Property News

The Costa del Sol Has Seen Massive Changes

Since development began in the 1950s, the Costa del Sol has been defined by spectacular growth in high-end tourism. This growth vaulted Malaga province into Spain’s top destination for travellers and second-home buyers worldwide, fuelling its economic and cultural renaissance. That enviable growth continues, largely thanks to the Costa del Sol. However, its character has changed over time. The market has moved into a more mature phase, sparked by population changes and world events.

Grandparents on the beach

Impact of Global Events on Local Dynamics

Consider some of the dramatic geopolitical economic events of the last 15 or 20 years. The economic crisis of 2008 hit Spain extremely hard, followed by the Arab Spring, Brexit, and the ongoing war in Ukraine. This has had an impact on the Russians departing Spain and Ukrainians arriving. In addition, there has been the rise of remote working, accelerated by advances in technology and the Covid pandemic. Finally, there has been an explosion in the growth of Scandinavian immigration. It really has been a transformative couple of decades.

Tourism as a Catalyst for Development

Tourism has long been the engine of growth in the Costa del Sol. By the 2000s, the area had become Spain’s largest tourist destination. The economy had matured from its freewheeling early decades but continued to grow at a furious pace. Hotel construction boomed. Between 1993 and 2007, 252 new hotels were built, most of them four- and five-star, adding 35,312 new vacancies. A whopping 49+ million people visited the region during this period. Over the next 15 years, that number doubled again! Current government figures point to more than 14 million tourists in 2023 alone. Nor has Malaga tourism hit its limit. However, the region may be looking at a different type of tourism in the future.

Population Growth and Diversity

Before returning to that, it’s worth noting that the growth in tourism had another effect: massive population growth. Malaga province numbered 781,690 in 1960; by 2021, the population had exceeded 1.7 million. It continues to be one of Spain’s fastest – if not the fastest – growing provinces. In the last decade or so, growth has spread out from its historic centres in Malaga city to the luxury tourist city of Marbella. It’s now found even in smaller cities like Estepona, Fuengirola, Manilva, and Benalmádena. And one of the interesting things about the growth in mass tourism is its secondary effects. On the one hand, it has led to the internal migration of Spaniards coming south for jobs and lifestyle changes. On the other hand, there is the arrival of people who have come from outside of Spain. People come, fall in love with Andalusia, and then buy a home here. The sun, the pace of life, and the cost of living all encourage a portion of people to transform themselves from tourists into residents.

The New Age of Residential Tourism

Age is a key factor. Median age continues to increase in Malaga province, especially among those settling on the Costa del Sol. Retirees are the main drivers. Most of this group comes from Northern Europe. The UK continues to top the list despite the damage caused by Brexit. Though Brexit did cause some British residents to return home, it also compelled many of those who stayed to become more deeply invested in Spain and the Costa del Sol. This ageing demographic creates greater demand for long-term properties and leisure services. It also creates a widening demand for general, specialist, or long-term healthcare. The result has been a growth in world-class infrastructure and services in the region.

The population has diversified as well. For instance, Marbella’s registered non-Spanish residents currently boast over 153 countries of origin, out of a world total of 195. The nations represented range from Tajikistan to Burundi to Vanuatu. The most common nationalities, besides Spanish, are British, Moroccan, Ukrainian, Colombian, and, until recently, Russian. Obviously, Spaniards continue to hold a lot of buying power in the region. However, at least 90% of all properties over €2 million are sold to foreigners. In the last quarter of 2023, 33% of all home purchases in Malaga province were by foreigners.

The Rise of Residential Tourism

There is also an intermediate trend between pure tourists, who come for a week during spring break or Christmas, and those who decide to move here permanently: residential tourism. This is characterized by the movement of relatively well-to-do people from mostly Western countries to tourist destinations for long-term stays, often in second homes. This phenomenon began in the 1990s, mainly among the British, until the 2008 financial crisis ended. Soon after, it re-emerged, driven less by those fleeing work and more by those bringing it with them, thanks to smartphones and online remote working. However, it was the Covid-19 pandemic that caused the remote working earthquake. Suddenly, large groups of workers were encouraged – or forced – to work online rather than in offices. A whole new international community of telecommuting and freelance work has accelerated the growth of a new demographic. These are people of working age, sometimes with families, who wish to relocate full- or part-time to places like the Costa del Sol.

Spain has recognized this global phenomenon by introducing the digital nomad visa last year. It has some bureaucratic kinks to work out, but it is a good attempt to meet this demand. Quality of life is typically the motivation for digital nomads. They also typically bring considerable wealth with them. By 2023, to illustrate, the average budget of a second-home buyer grew to €740,000, three-quarters of whom “are cash buyers”. They are staying longer, too, beyond the usual busy summer season. This is a real net gain for Spain and Andalusia specifically. A report says that providing housing and services for foreigners generated 105,606 full-time jobs in Spain in 2022, highlighting the importance of the sector. The tourist boom will not end anytime soon, which means more people are discovering the possibilities of living here long term.

We can expect continued changes with the diversification of the typical tourist who visits. This will result from the shift towards higher-end tourism and the countries that contribute to tourism. Malaga—and Andalusia—is a place in constant flux. That has been a net gain regarding quality of life, culture, and economics.

By Adam Neale | Property News | May 8th, 2024

The Costa del Sol Has Seen Massive Changes

"Looking to buy or sell a property?"