Investing in Property in Malaga

The reasons to consider investing in property in Spain are near limitless. Welcoming people, fascinating culture, and endless sun, sea, and sand.

If Spain is the best place for expats and digital nomads to live in Europe right now, then Malaga is the country’s shining star.

Last year Malaga was voted the 2nd best city in the world for remote workers, and Google’s decision to build their new cybersecurity centre in Malaga has also attracted huge numbers of people to the city. Spain is in the middle of a tech revolution, positioning itself as a tech hub with some of the biggest players in the industry announcing significant investment in new Spanish sites. And Malaga is right at the heart of it.

That means that Malaga is a hotspot for property investment from all over the world right now.

The aim of this guide is to give you an in-depth overview of real estate investing in Spain, specifically in Malaga. We’ll cover the pros and cons, as well as the challenges of investing in the city. Helping you to ultimately decide if Malaga is a good investment for you.

Real Estate Investing in Spain

First things first, the good news is that it doesn’t matter what your nationality is. Anyone can buy property in Spain. The sale of real estate to foreign investors is not limited in Spain: anyone can buy and sell housing and commercial real estate or rent it out.

The second piece of good news is that the real estate market in Spain is thriving right now. The Costa Del Sol is considered the best place to invest in property in the country, especially for foreign investors. That means spots such as Estepona, Fuengirola, Marbella and Mijas. And of course, Malaga.

At the end of last year, it was reported that property prices in the Costa del Sol had increased by 7.6% year-on-year, averaging 1,977 € per square meter. That means that prices are 22.6% below the 2007 peak and 47.2% above the low. And those figures are only set to continue increasing.

There are many different opportunities for property investment in Malaga. You could consider holding and selling the property, which has excellent returns on investment right now. Alternatively, you could consider investing in property in Spain for long-term rental or for short-term holiday rental. The rental yields for this approach are incredibly attractive too.

Is Malaga a Good Investment?

Malaga is a great place to invest in property right now, and the city is bringing receipts. It has the facts and figures to support its claim that it’s a valuable investment destination.

Though Malaga property has a reputation for being expensive, the reality is that there are a wide range of property types and prices available here. As a rough estimate, you might find apartments starting from around €200,000, while more luxurious properties or those in prime locations can easily reach into the millions.

The property market in Malaga is incredibly buoyant right now and demand for properties is high.

And if you’re buying to let then you’ll want to know that rental yields in Malaga are now higher than in Madrid.

According to statistics from Fragua by Atlas Real Estate Analytics the rental yield for Malaga was 7.22% (up from 5.43% the previous year), well above that of Barcelona (5.29%) and Madrid (4.96%)

If you’re not investing in property to rent and want to know about resale values in the city, then you need to know that recent data from Idealista reveals a 10.1% increase in property prices annually. The most recently released sales price information clearly shows that property prices in Malaga have reached an all-time high.

All-time high prices aren’t traditionally good words to hear as an investor looking for potential investment markets. But trend predictions show that this increase in prices in the area hasn’t peaked yet.

Myriad factors, including Malaga’s popularity with tourists, with ex pats, and its continually growing status as a tech hub, means that property in Malaga, particularly rental property, is in high demand.

In short, that means that Malaga poses a great investment opportunity, and one that will continue to grow in value with no signs of the bubble popping.

Where Is The Best Area To Buy In Málaga?

Malaga is a safe and beautiful city. There are very few areas that would not be appealing to home owners, renters, and property investors alike.

The property market here is diverse. You’ll find that the most popular areas such as Marbella and Puerto Banus attract a luxury crowd with the price tag to match. Whereas neighbourhoods like El Palo and Pedregelejo are considered ripe for investment while still offering budget-friendly property options. And if you can find investment property in the historic heart of the city then this is perfect for the short-term rental market.

So where is less appealing? As a rule of thumb, we recommend avoiding areas with high unemployment levels, lack of amenities, or areas that are too far from the city centre. These will have lower rental demand in both the short-term and long-term rental markets.

Some of the best and most attractive areas to buy in Malaga are:

Marbella And Puerto Banus

This is the best place to look for luxury properties and to target those looking for a high-end, celebrity-style lifestyle. The properties here are expensive, but as a result the area attracts a more expensive clientele.

El Palo And Pedregalejo

These are more affordable properties (when compared to Marbella) but they are still close to the beach and very popular with locals. This area is considered to have a good balance between affordability and growth potential whilst still being more friendly for investors on a budget and popular with expats.

Malaga’s Historic Centre

This is the cultural centre of the city and a hub for cultural events. The prices here are higher due to the central location of the properties here, but there is a good demand for short-term rentals in the city centre making it a very attractive prospect for this type of investment.

Outskirts Of Malaga

The outskirts of the city centre may not be as instantly attractive as the historic centre, but they are infinitely more affordable. These areas are expanding rapidly and many are subject to investment and gentrification. This means there is potential for property value increases here.

Can A US Citizen Buy Property In Spain?

The short answer to this question is yes: A U.S. citizen can buy property in Spain.

There are no restrictions on who can buy property in Spain. That means it doesn’t matter what your nationality, you are welcome to invest in property in Spain that you hold and resell, or that you rent out.

However, if you are considering investing in a property in Spain or Malaga as a route to residency in the country using the so-called ‘golden visa’ scheme then you need to know that the rules are about to change.

The golden visa scheme was a scheme in which foreign investors could purchase property in Spain and allowed non-EU nationals a unique visa if they invested at least €500,000 in Spanish real estate. It was long considered the easiest way for non-EU nationals to effectively ‘buy’ Spanish residency. But now that scheme has been scrapped.

This is bad news for owner occupiers who want to move to Malaga to live an expat life. But will have no impact on those buyers investing in property in Spain as a vacation home, rental investment, or to hold and then resell.

How To Invest In Property in Malaga

Investing in property in Malaga can be a time-consuming process, but if something’s worth doing then it’s worth taking the time to get it right.

Of course, the first thing you need to do is find the right property. This is sometimes referred to as the ‘fun part’ and it is at this stage that you’ll need to find an expert real estate agent. They can help you with your property search as well as guiding you through the process: essential if you’ve never purchased property in Spain before. Don’t rush this process. It’s important to get it right and choose the property with the best investment potential as well as the one that meets all of your criteria.

When you’ve found the right property, you’ll need to complete the following step by step process. Your Right Casa real estate expert can help you wish this or refer you to a relevant expert with the skills to make the process as simple as possible.

Obtain An NIE. An NIE is simply a foreigner identity number, and you will need to obtain one to undertake any kind of financial or economic activity in Spain. You will also be asked to provide you NIE when you register your property. To obtain an NIW you will need to visit the Spanish embassy in your home country or you can do this in Spain. You can find out more about applying for an NIE here.
Open A Bank Account. You don’t have to have a Spanish bank account to buy a property in Spain but having one will definitely speed up the process and make it easier too. You will need an NIE number to open a bank account in Spain too. Here’s more in-depth information about opening a bank account in Spain
Start Negotiation. Negotiating the price of the property with the seller can make the difference between a good investment and a great investment. This part of the purchasing process can be very tedious and time consuming in Spain, as sellers can be aggressive when trying to push the price up, but your real estate expert can do a lot of this work on your behalf.
Apply for A Mortgage. If you are a cash buyer then you can skip this step, but if you need a mortgage for your Spanish property investment then now is the time to complete your application. Take the time to compare offers and interest rates. Bear in mind that if you are a non-resident, you must pay an extra 15% deposit compared to residents, so consider this in your financial planning.
Sign A Reservation Contract. It is only at this point that you actually sign any paperwork with your seller. A reservation contract is a document where the sale price is agreed and only at this point will the property stop being listed elsewhere.
Deposit Agreement. This is a much more important document as this is the private purchase contract in which you demonstrate a real commitment to buying the house at the agreed price. At this point you will have to make a certain payment, and this will be non-refundable if you decide against purchasing the property.
Getting Your Documents Together. You’re not ready to go to the notary to ensure the property doesn’t have any defects and to exchange paperwork. To do this you will need to have your documents together. A lawyer is not a legal requirement yet but would be really useful and recommended at this stage (just to make sure you are not buying a property that has some hidden debts or similar issues), as well as an architect who can properly evaluation the whole situation.
Going to the notary and signing the title deeds. The process is nearly over! When you visit the notary they will write up the property deed and the agreement with the seller, and witness it. Then, you will visit the notary for the official signing of the sale deed, the last step before the property is fully yours. After that, you will finally get your keys to the property so that you can register it and transfer ownership officially.

Challenges of Investing in Malaga

Of course, property investment anywhere in the world isn’t always sunshine and roses. There are challenges and risks involved in investing anywhere, including the Costa Del Sol.

The first challenge is going to be finding the right property at the right price. Because demand for property is high in the Costa del Sol and in Malaga you won’t be the only one looking for investment property in the region. And this means that prices can be high. But you can overcome this by negotiating vigorously until the price meets your expectations. Don’t be scared of losing the property: hold your nerve and if the price isn’t right then move on. Remember that without the right initial purchase price, your rental yield will be smaller.

Another common challenge faced by property investors is the staging and furnishing of the property. Many investors spend far too much furnishing their property to meet their own tastes. But this would be a mistake. If you’re renting the property, particularly in the short term, then the furnishings should be robust but affordable. Don’t be afraid to save money by using furniture from existing properties or even to buy good quality second-hand pieces.

Selling your property. When the time comes to sell your property on, choose an established and highly regarded real estate expert. It may cost more to hire a real estate agent than to do it yourself but with a real estate agent working hard for you, you’re likely to get a much higher price for your property.

Using A Real Estate Expert In Malaga

There are so many advantages of choosing to use a real estate agent in Spain, and we would always advise potential investors to seek expert advice before committing to anything. A real estate expert will do so much more than just show you properties.

One of the obvious things a real estate expert can do for you in Spain is breach the language barrier. At Right Casa all of our team are Spanish and English speaking, so they have the skills to help you negotiate the best possible deal.

We are also area experts, living in working in the Costa Del Sol. We know which areas are up and coming, and what they look like on the ground. We can take your vision and apply it to our reality, so that we can find property that meets all of your expectations.

It’s also worth noting that contracts for Spanish properties may not be the same as the ones you’d find in your home country, and that these are also likely to be written in Spanish. The bureaucratic process in Spain can be a slow and time-consuming one, but it’s also one we’re experienced working within.

We know how to find the best investment properties: we sell them to clients like you all the time. With is why, call us biased, but we think working with Right Casa is the best thing you can do to get your Malaga investment portfolio moving.

Pros & Cons Of Investing In Malaga

Pros of Investing in Property in Malaga:

Beautiful coastal location
Captive market of potential renters keen to rent in the city
Active short-term and long-term rental markets
Record high property prices that are continuing to rise
Great returns on investment for both rental properties and hold and resell property investments.

Cons of Investing in Property in Malaga:

High demand for property in the city means a lot of competition for properties
High property prices mean that many budget investors are priced out of the market here.
Some investors find the language barrier difficult.

Is Málaga Worth Investing In?

Malaga continues to be a property market that is well worth investing in. The city is growing rapidly in popularity with tourists, expats, and digital nomads. Property can be affordable here. And the yields as well as growth potential in the city are incredibly attractive.

There’s no time like the present, and there’s never been a better time to embark on a property investment journey in Malaga. So reach out to RightCasa to find out more about how we can help you to turn this dream into reality.