Costa del Sol Real Estate Market Update

We are delighted to bring you our data-backed Costa del Sol Real Estate Market Update for October 2025. This uses the latest releases through July–September 2025.

1. Executive Summary

The Costa del Sol market continues to show resilience amid tight supply and persistent demand, particularly from international buyers.
New large-scale investments and land sales are underway, signaling strong developer confidence.
Price pressures remain upward, especially in prime zones (Golden Triangle: Marbella, Estepona, Benahavís).
Caution is needed in mid-tier segments, where overpricing can lead to inventory stagnation.
Macro headwinds (interest rates, regulatory changes) will exert influence, but for now the local fundamentals remain favorable.

2. Market Drivers & News Highlights

2.1 Major Projects & Land Moves

AEDAS Homes has committed around €200 million to two high-quality residential projects in Estepona’s “new Golden Mile” (Unika and Zenity), comprising ~380 units and amenities like coworking, wellness, pools.
Fundación Antonia Guerrero has placed 108,799 m² of residential land (capacity ~1,125 homes) up for auction in the SURO R1 Saladavieja sector of Estepona, with a minimum price of €66 million.
Exxacon, a Marbella-based developer, plans a €100 million push over the next 4 years to deliver about 1,000 homes, reinforcing its position in the Costa del Sol.

These developments and land deals indicate confidence that demand will support new supply in the coming years.

2.2 Supply Constraint & Stock Trends

Nationally, the supply of homes listed for sale has dropped ~20% year-on-year (Q2 2025), although Málaga/Costa del Sol saw a milder decline (~3%) compared to other regions.
The scarcity of quality finished product continues to tighten the gap between demand and supply, especially in desired coastal and hillside zones.

2.3 Price Growth & Regional Differentials

Across the Costa del Sol and Málaga province, property values have risen steadily in 2025, with key hotspots registering +5-7% gains.
According to MDR Luxury Homes, in prime zones:
• Golden Triangle (Marbella, Benahavís, Estepona) is seeing average increases around +11.9% (Marbella +9.8%, Benahavís +10.8%, Estepona +15%).
• Málaga East / Axarquía is also showing strong upward momentum (average +16.4%) though still at lower absolute price levels.
In the luxury sector (properties > €1 million), demand remains robust and is expected to outpace average growth nationwide.

2.4 Demand Trends & Buyer Profile

International buyers remain a dominant segment, with many purchases being second homes or relocation-driven.
Buyers are increasingly seeking turnkey and amenitized projects (pool, wellness, coworking, sustainability features).
Developers are more willing to integrate build-to-rent schemes, rental licensing clauses, and condominiums built for lifestyle / services.

2.5 Macroeconomic & Regulatory Context

Spain’s housing transactions are projected to grow by ~3–4% in 2025.
Mortgage rates have begun to ease slightly from recent highs, improving buyer affordability in some segments.
However, regulatory uncertainty (rental laws, fiscal adjustments) is a known risk, particularly for investors relying on short-term rentals.

4. Key Metrics & Indicators to Watch

Average €/m² across key municipalities (Marbella, Estepona, Mijas, Málaga city)
Number of transactions month-on-month & YoY
Days on market / absorption rate (how quickly properties sell)
New project launches & sales velocity
Mortgage interest trends and credit availability
Regulatory impact (e.g. changes in rental legislation, tax shifts)
Tourism & hotel‐occupancy metrics (a proxy for short-let demand)

For example, hotel occupancy in September reached ~90.97% on the Costa del Sol, with forecasts for October ~82.2%. These tourism dynamics feed into investor confidence in holiday rental returns.

5. Opportunities & Risks

Opportunities

Buyers who time acquisitions now in emerging zones may benefit from higher future growth.
Developers with ready parcels (with permits) will be at an advantage over those needing to wait on approvals.
Branded residences, amenitized communities, and sustainable / smart home features add differentiation.
The luxury end of the market remains relatively insulated from interest rate pressures, as high-net-worth buyers are less rate-sensitive.

Risks / Challenges

- Should rates rise further or credit tighten, mid-segment buyers could struggle.
- Overbuilding in less preferred locations may lead to pockets of oversupply.
- Changes to rental regulation or taxation might lower yield expectations for investors.
- Infrastructure constraints (roads, services) especially in hinterland or newly developing zones may limit growth potential.

6. October Outlook & Forecasts

Transactions may flatten or show modest gains as the “shoulder” season sets in, but demand will still persist in strong micro-markets.
Prices should continue creeping upward, especially for quality stock, though growth may moderate compared to earlier in 2025.
New launches will likely pick up, particularly from developers repositioning land acquisitions made this year.
Inventory will remain tight unless there is a substantial delivery of new units, placing more emphasis on re-sales.
Investor sentiment will depend heavily on financing conditions and any changes in fiscal or rental regulation.

🔹 High-End Buyers (€1M+)

Implication: Luxury stock remains limited, and prices in Marbella, Benahavís, and Estepona are still trending upward (≈+10–15%). Waiting is likely to mean paying more.
Action: Focus on prime properties with strong lifestyle appeal (views, golf, gated communities, branded residences). These are holding value best and are least affected by mortgage rate fluctuations.
Tip: Cash or low-leverage buyers have a distinct advantage in negotiations, especially for turnkey villas and penthouses.

🔹 Mid-Range Buyers (€500K–€1M)

Implication: Supply is tighter, but there’s still choice between new builds and quality resales. Overpriced resales risk staying on the market longer, creating negotiation room.
Action: Compare developer incentives (payment terms, furnishings, amenities) against resale opportunities with space and character.
Tip: Aim for well-located mid-range zones (Nueva Andalucía, Guadalmina, San Pedro) where lifestyle is excellent, but prices are not as overheated as Marbella frontline.

🔹 Entry-Level Buyers (<€500K)

Implication: Stock is shrinking fastest in this band, especially for modern, ready-to-move-in apartments. Financing is more critical here, as this group is most sensitive to mortgage rates.
Action: Look at emerging areas (Axarquía, Málaga East, Mijas, inland Benahavís villages). These offer growth potential and more attainable entry points.
Tip: Move quickly on quality listings under €400K, as competition is strong, particularly from international buyers seeking rental potential.

🔹 Investor Buyers (holiday-lets, long-term rentals)

Implication: Tourism remains robust (hotel occupancy >80% through October), supporting rental yields. However, regulatory uncertainty around short-term rentals remains a risk.
Action: Prioritize properties in tourism-licensed communities or developments already structured with rental models. Consider long-let yields in urban Málaga or Estepona as a hedge.
Tip: Think mid-to-long term: even if rental laws tighten, lifestyle demand will support capital appreciation.

✅ Overall Takeaway:

The Costa del Sol remains a seller’s market, but opportunities vary by segment.
Prime buyers should act decisively, mid-range buyers can negotiate, and budget buyers need to look to emerging zones for value.
Investors should factor in regulation but can still find strong lifestyle + rental plays.