Marbella property market comeback?

A politically charged building scandal has tainted the Marbella property market reputation. Now the new mayor is spearheading a legal clean-up – but some British owners may still lose out.

August 2007

Is Marbella's property market on the brink of a comeback?

It was the Spanish playboy Prince Alfonso von Hohenlohe who put Marbella on the map in the 1950s, when he founded the swanky Marbella Club and brought his jet-set friends from Madrid there. In recent years, however, despite the perfect climate, the town’s reputation has been under a cloud. Corruption has been so rife within the property market, buyers have been driven away.

Now, after a long-running clampdown that has resulted in scores of arrests, and local elections designed to usher in a new era of honesty at the town hall, Marbella is trying to rebuild its reputation and restore buyer confidence, particularly among foreign investors. It has a new urban plan from the regional government of Andalusia, based in Seville, and an amnesty is being declared on many of the illegal developments.

The person responsible for the clean-up is the town’s new mayor, Angeles Muñoz, 47, the Popular Party candidate, who came to power in May. “We are going to remove the legal insecurity so that buyers can feel confident,” she says. “To do this, we will have to legalise practically all the 19,000 properties that were built with illegal licences.”

The task that her new administration faces is a daunting one. “British purchases are down something like 70% since 2003,” says Chris McCarthy, head of Viva Estates, a local agency. “Property prices peaked that year, and our average sale price of €325,000 hasn’t budged since. June was the worst month in five years, and a lot of agencies are downsizing or closing.”

“Leading up to the new millennium, we had 20% per annum capital gains for five years, but it’s been downhill since 2001,” says Diana Morales, who heads an eponymous high-end agency. And, though the proposed amnesty will benefit many British buyers innocently caught up in the scandal, others are likely to see their holiday homes bulldozed and their hopes of a life in the sun crushed.

There has been no political honeymoon for Muñoz. A GP who started out in local politics, she served as a junior minister in the previous national government, and the party she represents is the only one not implicated in the corruption scandal. Within months of her election, however, her political opponents are already muttering about potential conflicts of interest – her Swedish-born husband, Lars Broberg, is a local businessman with property investments.

Marbella’s problems stretch back to 1991, when a local developer, Jesus Gil, was elected mayor. Though initially popular, having boosted employment and cut street crime, Gil oversaw a culture in which anything from building permits to municipal contracts could, allegedly, be bought. Illegal licences for an estimated 30,000 properties are thought to have been granted under an urban plan he instituted in 1998.

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