I recently came back from Edinburgh. Very charming and I recommend a visit especially during the Fringe Festival. When I arrived back it reminded me of one of the things I love about Marbella. No matter where you have been or for how long, when you come back to Malaga airport you can not help but feel good. It is hard to describe but usually when you come back from holiday most people get a little depressed, end of holiday, going back to work etc but here maybe because there are holiday makers on the plane or because of the light and energy of the place you cant´t help but get that feeling you get when you arrive at a holiday destination. Strange but true. Does anyone else get this?
So what has been happening here over the last ten years? Well in summary, although I was keeping an eye on the market for the first 6 years I could not help but think how the market kept going up. When I arrived prices were reasonable (not cheap) but they seemed to be for ever increasing and pretty soon the link between even short term rental yield and price had been broken. There was no logic behind prices it was simply a bubble where the price was what someone would pay. In some ways it was justifiable, people were told they were buying a dream and because of the limited area of coastline there was a limit of supply and many buyers felt this was the case. What is the price of a dream? (I could go into a rant about the sales people and dubious sales tactics used by them and their bosses but we have all heard the stories already). The paradise element will always be here but when the dream can no longer be financed because the banks will not lend, then it turned into a nightmare, especially for people who thought it would go on for ever uninterrupted. My view is it will go on for a long time but there will be dramatic ups and downs more so than in say in London. Why? Because here people are buying luxury: second homes, second cars , holidays etc. etc. but when things turn and people need to save then they not only stop buying second homes but actually sell second homes so the volatility here is exaggerated in comparison to a normal residential area. This may seem like common sense but when buying or investing in property the simple supply and demand formula and drivers must not be forgotten. We are now looking in some cases at prices that are half what they were three or four years ago. Given the drop in rental income I believe these prices are now more reasonable (please note I did not say reached the bottom but I think we are close). You can definitely earn a higher yield from a well purchased property, even with depressed rental prices, than you can if you put your money in the bank.