Your Marbella property investment – capital gains or rental income?
Buying a property is a very personal and often also emotionally driven process, but there is also an investment aspect to it. In the case of Marbella, this involves not only the future growth in value of your home, but also the rental income potential. At the end it is a property investment.
Many of the people who buy luxury properties in Marbella traditionally use them not as a primary residence but as a holiday home or second home in which to spend extended periods of time. Not being here all the time means you can either keep the property closed up and unused while you’re absent, or realise that this represents an economic asset that can earn you money.
In other words, you could keep the property all to yourself and absorb the maintenance and utility costs, as well as annual taxes, or rent it out during the weeks and months you are not in residence, and in this way cover all those costs, as well as actually earning a return on your investment. The rental market in Marbella has seldom been as buoyant as it is now, and this makes letting your property very lucrative.
A buoyant rental market
The rental market on the Costa del Sol is divided into two main categories:
- Long-term lets to resident tenants. It is done by the month, and while earning lower rates it ensures steady income throughout the year.
- Renting out to guests coming over for short-term holiday stays. These rentals are calculated by the week, and while potentially more lucrative due to high summer season rates, do require more management and marketing.
In both cases but especially that of holiday rentals in Marbella, the property should be prepared in a professional way to be appealing and ensure suitable tenants are willing to pay a pleasing rate. To achieve this, the property has to be clean, modern, attractive in style and decoration, well-equipped and also in a good location close to amenities and leisure facilities.
The property has to be clean, modern, attractive in style and decoration, well-equipped and also in a good location close to amenities and leisure facilities.
Since the end of the Covid lockdowns, the rentals market in Marbella has been booming, with more demand than supply ensuring rising rental rates both for the long-term and short-term segments, and ROI (return on investment) typically around 5-10% or even above. More income can be earned from holiday rentals, but this does require marketing and the hands-on management involved in the preparation, cleaning and maintenance of the property, as well as attending to guests.
Moreover, a holiday rental property must be fitted with a first aid kit, tourist information, access to natural light and fresh air, Internet connection, heating and cooling, as well as manuals for all the equipment and appliances within the home. The income earned from rentals is also taxable and should be declared, but a professional management company will do all of the above, as well as marketing, arranging contracts, maintenance and management, for a reasonable fee.
Other income from your property investment
Some owners will also use part of their Marbella property as a B&B, or if they have an exceptional home with sufficient indoor and outdoor space, to host launches, weddings and other events. These options are perhaps a little less common in Marbella than in some other markets, but quite apart from direct income in the form of events or rental tenants there are other ways for a property make you money.
In fact, the classic way in which your home is also an investment asset is when you do nothing at all and simply own it, whether you live in it year-round or just occasionally. There are few assets that earn you money in this passive way, but it’s always a good real estate investing. A home gains value with time, and produces a profit (or Return on Investment) in the difference between the purchasing and selling prices. The longer you own a property, the greater this tends to be, though of course it depends on the market cycles too.
Having good instincts when buying and selling properties can earn you a great deal of relatively easy money, and this is of course after deduction of any related taxes and costs, including home improvements. The net profit divided by the number of years gives you the annualised ROI, and here real estate shows itself as both a solid and a potentially very lucrative form of investment. In Marbella, the market is strong, and though prices have been rising steadily, no bubble is in sight.
Prime property in a prime location
Given the above, how do you go about finding the optimal home and property investment in Marbella? First, you look at the location, making sure that:
- The property is located in a popular area with a good address
- The surroundings are attractive and the views excellent
- It is close to practical and leisure amenities
- It is in an upwardly mobile zone with great investment potential
After establishing that the property is situated in a top location it is important to assess the home itself, focusing on:
- The quality of the architectural styling
- Build standards and materials used
- Latest technological features
- Interior layout and finishing
- Security, including gated communities with manned entrances
- Amenities such as swimming pools, spa, gym, concierge services, etc.
- The standard of the gardens and communal areas
Combine all these aspects, and if the property and development in question tick all the boxes, including easy and cost-efficient maintenance, the convenience of a lock up and go home, and an overall offering that is hard to replicate elsewhere, then you know the property in question represents not only a great property investment, but also a highly desirable home.
The View Marbella was designed with exactly this in mind, starting with a premium hillside location within an exclusive residential area endowed with the kind of country, golf and sea views that inspired its name. From this point on, everything from the main entrance and communal amenities to the architectural design and finishing has been created with an exceptional way of life in mind.
Ultimately, the finest investments are those properties that mature like a good wine and become an icon of comfort, style and quality.
Everything from the main entrance and communal amenities to the architectural design and finishing has been created with an exceptional way of life in mind.