Unlocking the Potential of the Costa Blanca: Is Now the Best Time to Invest in Alicante and Benidorm Real Estate?

The Costa Blanca is one of Spain’s most desirable regions for real estate investment. Known for its golden beaches, sunny climate, and vibrant culture, areas like Alicante and Benidorm have become hotspots for international buyers seeking both holiday homes and lucrative investment opportunities. But is now the best time to invest? Or should potential buyers wait for a price drop?

In this article, we’ll delve into the current property market trends across Costa Blanca, the factors influencing property prices, and what the future holds for real estate investors. Let’s explore why you should be thinking about securing your dream property sooner rather than later.

The State of the Costa Blanca Property Market in 2024

Despite a slight cooling-off period across Europe post-pandemic, Costa Blanca’s real estate market remains resilient and dynamic. In Alicante and Benidorm, demand for property remains high, especially among foreign buyers.

Key Statistics (Q3 2024):

• Foreign Buyers: International buyers, primarily from the UK, Germany, Belgium, and Scandinavia, represent 38% of all property transactions in Costa Blanca, higher than the national average.

• Average Property Prices: The average price of property in Alicante province is currently €1,720 per square meter, representing a steady year-on-year increase of 4.8%.

• Luxury Market: In areas like Benidorm, where demand for beachfront properties is growing, prices can exceed €3,000 per square meter, with ultra-modern new builds attracting investors looking for strong rental yields.

• Sales Volume: Despite global economic uncertainty, total property sales in Alicante have increased by 6% year-on-year, driven by high demand in both the resale and new-build sectors.

What’s Driving Property Prices?

Several factors are keeping Costa Blanca’s real estate market buoyant:

1. High Demand, Low Supply

Costa Blanca is a well-established favorite among foreign buyers, and the region’s natural beauty, paired with its proximity to major airports, makes it a consistent draw. However, a shortage of land for new developments in prime areas like Alicante and Benidorm is restricting the supply of new homes. This imbalance between high demand and limited supply is driving up prices, especially in the luxury and beachfront sectors.

2. Mortgage Rates and Lending Trends

While mortgage rates have seen slight increases over the past year due to rising ECB interest rates, they remain relatively low compared to historical averages. Spanish banks are offering competitive mortgage products, especially for non-residents, with rates around 3-4% depending on the type of loan. This availability of financing is encouraging more buyers to enter the market, fueling demand.

3. Growing Rental Yields

Short-term rentals are booming in Alicante and Benidorm, especially with the resurgence of tourism. The rental yield for properties in prime areas can range from 4-7% annually, making this an attractive option for investors looking to capitalize on both property appreciation and rental income. In cities like Benidorm, luxury apartments with sea views can command premium rental rates, particularly during the high tourist season.

Will Property Prices Drop or Continue to Rise?

Many prospective buyers are curious: should you buy now, or will prices decrease in the near future? According to real estate experts, while the market may stabilize, significant price drops are unlikely in Costa Blanca, and here’s why:

• Continued Demand from Foreign Buyers: International buyers continue to see the Costa Blanca as a safe investment haven. Even with economic challenges elsewhere, demand remains strong. This is especially true for new-build luxury developments.

• Shortage of New Developments: Land is becoming scarcer, especially in prime areas. Local governments have introduced regulations limiting the construction of new developments to preserve green spaces, further restricting supply.

• Stable Economic Outlook: Despite challenges, Spain’s economy is expected to grow at a moderate rate over the next few years, supporting stable property values.

Some experts predict a further 3-5% increase in property prices in Alicante and Benidorm by 2025, driven by these factors. While the rate of increase may slow slightly due to higher interest rates, the overall trajectory points toward growth.

Market Trends: What Does the Data Say?

• Property Sales Growth: Between 2020 and 2024, property sales in Alicante have grown by an average of 7.2% annually, driven largely by international demand.

• Price Growth: Prices have been climbing steadily, with a 5% average annual increase over the past five years. New build properties in premium locations have seen even higher price hikes.

Charting the Future: Forecast for 2025 and Beyond

As you can see from the forecast, prices are expected to rise modestly, with demand from foreign buyers continuing to push the market forward. These projections signal that now is the time to secure your investment before further price increases take hold.

Why You Should Act Now

If you’ve been considering buying a property in Costa Blanca, there’s no better time than now. With a limited supply of new developments, especially in prime areas, and rising demand from international investors, waiting could mean higher prices in the future. And with strong rental yields on offer, purchasing a property in the region can bring immediate returns.

Ready to Explore Your Options?

At Costa Prime Properties, we specialise in luxury new-build developments and resale properties in Alicante and Benidorm, as well as other beautiful towns in Alicante province such as La Nucía, Polop, Albir, Finestrat, Alfas del Pi, Denia, Torrevieja, and Orihuela Coast, among many more across the Costa Blanca. Whether you’re searching for a beachfront villa, a modern apartment with panoramic sea views, high-yield investment properties, resale properties, or rental options, our team is here to help you navigate the market and find your dream home.

Contact us today to learn more about available properties and how we can help you make the most of the Costa Blanca property market in 2024 and beyond.