The Marbella property market in 2020
2020 has been a year that has taken many across the world by surprise, and forced us to change the way we work, live and interact with one-another. No-one could have predicted a year such as this, and it will live on in the collective memory as one of the strangest and most challenging of times, but how permanent is its impact? We pose this question in the context of the Marbella property market.
As the year started, many feared the onset of a mild recession in large parts of the world. It would have been part of a normal cycle after several years of moderate to strong growth that came after the financial crisis of 2008-2009, but in the end 2020 started strong. Indeed, enquiries for property for sale in Marbella and other parts of the Costa del Sol were plentiful, and the first quarter of the year continued the strong showing seen in the last quarter of 2019. Everything seemed set for a solid year, and then the Covid-crisis was suddenly upon us and before we knew it the region went into a strongly enforced and adhered to lockdown.
Unlike financial or economic crises such as those experienced in cyclical waves, the recession caused by the lockdown measures is artificial in the sense that it is not caused by a bubble, a financial crash or a lack of demand. The mere fact that people were confined to their homes for almost two months caused a level of inactivity that greatly reduced economic output. Certain business sectors grew while many saw drastic declines in revenue, and the property sector once again showed its flexibility when real estate agents and property developers adopted modern technologies such as virtual property tools to continue to provide service to their clients.
The legacy of 2020
The period that followed the lockdown demonstrated just how strong demand for Costa del Sol property continues to be, as agents were flooded with enquiries. The subsequent travel restrictions that were imposed in somewhat confusing stages by the various European governments limited what could still have been a good year, but as we head towards winter increasing limitations on movement and in some countries complete lockdowns threaten another period of enforced inactivity and recession. Property prices in Marbella had held up very well for much of 2020, in spite of Covid, but now they are expected to begin a gradual drop that will peak in the first quarter of 2021.
As restrictions begin to be lifted in the first months of 2021, and both the economy and society in general start a gradual return to normality, pent up demand will once again be released, investment confidence will grow, earnings will slowly return to normal and the world’s economies will register strong growth that should see levels return to pre-Covid standards by the end of 2021.
In this, deemed the most likely scenario, the pace will gather after Easter and property prices will follow sales in an upward movement from summer onwards. If all goes as expected, Covid could just be a bad memory by 2022 and the Marbella property sector returned to full vigour.