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Market Forecast – What to Expect From 2022
Market Forecast
What to Expect From 2022While Solvilla, and the Marbella property market in general, can look back upon a very successful 2021, as we enter a new year it is natural to project our thoughts to the future and question what lies ahead.
Just as 2021 was shaped by the events of 2020, so the same applies to 2022. On a macroeconomic level, the pandemic lockdowns and travel restrictions that befell much of 2020 led to a paralysis of movement and therefore economic activity for extended parts of the year. The result was an economic contraction of historic proportions – 12,5% in Spain - and for once it wasn’t caused by financial or economic conditions.
As the situation improved gradually over 2021 we entered a period of strong economic recovery, partly the product of pent-up demand being released, and partly due to the accelerated evolution of tech-based development. In Spain, the economy recuperated approximately half of what it had lost in the previous year, and it’s forecast to do the same in 2022 – and while this means we will only be back at 2020 levels by early 2023, this does mean higher than usual growth rates of around 6,5%.
Just as 2021 was shaped by the events of 2020, so the same applies to 2022. On a macroeconomic level, the pandemic lockdowns and travel restrictions that befell much of 2020 led to a paralysis of movement and therefore economic activity for extended parts of the year. The result was an economic contraction of historic proportions – 12,5% in Spain - and for once it wasn’t caused by financial or economic conditions.
As the situation improved gradually over 2021 we entered a period of strong economic recovery, partly the product of pent-up demand being released, and partly due to the accelerated evolution of tech-based development. In Spain, the economy recuperated approximately half of what it had lost in the previous year, and it’s forecast to do the same in 2022 – and while this means we will only be back at 2020 levels by early 2023, this does mean higher than usual growth rates of around 6,5%.
Growth prospects
What it also means is that we can look forward to strong economic growth in 2022, even if it is technically ‘recuperative’ growth. Globally, the main driver is the rapid evolution of tech-based innovations, into which most funds are now flowing, but we’ve also noticed the strong resumption of consumer growth, not least in the luxury end of the Marbella property market, which is expected to repeat the excellent showing of 2021.
‘But’, I hear you thinking, ‘is it all going to be plain sailing?’. Indeed, we’ve become so used to successions of new crises that good news needs qualifying. And yes, the resumption of demand and the return to economic activity have reacquainted us with levels of inflation not seen for over two decades. Shortages were another serious problem in the aftermath of the pandemic lockdowns, and even now, supply chains are struggling to catch up.
‘But’, I hear you thinking, ‘is it all going to be plain sailing?’. Indeed, we’ve become so used to successions of new crises that good news needs qualifying. And yes, the resumption of demand and the return to economic activity have reacquainted us with levels of inflation not seen for over two decades. Shortages were another serious problem in the aftermath of the pandemic lockdowns, and even now, supply chains are struggling to catch up.
But so far the markets are holding out, real estate is a popular asset and tech investment is driving longer-term growth as productivity gains. Spain, for one, is receiving its share of inbound investment, and in Marbella it is creating an influx of luxurious modern hospitality projects such as the new five-star deluxe Four Seasons resort hotel and beach club with boutique hotel that is set to arise just east of Marbella town, involving an investment of €650 million.
Other signs of strong investor movement in this area are the take-over by a new group of the Los Monteros Hotel for €47 million, the redevelopment of Laguna Village by the Pacha Group and other grand luxury hotel and residential resort projects flanking Marbella – indications of just how much interest there is in this region, and confidence in its future. Marbella is a dynamic, young and cosmopolitan town that is growing fast and adding rapidly to an already impressive range of luxury and professional amenities and services.
Other signs of strong investor movement in this area are the take-over by a new group of the Los Monteros Hotel for €47 million, the redevelopment of Laguna Village by the Pacha Group and other grand luxury hotel and residential resort projects flanking Marbella – indications of just how much interest there is in this region, and confidence in its future. Marbella is a dynamic, young and cosmopolitan town that is growing fast and adding rapidly to an already impressive range of luxury and professional amenities and services.
Supply vs. Demand
If anything, our problem in 2022 will be supply, not demand. Such is the desire for the lifestyle of the Costa del Sol that most of the new villas and apartments have been snapped up and buyers are turning to off-plan projects that will be ready to move into within six to 18 months. Renovated properties in Marbella are also very much in demand, and while prices are rising steadily, they still fall short of those of most people’s home markets, so expect a robust 2022 on the Costa del Sol!