Q1 2023 – Sotogrande Real Estate Market
First Quarter of 2023… What’s going on so far this year in the Sotogrande Real Estate market?
Reflecting on the current trends in the real estate market in Sotogrande I can only conclude that we are in a good place. As a very well-known luxury holiday resort to a very select few, it has developed over the past 60 years or so into a desirable place to own property not only as a holiday destination but as an urbanisation to live year-round. Infrastructure, the pandemic, its low urbanistic density, low-cost air transportation and geographic location, culture, cosmopolitan appeal, and recently low tax structure all add up to its growing appeal.
Infrastructure Development and Events Boost Sotogrande’s Appeal
Gradual infrastructure development from roads (fast access to Malaga airport), health care (new private hospitals), communication (high-speed internet), education (top tier international school), hospitality (more and improved hotels and restaurants), and high profile events in golf and polo (European Tour Golf, Aramco golf, LIV golf venue 2023, International Polo tournaments) have all added up to Sotogrande being an attractive safe and appealing place to be.
Low-Density Urbanisation and Height Restrictions Make Sotogrande Desirable
Pandemic-Driven Changes in Real Estate Investment and Lifestyle Priorities
The pandemic led to a number of fundamental changes in the way we think and act and this impacts Sotogrande as well. For example, the acceptance of working from home by workers. Acceptance of working from home by employers. New lifestyle priorities. Due to Covid, residential real estate was back in the investment spotlight, albeit coupled with lifestyle choices. There was a lot of cash around and the housing boom from 2020 to 2022 was clearly a direct reaction to quarantine life.
From the very beginning in 1962, Sotogrande was zoned as low-density uranisation with the majority of its 2000 hectares destined for single-family building plots. Villas are restricted to a maximum of 9,5 meters in height. Also, the relatively small areas where apartment blocks were planned, have strict height restrictions. This low-density environment is exactly what primary but principally second homeowners are looking for.
Easy Travel and Good Weather Make Costa del Sol Appealing to International Buyers
Getting to Malaga and back to Sotogrande in a taxi can be more expensive than the return airfare of your flight to London, so reaching the southernmost part of Europe, where the annual sunny days add up to over 300 is cheap and very desirable. This appeals to all Europeans. Cheap travel and good weather and sunlight make the entire costa del sol appealing to Scandinavians, Anglo-Saxons, Eastern Europeans and increasingly to Americans. Motivations to live partially or full-time in Spain may be different amongst the different nationalities but the appeal is the same for all. This mix of nationalities makes for an impressive multi-cultured population quantified by the remarkable demographics of students at the Sotogrande International school. More than fifty different nationalities are represented.
Tax Structure and incentives as positive… and Macroeconomics to be cautious.
Andalucía is not a tax haven, but it is certainly very competitive by comparison to other jurisdictions. The current regional government is trying very hard to attract investment. We have seen the reduction in transfer tax on real estate purchases down to 7%, the abolition of the wealth tax, and inheritance tax rates reduced to the point that for most it is zero.
Having highlighted many of the positives, Sotogrande still remains a place most residents call a second home. Real estate generally is exposed to global macroeconomic factors to a higher degree than primary residences. When things get tough it is natural to protect one’s primary assets as a priority. And things have got tough recently.
Sotogrande Real Estate as a Golden Opportunity Amidst Banking Sector Uncertainty
Most of us recall that the pandemic caused supply chain disruptions, and that tech companies boomed, leading to banks such as Silicon Valley doing well with much cash to invest. We also know that the Ukraine war has led to a global energy crisis, growing inflation, interest rates increase, a slowdown in sales and caution. As we reach the end of the 2023 first quarter, we now have a bank crisis caused mainly by interest rate rises. High interest hurt Silicon Valley Bank invested funds into mortgage-backed securities at a 1,5% return which could not keep up with interest rates rising above 3%. This caused the bank to go broke, made everyone very nervous led to government intervention (Federal Reserve / Bank of England / Swiss government) and UNCERTAINTY in the banking sector knock-on effect.
“I regularly get asked how is the real estate market. Has there been a slowdown? I suppose the answer should be yes, but the reality is no.” Assures Charlie Gubbins.
So when will the interest rate rise stop? Has inflation been curtailed? Where can you place (invest) your money? While everyone is predicting a housing crash, I believe the opposite. Real estate is going to be a golden opportunity. When people want a secure investment, real estate will be the focus, and prices are going to rise.
Would you like to know more about Sotogrande Real Estate Market?
Reach us out, Charles Gubbins:
charles.gubbins@noll-sotogrande.com
+34 607 911 661
Discover the latest trends of Sotogrande market clicking HERE ››
Golden opportunities in the Sotogrande real estate market:
Attractive family villa located in Sotogrande Costa
A very well constructed villa situated in the upper part of Sotogrande Costa. Sitting on a flat plot of 1350m2 the villa is close to the main shopping areas, and easy distance to cycle...
