Málaga 2016

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Real Estate market recovery in Malaga--------------------------------------------------------------03

Malaga’s economic situation

Situational analysis-----------------------------------------------------------------------------------------05

Economic and financial report----------------------------------------------------------------------------06

Open and connected to the world economy ------------------------------------------------------------07

Why invest in Malaga?

Malaga, tourist capital city in Southern Europe----------------------------------------------------------8

Quality of life ------------------------------------------------------------------------------------------------9

Golden visa -------------------------------------------------------------------------------------------------10

World air transportation connectivity--------------------------------------------------------------------10

Future prospects---------------------------------------------------------------------------------------------10

10 reasons to invest in Malaga----------------------------------------------------------------------------11

Buyer’s profile----------------------------------------------------------------------------------------------12

Rental market

Thriving market in 2016-----------------------------------------------------------------------------------12

Area-based market report

Pacifico ------------------------------------------------------------------------------------------------------13

Extension – Perchel sur -----------------------------------------------------------------------------------13

Historic district – Soho ------------------------------------------------------------------------------------------14

Malagueta – Sancha ---------------------------------------------------------------------------------------15

Limonar – Mayorazgo -------------------------------------------------------------------------------------15

Cerrado de Calderon – Clavero – El Morlaco ----------------------------------------------------------16

Pedregalejo --------------------------------------------------------------------------------------------------16

El Palo -------------------------------------------------------------------------------------------------------17

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Real Estate market recovery in Malaga

The Costa del Sol has been experiencing an economic recovery since 2014, where the real estate

sector plays a leading role. If we talk about the capital city (Malaga) the sales figure growth

reached 19% and 28% in 2014 and 2015 respectively. This piece of information together with

the report presented below, show that Malaga city is the ideal destination both if you wish to

live permanently or as a second residence as well as investing in real estate as the boom that the

city is experiencing in every sense turns it into one of the most profitable places in Spain.

There has been a growing demand by Spanish clients

throughout 2015. Its presence had been merely

symbolic after more than five years. In the same way,

the foreign demand is also increasing as the prices in

Spain are reasonable if we compare them to those of

other European countries especially Malaga in

contrast with other capital cities such as Barcelona,

Madrid and San Sebastian.

Our plans for 2016 are to be able to offer the best

tools to our real estate team with the purpose of

offering a high quality service to our clients. The

company has anticipated that 2000 new real estate

agents will be hired to cover its sales network

worldwide. That increases the possibility of finding

the ideal buyer for our properties.

With a list of properties of more than 70 million euros constantly growing, and thousands of

prospective buyers, our forecast for 2016 is to double our turnover and transactions completion

compared to 2015

We hope you find this report useful and that you turn to us if you wish to carry out a real estate

transaction. We are at your complete disposal.

Yours sincerely,

Mario Garnica

General Director- Engel & Völkers Malaga

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We entered this year 2016 with

complete optimism with regard to

the residential market in Málaga

after leaving behind a positive

2015 in which clear recovery

symptoms of this sector have

been shown as there has been an

increase in property sales all over

the city. It is also important to

mention the real estate prices

stabilization (and even increase)

in certain areas such as the

historic district, la Malagueta or

the promenade Antonio Banderas, among others.

This is why experts state that 2016 will mean the consolidation of the real estate boom in the

whole of Spain (especially, in cities such as Barcelona, Madrid, Malaga or Valencia) and it will

be based on three pillars: price stabilization, the loans’ increase and the return of the citizen’s

confidence.

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Malaga’s economic situation

Situational analysis

With 600,000 inhabitants, the city of Malaga is the capital and central nucleus of the Costa del

Sol with nearly 2,000,000 inhabitants, one of the most important urban areas in the country.

In the same way, it is important to highlight that Malaga is the Andalusian city with the highest

economic activity rate and the fourth of Spain. Furthermore, the latest Eurobarometer news

indicates that it is the best Spanish city to live in.

As in other large urban nuclei, Malaga

possesses a diversified economy, with very

competitive sectors, such as new technologies,

services, tourism, commerce, construction and

logistics. In the last years, the city has

promoted new strategic sectors such as mobile

technology, smart cities, green energy or

navigation among others. That is why, in the

last years it has been chosen as the most

intelligent city in Spain (worldwide award of

the Smartcity program), being the

headquarters of the Association of Science and

Technology Parks of Spain.

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Equally as good and thanks to the first-class infrastructures, such as the port of Malaga, the

international airport, the high-speed train, the Trade Fair and Congress Centre of Malaga,

Mercamalaga (wholesale marketplace), the future Mediterranean Core Network Corridor (the

railway that will link the main Spanish ports with the centre and North of Europe, as well as the

North of Africa), the capital of Malaga and its metropolitan area are becoming stronger as a

great economic activity node.

Economic and financial report.

Malaga is the economic engine of Andalusia, third most prosperous autonomous community,

with a GDP of more than 145,000,000 € in 2015 (which means 13.5% of the GDP in Spain).

Along these lines, the Costa del Sol capital stands out for being one of the first cities in Spain to

start the economic recovery process and it is the second province which has created more jobs in

the last few years due to a solid business network and a favourable atmosphere for

entrepreneurship.

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According to the last piece of information offered by the National Institute of Statistics, there

are more than 111,000 companies coexisting in the area of Malaga, most of them being small

and medium-sized enterprises.

Throughout the year 2015, more than 5,000 companies were created, 6.9% more than in 2014,

positioning itself at the head of Andalusia. With 1 company for every 17 inhabitants, the

province of Malaga is one of the most entrepreneurial of Europe.

In the same way, the Andalusian

capital has also been one of the

main locations where home prices

have started to stabilise (and even

increase in certain areas), during

2015, after 7 years dropping

continuously. In this way, the

average price per square metre in

the city (facts from July 2015) is

2,053€ with great differences

depending on the area. In the most

sought-after locations, the average

prices go from 2,000€/m2

of the detached houses in residential complexes in El Palo to

3,000€/m2 in

Pacifico. The most exclusive properties reach prices close to 9000€/m

2.

Open and connected to the world economy

The open character of the city, together with its climate and its usual connectivity, has attracted

foreign investors. No wonder, the foreign investment in 2013 was worth 94,000,000€.

Moreover, the forecast points to the creation of more than 1,700 jobs in the next few years and

an investment of more than 54,000,000€ made by foreign companies set up in the province of

Malaga, according to the barometer IESE (business school) and IDEA (Innovation and

Development Agency of Andalusia).

Additionally, according to the consultancy and real estate services firm, CBRE, Malaga is the

second middle-sized more attractive city in Europe for real estate investors.

This is why, companies such as “Banco de Andalucía”, “Banco Europeo de Finanzas” or

international companies as for example Oracle, Fujitsu, Ericsson, Caterpillar, Mayoral, San

Miguel, SANDO, Pernod Ricard or Bestseller (among others) have its headquarters in Malaga.

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Why invest in Malaga? More reasons to invest in Málaga.

Malaga, tourist capital city in Southern Europe

With more than 3.75 million

visitors and 2.2 million of

overnight stays, Malaga has

become one of the main

urban destinations and the

third metropolitan area in

Spain. Considered as one of

the favourite cities by tourists

(the level of satisfaction in a

scale from 1 to 10 is 8.63)

and with the best judged

range of hotels by travelers in

Spain (information offered by

hotel.info) the Costa del Sol

capital has been established as one of the most attractive destinations and with the best

prospects in Europe for the next few years.

The city also occupies an important position regarding business tourism: following the growth

shown over the last years, Malaga will end 2016 as the fourth Spanish city as far as activity is

concerned. What is more, it is regaining positions as a cruise ships port to become one of the

main Mediterranean ports again, being the second Spanish port (excluding the islands) only

surpassed by Barcelona, main port in Europe.

In the presence of these figures and the price reduction of more than a 40% from the highest

point, it is no wonder that a lot of foreigners, especially those coming from countries less

affected by the economic recession, are driven to purchase properties on the Costa del Sol’s

capital to spend their holidays, or to rent to a third party.

Top 10 hotel.info main Spanish cities (2014)

Position City Global assessment

1 Malaga 7.68

2 Murcia 7.66

3 Valencia 7.55

4 Bilbao 7.44

5 Zaragoza 7.37

6 Barcelona 7.33

7 Madrid 7.27

8 Palma de Mallorca 7.22

9 Seville 7.21

10 Las Palmas de Gran Canaria 6.99

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Quality of life.

Malaga occupies the ninth place among the cities with the highest quality of life according

to the European Comission, being the only Spanish city out of the top Ten European Cities

list.

The city offers a mild

Mediterranean climate with

more than 3,050 of sunlight per

year, green areas, 13 kilometres

of well-kept beaches, a wide

public transport network, tourist

attractions, Mediterranean

gastronomy (with eight

Michelin stars along the Costa

del Sol) and excellent

connections with the rest of

Europe and the world. There is

also a high-quality education

system, excellent universal

health coverage for residents, a

complete business and shopping

centres network, one of the best and widest cultural offer in Europe (36 museums such as

Picasso Museum, Carmen Thyssen Museum, Pompidou Centre or the Saint Petersburg

State Russian Museum, Malaga Spanish Film Festival, Easter, August fair, etc) and also a

wide variety of leisure and sports activities (there are sports facilities of all kinds and elite

clubs for example Unicaja basketball team and Malaga football club).

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Golden Visa

Without a doubt, the Law on Visas for Entrepreneurs (passed the fourth trimester in 2013)

establishes the granting of a residence permit to those foreigners purchasing properties in

Spain at a value of 500,000€ or over. This is another key factor that contributes to foreign investment in the city.

World air transportation connectivity.

With more than 14.5 million passengers coming from the 125 direct connections with the

main airports of Europe, Asia, America and Africa, the International Airport of Malaga is

one of the most modern and best equipped in Europe (it has five terminals, two runways

and the necessary infrastructure to operate A-380 aircrafts). In 2015, its all-time record

was broken, and out of the major airports, Malaga is the fastest growing.

Future prospects.

Malaga city has been transformed into a trendy destination in recent years, with an annual

increase in regard to the number of visitors superior to 10%. Throughout 2015 more than 14,5

million passengers stopped over at the Airport of Malaga. In the same way, more than one

million tourists have stayed in its hotels and

the city’s cultural offer is growing in an

unstoppable way as it is shown by the

opening of the Pompidou Centre and the

Saint Petersburg State Russian Museum or

the next opening of Malaga Fine Arts

Museum (that will become the biggest of

the already existing museums in the city).

All this contributes to the capital being

strengthened as a reference and as the

forefront of the Costa del Sol brand (area of

the highest influx of tourists in the last few

years).

Travellers in the main tourist areas (2010-2014) This graphic shows the evolution of travellers’ numbers that each of the main tourist areas in Spain has received from 2010 to 2014. Year 2014 Year 2013 Year 2012 Year 2011 Year 2010

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There is a renewed interest in buying properties again due to many different factors: signs

indicating that Spain's economy is growing, and the Euribor (index of reference for most of the

mortgage loans in Spain) being at an all-time low, the banks need to grant mortgage loans to

keep their business and the feeling among the population that the deepest part of the recession

has passed. Therefore, the buying and selling market has started to invigorate, while the rental

market will continue being dynamic in the next few months.

Speaking about the real estate market, it should be noted that the stock of already existing

properties at the beginning of the economic recession is being sold or it has already disappeared

in some specific areas such as the city of Malaga, which is causing the prices to stabilise or even

rise in sought-after areas.

Ten reasons to invest in Malaga

Ten reasons to invest in Malaga

1 First city in Spain and ninth in Europe with the highest quality of life for their inhabitants according to

the European Commission Eurobarometer.

2 Costa del Sol Capital, first Spanish coastal zone regarding number of tourists

3 First Smart city in Spain and second most interesting mid-sized city in Europe (less than a million

inhabitants) for investments.

4 City with the best climate in Spain (except the Canary Islands) according to eltiempo.es

5 Andalusia Technology Park and Malaga valley headquarters (the most relevant technological think

tank in Europe).

6 City with the highest tourism growth rate in Spain in the last years (+120% from 2005 and 2014),

followed by Barcelona (+50%)

7 First smart city in Spain

8 Malaga international airport with more than 14.5 million passengers during 2015

9 European capital of sport in 2020

10 More than 140 nationalities among its inhabitants.

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Buyer’s profile

The buyer’s profile is that of national families that change their residence, just as foreign

families from different nationalities (British, Scandinavian, French, Benelux, German and

Russian mainly) who look for a house to live or spend short holiday periods, as well as a second

residence to rent long term. It should be highlighted that Malaga has more than 20 international

schools in total.

The purchase of properties by foreigners in Spain meant 15.8% of the total in 2014, according

to the information provided by the Ministry of Public Works. This average goes up to 38% in

the case of Malaga province.

Rental market

Thriving market in 2016

The rental market in Malaga can become one of the main pillars of the real estate sector

recovery. Factors such as the high

profitability offered to the owner (around

4% per year), changing the old mindset

on the disadvantages of renting, and the

rise in the tourism industry, have been

favourable to the rental market prospects

in Malaga.

The average rent price in Malaga has

gone up 13.5% throughout 2015 and it

costs an average of 7.6€/m2. This

estimate is higher if the property is less

than 100 m2 and lower if it is bigger.

Nevertheless, if we focus on areas such

as the historic district, Malagueta,

Limonar or Pedregalejo prices can be

over 10€/m2.

According to the experts, buying a property to rent it out is becoming a more and more

profitable business. The rental market boom has allowed rented properties to offer a profitability which was inconceivable before the start of the economic recession.

The situation in 2016 is that of a growing demand for rental housing. The prices are stable even though there is a slight rise in the historic district and in exclusive locations.

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Area-based market report

Pacifico

Industrial engine of the city throughout the 19th and beginning of the 20th centuries, this location

has undergone a transformation during the last decades as the centrality of the city has spread

towards the west. There are Town Hall headquarters, a council office, museums, green spaces

and a great promenade where one can enjoy all year long. The area is around 5 minutes from the

city centre. Many properties here are around 10 to 25 years old, with good quality materials,

surfaces ranging from 80 and 150 m2, front-line apartments or in residential complexes with

swimming-pools and green spaces.

Average price: This is one of the areas where housing prices are higher.

Services: Pacifico is a very sought-after area for Spaniards due to its services offer, its closeness

to the city centre and its luminosity. Another strong point is its recreation areas (Parque del

Oeste, Antonio Banderas promenade…) and its excellent means of communication as it is only

5 minutes away from the Costa del Sol highway, the airport or the train station María

Zambrano.

Forecast for 2016: There is the sensation that price adjustment has not finished yet, due to

housing excess supply, in contrast to the quantity demanded, and new developments being

erected.

Extension- Perchel Sur.

This area combines good-quality residential buildings erected on the Alameda extension

(Avenida de Andalucía) and on its surroundings in the 70’s with more recently built

developments (from year 2000 onwards) around the train station.

Average price

Selling price

3,000€/m2

80 m2 apartment

240,000€

150 m2 apartment 450,000€

Selling Price

2,500€/m2

80m2 apartment

200,000€

150m2 apartment

375,000€

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Services: The biggest number of shopping centres of the capital city is located in this area. The

infrastructure (high-speed train station, the underground, the commuter train, buses), its services

offer, its closeness to the historic district (less than a five-minute walk) attracts more and more

international buyers and also Spaniards coming from other areas.

Forecast for 2016: even though there is the feeling that price adjustment has not finished yet,

news obtained in 2015 seems to indicate that in 2016 prices will be stable in Perchel South and

regarding the best properties, prices are forecast to rise slightly, mainly due to high profitability

of rental properties in that area.

Soho- Historic District.

Malaga historic district has a lot of colour and charm. In this area, we can find different types

of properties such as small palaces from the

beginning of the 19th

century, luxurious

buildings on Larios street or small apartments

rich in history that are ideal for international

buyers looking for a second home. The

average surface is 90 m2.

Soho was buit at the beginning of the 20th

century and it is located in the expansion district

of the city centre. It has been undergoing a

transformation in the last few years with the

opening of new cultural spaces, restaurants and

hotels which turns it into a powerful medium-

term projection area.

Services: In this area, one can find the greatest

gastronomic, cultural and commercial range of

the city.

Forecast for 2016: Regarding the most affordable properties, prices are forecast to rise slightly.

Nevertheless, prices are forecast to lower when referring to high-priced properties.

Soho

City centre

Selling price

2,400€/m2 2,500€/m2

80m2 apartment

192,000€ 200,000€

150m2 apartment

360,000€ 375,000€

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Malagueta-Reding

La Malagueta is recovering the value which dropped during the first years of the 21st century.

This fact is due to its excellent location (the famous Malagueta beach is found here) and to the

transformation undergone during the last few years with the opening of “Muelle Uno”

Pompidou centre, or the upcoming opening of the hotel “Gran Hotel Miramar”. Whether it is a

one-bedroom beach-front apartment or a stately villa, some of the most emblematic properties

can be found in this area, where average house prices can double.

Services: Just a walk away from the city centre and

the port, all kind of services can be found (shops,

supermarkets, restaurants, sport clubs, gyms, schools

etc)

Forecast for 2016: Even though flat prices are remaining stable, when referring to villas and

detached houses, prices are forecast to adjust, as there is a significant gap between buyer and

owner.

Limonar- Mayorazgo

Families from Malaga have a very high opinion of this stately neighbourhood which was built at

the beginning of the 20th century. There are plenty of apartment blocks, with lots of common

areas (swimming-pools, gardens, etc) and terraced houses. There are also a great number of

exclusive historic villas and detached houses.

Housing prices in Limonar-Mayorazgo are similar to those in La Malagueta and, as it has

already been mentioned, the residential complexes can double the average price already

specified.

Services: There are schools, clinics, hospitals, supermarkets and an easy access to the

motorway.

Forecast for 2016: Prices are forecast to adjust due to the low demand.

Selling price

2,500€/m2

80m2 apartment

200,000€

150m2 apartment

375,000€

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Clavero-Morlaco-Cerrado de Calderón

Even though these three neighbourhoods share services, location and environment, each one of

them features distinguishing characteristics. In the neighbourhood of El Morlaco, there are some

of the most exclusive and impressive villas in the city. They are close to the beach and have

breathtaking views. In some cases, they are more than two-million euros. Clavero is the most

recent one of the three and it is mostly made up by high-quality blocks of apartments and also

by terraced and semi-detached houses. Last but not least, Cerrado de Calderón attracts lots of

foreign residents, due to its international schools, its services offer and its good means of

communication.

Services: It is in general a quiet area, surrounded by

services that are located less than 5 minutes away by

car.

Forecast for 2016: The same as in other areas,

apartment prices have been adjusted, while when

talking about villas and detached houses, prices are

forecast to lower, due to the great offer already

existing in the area.

Pedregalejo

Former fishing neighbourhood and wealthy families’ residence, this area has become in one of

the favourites for foreigners and local young people. Well-known beaches, we can find here

from small apartments to large villas. One of the most sought-after properties is its famous

“casas-mata” (townhouse from the middle of the 20th

century with a back patio and a front one

in some cases)

Services: This is one of the liveliest neighbourhoods of the eastern part of the capital city. In it,

we can find renowned schools, supermarkets, gyms, shops, the market, famous beach

restaurants and a wonderful promenade. As it is a more or less flat area, it is possible to go to

the beach walking from almost every place within this district.

Selling price

2,300€/m2

80m2 apartment

184,000€

150m2 apartment

345,000€

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Forecast for 2016: Regarding the significant demand

for apartments, prices are forecast to rise slightly in

contrast to single family homes.

El Palo

This neighbourhood has a life of its own, and for many inhabitants it is a city within a city. As

its neighbouring area Pedregalejo, this area is a former fishing quarter and on its hills there are

the most exclusive complexes in the city (Pinares de San Antón, Miraflores del Palo and El

Candado). Big single family homes (with average plots between 600 and 1,200 m2) are

plentiful, even though in some occasions they are bigger than 5,000m2. This properties offer all

kinds of luxuries and comforts (swimming-pools, tennis courts, cinemas, gyms and everything

else one can imagine).

Services: El Palo is close to the sea, where all kind of services can be found (market,

restaurants, health centres, police station, shops, gyms, public parking, beaches, supermarkets

etc). In the residential complexes there are tennis academies, social clubs, a golf course and a

marina.

Forecast for 2016: Due to the great supply of existing houses, only the best-priced ones or

those standing out from others, will be sold. That is why prices are forecast to lower while the

supply is so abundant.

Selling price

2,400€/m2

80m2 apartment

192,000€

150m2 apartment

360,000€

Selling price

2,000€/m2

250m2 house

500,000€

400m2 house

800,000€

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Engel&Völkers Malaga East

Address: Calle Sebastián Souvirón, 8 (local esquina)

Postal Code: 29005

Malaga (Malaga)

Phone number: (+0034) 951956922

Email address: malagaeast@engelvoelkers.com

Web page: www.engelvoelkers.com/malagaeast