Costa del Sol

Some of the new homes on the Costa del Sol should never have been built and will never be sold as homes, but demolition is not the answer, argue local developers.

There are around 16,700 new homes on the market in Malaga province – home to the Costa del Sol – most of which will have been sold by the end of 2013, says José Prado, President of the Costa del Sol developers’ association (ACP), in a recent interview in the Spanish press.

But some of the new homes built during the boom will never be sold, says Prado, because of their poor quality or bad locations. “There are homes built in those years that can’t be sold and will have to be used for time-share or transformed into retirement homes,” he said.

I for one fail to see how badly-built homes in undesirable locations will attract time-share buyers or the elderly in need of care, so I don’t see how his suggestions will solve the problem of new homes that nobody wants.

Anyway, nobody knows if there is any market for the least attractive new homes on the Costa del Sol (and other Costas, for that matter), but they won’t find out until they test the market will really low prices. Perhaps those homes can be sold at the right price. I would try low prices before spending yet more money trying to reposition unwanted homes as time-share or retirement homes.

The other option for the dregs of the new-home stock is demolition, as suggested by José Luis Suarez – IESE business school professor and Spain’s leading real estate market expert. But local developers won’t hear talk of it, for fear of what demolitions might do to market confidence. “We need the market to reactivate and we need to change the use of those developments, but we don’t need to knock anything down,” argues Prado. “There is a market for everything that has been built on the Costa del Sol.”

The property market on the Costa del Sol will start to recover before the rest of the Spain, argues José Luis Suarez, a professor at IESE business school, and Spain’s leading authority on the housing market.

With its high percentage of holiday-homes built with foreign buyers in mind, Malaga province (home to the Costa del Sol) can count on internationally diversified demand, whilst many other Spanish provinces have to rely solely on local demand weakened by recession and unemployment.

“In the real estate sector, the Costa del Sol is a leading indicator: it went into recession before other areas, and it will start to recover before them as well,” said Suarez in a recent interview with local newspaper La Opinion de Malaga, during an industry conference called ‘In Search of a New Identity’.

Knock ‘em down

Suarez also warned that some new developments might have to be demolished because they have no market. “Many of the new homes in stock are flats of poor quality or located in undesireable areas,” said Suarez. “The stock will have to be digested by the market over time but I will tell you one thing: there are some developments that will have to be demolished because they cannot be sold. It’s something we have yet to see in Spain…..though there have been precedents of this kind in other countries.”

The property market on the Costa del Sol will start to recover before the rest of the Spain, argues José Luis Suarez (pictured above), a professor at IESE business school, and Spain’s leading authority on the housing market.

With its high percentage of holiday-homes built with foreign buyers in mind, Malaga province (home to the Costa del Sol) can count on internationally diversified demand, whilst many other Spanish provinces have to rely solely on local demand weakened by recession and unemployment.

“In the real estate sector, the Costa del Sol is a leading indicator: it went into recession before other areas, and it will start to recover before them as well,” said Suarez in a recent interview with local newspaper La Opinion de Malaga, during an industry conference called ‘In Search of a New Identity’.

Suarez also warned that some new developments might have to be demolished because they have no market. “Many of the new homes in stock are flats of poor quality or located in undesireable areas,” said Suarez. “The stock will have to be digested by the market over time but I will tell you one thing: there are some developments that will have to be demolished because they cannot be sold. It’s something we have yet to see in Spain…..though there have been precedents of this kind in other countries.”