that people wanted a piece of overseas real estate, particularly in a glamorous and lovely setting like Marbella where they could work from home, the family and the kids could go to school and blah, blah, blah. And I think what we’ve seen over the last few years is the pent up demand that was produced during the pandemic. I think that has now been pretty much satisfied, so those people who realised that they could work from home, that they wanted to invest abroad, and the pandemic had taught them a few life lessons, those people have now entered the market and probably bought a place. What we’re seeing now, which is what we correctly predicted six months ago, was that there would be a levelling off of demand. But I think what this article doesn’t take into account is the fact that Marbella and the Costa del Sol is a bit of a bubble. It’s not the real world, it’s not the real Spain, thank goodness I don’t live in the real world at the moment and I’ve said that many times. And the more people that want to escape the real world, the more that they want to go to a bubble and a place that offers them, you know, a bit of a break from what’s happening out there in the ether. So Marbella ticks a huge amount of boxes and it’s become the California of Europe and it’s become the jet set paradise on the Mediterranean. There’s nowhere else really that competes with it. So although the author of this report is correct that buyers have gone from a fear of missing out to a fear of overpaying, I think that fear of overpaying is probably more relative to the the news that’s come out of the UK in the last few days with the U-turns around government spending policy and financial policy and obviously the interest rates that have gone up, cost of living crisis, all those sorts of things, which means that people are now going “Hang on a minute, are we overpaying for what we’re buying?” And do you know what? I’ve said for many months now that there are some people, there is a proportion of the buying market in Marbella, that has been overpaying. I’ve said that there’s two or three agents out there in the Costa del Sol who have created a bubble at the top of the market and people have been seduced by that and they’ve been paying a lot of money to get, not an average product, forgive me, I’m not suggesting that, but they’re paying a lot of money for something that isn’t maybe quite worth that. And my concern for those buyers who invested at that level in certain products, in certain areas, if they want to come to sell their property in 3 or 4 years time, they’re not going to be able to, because they spent too much money in the first place because it’s very easy being seduced by a show home that’s beautifully staged to within an inch of its life and paying 5 million for it. But is somebody in four years time going to come along and pay 5 million for that same property that has now got the kids’ toys in the lounge, the kids nappies hanging in the garden? No. What this report also goes on to say is that nevertheless, despite all that, “prices are still rising in most corners of the globe but just not at the pace they were.” So I’ve had a couple of chats with people today. One was with a client earlier, who was talking about getting a mortgage. He said, “Yeah, I’m going to get a mortgage in Spain because it’s still cheap money”. Even if the interest rates go up to five, 6%, that’s still really cheap money. We’ve all been used to borrowing money at almost nothing, next to nothing. You know, banks are almost paying us. And now we’ve returned to a, I think, a more sustainable arena where interest rates are on the rise slightly, but it’s still, you know, five, 6% to borrow a few hundred thousand or half a million euros. That’s still very cheap money. And then I had another conversation with a guy today who was saying, “The market’s going to crash, the whole world’s going to end” kind of thing because of the interest rate rise and the cost of living. And you know, I said, “Look, yes. I don’t think the prices are going to be rising by as much as they have done”. I think people are starting to see a little bit more sense than they’d exercised in the past. But prices in the prime areas, the areas where everybody wants to be, are still governed by supply and demand and they are still going up, albeit a little slower. So that’s the sort of takeaway from the first part of the report. They said that they expect a notable slowdown in the remainder of 2022 and 2023 with mainstream markets affected most, due to their greater exposure to mortgage rates. We are not in a mainstream market, we are not in typical Spain, we are not in typical UK. We are in one of the prime residential addresses in the Mediterranean where I’m guessing probably half of people will get a mortgage and half won’t even bother because they’ve got the cash at hand. So people need to realise when they talk about the Spanish or the European or worldwide markets, we are a bubble within that. And the bubble is becoming more bubblicious because of the amount of people from all these various countries that we’ve talked about before, being interested in buying a property here.


Would it be fair to say that it wouldn’t do some sellers bad to read this article? Because they are I think, spurred on by some of these enthusiastic agents. I think some sellers might be holding out for a big paycheck and they might just miss the boat…

Sean: I think they will. It’s frustrated me for a while that agents, ’cause it’s a competitive market. There’s how many agents? 2000 agents in Marbella or something crazy like that and they’re all after listings. And of course it’s very easy for me to go and see the guy over the road and say, “Oh, your villa’s worth 2 million euros”. Knowing damn well I can’t sell it for 2 million euros but I’ll get the listing because the guy thinks I’m amazing because I’m going to sell it for 2 million euros and all of a sudden I’ve got a listing. Wow, great. I would rather go to that guy and say, “Look, I think you’re probably going to get 1.8, put it on the market at 1.85 to get 1.8”. That’s what I would normally say. But if somebody’s going in there after me and promising the guy 2 million, they’re going to get the listing. And like you say, a lot of these vendors who’ve been promised the earth and this is what I was talking about with the people who’ve bought these over inflated properties over the last few years, I’d like to see them sell it for the prices they’ve been quoted. What we’ve got to bear in mind, that there are still some areas of Marbella, Benahavís, Estepona that are in such high demand. The Golden Mile, Sierra Blanca, being two places that we have still got a shift of supply and demand where the sellers are still in control. So although you talk about a market, there are markets within markets, and I’ve said this for 20 years, that it’s like buying in London. You know, there’ll be one borough of London that is in high demand, another one that isn’t, but they can be half a mile away. Do you know what? Some seriously wealthy people will just pay what it takes to be in the best location. And if that means they’re overpaying, that’s fine with them. If they’re paying 9 million for a penthouse in Puente Romano and if they come to sell it in 10 years time and it isn’t worth 9 million, do they care? They’ve had nine years worth of enjoyment out of the most amazing property. So we have to look at this realistically here. We’re not talking about people losing their jobs. So a lot of people have have said, “Oh, it’s going to be like 2008, 2009 all over again”. We see none of the fundamental reasons why the market collapsed worldwide in 2008 happening again here. Now people may correct me, I don’t know, the experts may say, “Sean, you’re absolutely wrong”. But we are seeing none of the redundancies, people running out of cash. We’re seeing none of that. There’s still liquidity in the market. Banks are still lending money, hand over fist to be honest with you. So we’re not seeing those same fundamentals applying. There isn’t this fire sale at all. In fact, if anything, as I said, there’s still a glut of people who want to be here, who want to have an active part in the community here, in such an amazing place to live. And like we’ve said before as well, Alfredo, is that when distress is apparent in one market, so say UK buyers buying in Spain, they were deterred last week because of the shenanigans with the politicians and the exchange rates took a pounding, but that opened up massive opportunities for the American market here. And I said to you on our last chat that I think our last four sales have been to buyers from North America. So while one market is down, it means another one is up. And because we have a worldwide product here and a globally attractive product in Marbella and its lifestyle, it means that we’ll always have clients even if one market like the UK is a little bit out of it at the time being. There’s also one more point I want to add, but you know, Marbella and Andalusia in particular, has recently scrapped the wealth tax altogether, which means that it’s obviously intent on attracting a lot of high net worth and ultra high net worth people to the region. So that’s very important as well because if Marbella becomes a hub, a very wealthy enterprise, then it makes it more attractive for other people at different rungs of the ladder to invest as well, and that’s what we’re seeing happening. And we’ve seen it happen for a while but now that that wealth tax has been abolished, it opens the floodgates really for people to come here with serious amounts of money and know that they’re not going to get taxed beyond reason. And that in itself is good for the area as well.


Okay, well thank you very much for the update, Sean. And let’s keep in touch.

Will do, thank you.

Get in touch with Cloud Nine Spain

Telephone: +34 951 203 808


Get in touch with Alfredo Bloy-Dawson