The Costa del Sol is one of Spain’s most attractive regions for real estate investment. With its sunny climate, high tourist demand, and still competitive prices compared to other European coastal areas, many wonder whether buying a property as an investment in this region is worthwhile.

 

1. Profitability and Investment Opportunities

 

The profitability of a property on the Costa del Sol depends on several factors, including location, property type, and investment strategy. There are two main ways to generate income:

  • Holiday Rentals: Due to the high influx of tourists, short-term rentals are a profitable option, especially in cities like Marbella and Málaga.

  • Long-Term Rentals: In areas with a stable population, such as Estepona or Fuengirola, long-term rentals can offer steady income.

 

Yield Examples by City

 

City Average Price per m² Holiday Rental Yield Long-Term Rental Yield
Marbella €5,000/m² 6-8% 3-5%
Málaga €3,500/m² 7-9% 4-6%
Estepona €3,000/m² 5-7% 3-5%
Fuengirola €2,800/m² 6-8% 4-5%

 

2. Taxes and Costs for EU and Non-EU Investors

 

Tax obligations vary depending on whether the buyer is from the EU or not:

  • Non-Resident Income Tax: 19% on rental income for EU citizens and 24% for non-EU citizens.

  • Property Transfer Tax (ITP): Between 7-10% of the property value, depending on the region.

  • Property Tax (IBI): Depends on the municipality, generally between 0.4% and 1.1% of the cadastral value.

  • Capital Gains Tax: Applied to the profit from selling the property.

 

3. Key Considerations Before Investing

 

  • Strategic Location: Areas with high tourist demand and good infrastructure offer better returns.

  • Property Management: A management agency is recommended for both holiday and long-term rentals.

  • Market Fluctuations: Although the Costa del Sol is a stable market, prices may fluctuate based on the global economy.

 

Conclusion

 

Investing in the Costa del Sol can be a great opportunity to generate passive income and increase property value over time. However, a detailed analysis and consideration of all financial and tax factors are essential before making a decision.