Property Investments Costa del Sol

1. High & Diverse Rental Yields

• Short‑term (holiday) rentals in top areas like Marbella and Málaga typically deliver 4–7% gross yields, occasionally climbing to 8–9% for ultra‑prime beachfront properties reddit.com+15directimo.com+15euroweeklynews.com+15.

• Long‑term rentals are steadier, yielding around 3.5–6%, with Marbella and Málaga delivering 4.5–5.6% directimo.com.

• Overall, regional average gross rental yield is about 5.6% .

2. Rising Property Values

• Coastal property prices in Spain rose 12.8% year‑on‑year to May 2025, with Andalusia up ~14.3% cincodias.elpais.com.

• Key hotspot price increases: Marbella +6% to ~€4,800/m²; Estepona +5.5% to €2,800/m²; Málaga city +4.5% to €3,200/m² realestate-space.com+5alexandercarmine.com+5dpc-costadelsol.com+5.

3. Strong Tourism Demand

• The region welcomes nearly 14 million annual visitors, driving vibrant rental demand realestate-space.com+4reddit.com+4cilomarbella.com+4.

• In 2024, Marbella achieved a hotel occupancy rate of ~80% Apr‑Oct and the highest average room rate in Spain at €214/night cadenaser.com.

4. Lifestyle & Demographic Appeal

• With its Mediterranean climate, beaches, golf courses, and cosmopolitan culture, the region draws expats, retirees, digital nomads, and holidaymakers—sustaining diversified demand reddit.com+8myspanishpropertyfinder.com+8livingstone-estates.com+8.

5. Favorable Tax Climate

• Wealth tax abolished in Andalusia since late 2022, effective 2023—benefitting residents and non‑residents alike cilomarbella.com+4costadelsol365.es+4reddit.com+4.

• Inheritance & gift tax often subsidized or reduced by 99% for direct family in Andalucía cilomarbella.com+1investinspain.be+1.

• Non‑residents pay 19% rental income tax if from EU/Norway/Iceland (24% otherwise) .

• Over‑65s enjoy full capital‑gains exemption on property sale profits optimummarbella.com+1en.wikipedia.org+1.

🔍 Best Locations & Their Strengths

🏘️ Property Types & Strategies

• Villas & Turnkey apartments: Premium rental yields (up to 6.5%) especially beachfront or gated communities directimo.com+4livingstone-estates.com+4dpc-costadelsol.com+4.

• Apartments (1–3 beds): Most popular for both short‑term (holiday) and long‑term renters.

• Development & Renovation Projects: High ROI via value‑add.

• Commercial Properties: Smaller but steady interest in retail/offices in Málaga.

• Growing demand for mid‑term stays (1–6 months) by digital nomads blends holiday and rental markets reddit.com+2livingstone-estates.com+2reddit.com+2directimo.com+1myspanishpropertyfinder.com+1.

📌 Considerations & Risks

• Seasonality risk in holiday rentals: rates drop 25–40% in low season; summer surges 40–60% directimo.com.

• Tourist‑license regulation tightening: e.g., Decree 31/2024 restricts new licences in Málaga & Fuengirola directimo.com.

• Proposed stamp‑duty hikes for non‑EU, non‑residents could double transaction taxes (concept debated; possibly from ~7–10% to ~14–20%) reddit.com+6reddit.com+6reddit.com+6.

✅ Summary

Investing on the Costa del Sol offers compelling upside via capital appreciation, rental yields and favorable tax regimes. For shorter-term gains and high yield, Marbella and Puerto Banús stand out. For strong growth with slightly lower costs, Estepona and Benalmádena are excellent alternatives. Málaga offers diversification with stable returns, while Fuengirola/Torremolinos/Mijas provide family-friendly affordability.