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Covid-19 causes a split in Marbella’s holiday home market

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Iranian-born art dealer Sholeh Abghari started coming to Marbella 15 years ago, and each visit to her family’s place in the Spanish resort town evoked something like dread.

“We had a summer house in [the Marbella neighbourhood] Nueva Andalucía. I would always say: ‘I don’t want to go. It’s only for old people,’” says Abghari, 38.

Her attitude changed in 2017, when she moved into the house and discovered a “young generation of entrepreneurs” had moved to the area. Since then, she and her husband Tarek Beshara, a hotel developer from Majorca, have had two children and, during the coronavirus pandemic, reserved a €2.5m unit in the area’s first designer-branded residence development, the recently launched Epic Marbella, furnished by Fendi Casa.

Epic Marbella, the area’s first designer-branded residence development, is furnished by Fendi Casa
Epic Marbella, the area’s first designer-branded residence development, is furnished by Fendi Casa

In recent years, new holiday-home developments have boomed on Spain’s Costa del Sol, with 267 projects offering about 15,000 units at the beginning of 2020, according to the Marbella-based real estate consultancy Prime Invest.

In March, the arrival of the pandemic, the ensuing lockdown and economic disruption brought back painful memories of the bursting of Spain’s real estate bubble in 2008, which saw prices for new houses fall by more than 32 per cent over five years and littered the coasts with half-built skeletons of homes.

The Marbella beachfront
The Marbella beachfront © Solarpix.com

“January to mid-March was the best spring ever. Then things changed,” says Daniel Kunz, a Prime Invest partner, whose company manages sales for 23 new residential developments on the coast. “Ninety-five per cent of our developments are sold to foreigners, so if they can’t travel things get complicated.”

As restrictions eased, the property market on the Costa del Sol has split between the haves and the have-mores. While middle-market projects have been hit by slowing sales as its clientele struggles with lost jobs and the inability to travel — overall sales are down 20 per cent in 2020, according to Fausto Martínez of FM Consulting — new luxury projects such as Epic Marbella have benefited from a super-rich class that has not been badly affected.

“In the first few months of the virus, activity was very low. But after confinement ended, the summer here was very happening,” says Carlos Rodríguez, chief executive of Sierra Blanca Estates, the project’s developer.

Units at Epic Marbella cost €2.5m-€7m
Units at Epic Marbella cost €2.5m-€7m

Rodríguez says deposits have already been paid for 26 of the first 46 Epic Marbella units, including 12 of the first 28 Fendi Casa units (the first phase of 18 is not decorated by Fendi). The residences, which range from 400 sq m to 1,000 sq m, are priced from €2.5 to €7m.

The arrival of the area’s first branded development is the latest shift for Marbella. Back in the 1960s, it was a small town frequented by the Spanish elite and foreign friends such as Monaco’s Prince Rainier and actors Grace Kelly, Laurence Olivier and Jimmy Stewart. By 2000, it had boomed to have a population of 100,000, buoyed by second-home buyers and expats from the UK.

“It used to be English buying two-by-two [room] apartments at the lower end, but in the last four to five years a lot of young Scandinavians in their 30s have moved here and bought big villas,” says Nick Bristow, 36, a real estate developer from Kent in the UK. He started visiting Marbella with his family 25 years ago — and, like Abghari, reserved a Fendi unit at Epic Marbella for €2.9m.

Christopher Clover, who has run Marbella’s Panorama Properties for almost 50 years, says the increasing presence of wealthy northern Europeans, such as Swedes and Belgians, marks the culmination of a two-decade transformation of Marbella to a year-round city with a population of more than 150,000.

While high-end homes seem to be selling, second-hand properties and lower-priced apartments outside central Marbella have had a harder time.

Villa in Sierra Blanca with six cabins. Available through Panorama for €4.35m © SIMON MAXIM www.simon-photo.ru

Leo, who did not want to give his real name, says he has benefited from the situation. The UK-based property developer has owned a holiday home in Marbella for 15 years but, in August, signed the contract for a villa in the Sierra Blanca neighbourhood for which he offered €2.5m, 20 per cent below the already reduced asking price of €3m. “It was the best time for us to buy,” he says.

Locator map of Marbella, Spain

The Spanish market was almost paralysed during the second quarter — sales in Andalucía were down 47 per cent compared to the same period in 2019, according to the country’s notary union. The number of sales in Spain rebounded in August, up 6.8 per cent year-on-year, but prices per sq m were down 7.3 per cent — and Kunz says some motivated sellers have been offering discounts of between 30 and 40 per cent.

Outside Marbella, in cheaper places such as Estepona, the market is being flooded with large developments. At the beginning of the year, Estepona had 82 projects accounting for 5,430 planned units, according to data from Prime Invest, more than a third of all planned for the Costa del Sol.

“In zones like Estepona, there was an excess of supply, and it will take a lot of effort to sell. They were selling slowly a year ago and now have almost stopped,” says José Carlos León of Nvoga estate agents. “There’s no demand for them.”

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Unlike when Spain’s last housing boom collapsed, lenders have been more demanding, requiring developers to pre-sell about 60 per cent of their units before they offer financing.

As a result, builders have been turning to investment funds for loans to buy land and pay for the early development process. With funds charging annual interest rates around 15 per cent, these early-stage projects are the most likely to have problems in future, says León.

“Up to today, projects haven’t stopped, but we’ll see [if that can continue] in the coming months,” he says. “There will be opportunities for investment funds to come in, buy the projects and take over.”

For Abghari, who opened an art gallery in Marbella in July last year, trouble in the middle market seems very far away. “In my gallery, my clients are mostly from Belgium, Scandinavia, all late 30s, 40s,” she says. “When I ask why do you want to buy art, they say: ‘I just bought a place.’”

Buying guide

  • Property transfer taxes for second-hand homes in Andalucía are: 8 per cent up to €400,000; 9 per cent from €400,000-€700,000; and 10 per cent above that. Lawyer’s fees are about 1 per cent and notary and registry fees will generally not exceed €3,000-€4,000 combined.

What you can buy for . . . 

€398,000 A new three-bedroom apartment in Nueva Andalucía. Through Renew Realty.

€2.1m A four-bedroom villa on the “golden mile”. Panorama Properties.

Follow @FTProperty on Twitter or @ft_houseandhome on Instagram to find out about our latest stories first





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UK ends damaging post-Brexit clash over status of EU envoy

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UK foreign secretary Dominic Raab has finally ended a corrosive diplomatic dispute over the status of the EU’s ambassador in London, a stand-off that had added to post-Brexit tensions.

Raab had previously refused to grant João Vale de Almeida full diplomatic status after Brexit took effect on January 1, arguing the EU was an “international organisation” not a state.

Brussels retaliated by shutting Britain’s head of mission to the EU, Lindsay Croisdale-Appleby, out of key meetings with EU officials, adding to Brexit tensions on trade and Northern Ireland.

But on Wednesday the issue was settled after a meeting between Raab and Josep Borrell, the bloc’s foreign policy chief.

Officials briefed on the deal said Vale de Almeida would now receive the same diplomatic recognition as his counterparts in EU missions in all other world capitals, including Washington and Beijing.

In a joint statement, issued at a G7 meeting in London, Raab and Borrell said they had reached an agreement based on “goodwill and pragmatism” on an establishment agreement for the EU delegation to the UK.

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While Vale de Almeida will enjoy full ambassadorial status, British officials said Raab had secured a deal “which gives us some of what we want” regarding the legal situation of EU staff in London.

EU officials will enjoy a largely similar status to other diplomats but with some downgrades: notably, under the agreement, they will not have immunity from prosecution for road traffic accidents.

Raab insisted on this carve-out following the death of Harry Dunn, a British motorcyclist killed in 2019 in a collision with a vehicle driven by Anne Sacoolas, the wife of a US diplomat. She returned to the US claiming diplomatic immunity. 

But many British diplomats were dismayed at how long it had taken to resolve the dispute. “It was a stupid thing to do in the first place and we’ve had to back down,” said one former ambassador.

The diplomatic rapprochement was hailed in Brussels as a sign of a “new cycle” in UK-EU relations following the European parliament’s formal ratification last month of the trade deal between the two sides, which took effect on January 1.

There has also been a thawing in relations over the management of tensions in Northern Ireland, as London and Brussels look for ways to soften border checks on goods coming from the British mainland to the region.

Vale de Almeida will now get to present his diplomatic credentials to the Queen — an honour not available to the heads of international missions.

Boris Johnson has never recognised the EU as equivalent in status to a national government but Number 10 insiders insisted that the Foreign Office — not the prime minister — was responsible for the diplomatic dispute.

Meanwhile, Ireland and the UK announced plans for the first meeting in two years of the British-Irish Intergovernmental Conference, a structure created under the 1998 Good Friday Agreement for the two countries to liaise on issues around Northern Ireland. 

“We are aware that there are sincerely held concerns in different communities in Northern Ireland in relation to a number of issues and firmly agree that the best way forward is through dialogue and engagement,” said Northern Ireland secretary Brandon Lewis and Ireland’s foreign affairs minister Simon Coveney in a joint statement after they met in Dublin on Wednesday afternoon.

The meeting will take place in June, ahead of the July marching season in Northern Ireland, which could inflame tensions between unionists — who feel that their region’s status in the UK is under threat from post-Brexit trading arrangements — and nationalists, who are pushing for a vote on a united Ireland. 

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France threatens to cut power to Jersey as fishing tensions rise

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France has threatened to cut off its power supply to Jersey in the Channel Islands, as tensions rise with the UK over the post-Brexit fishing regime.

Following the UK’s full departure from the bloc in January, French fishermen have expressed concerns at difficulties in receiving the necessary licences to fish in British waters.

The dispute also comes at a time when UK and EU negotiators are in discussions over the 2021 catch quota for shared fishing stocks.

Jersey, the largest channel island and a British crown dependency, receives 95 per cent of its electricity from France through underwater cables. Its foreign policy is governed by the UK, which means it is treated as a third country by the EU.

Annick Girardin, the French maritime minister, told France’s National Assembly she was “revolted” that Jersey had granted 41 fishing licences that included conditions and specific criteria that were “decided unilaterally and without explanation”.

“It’s unacceptable,” she told lawmakers. “We’re ready to resort to retaliatory measures . . . concerning Jersey, I’ll remind you of the transport of electricity via submarine cables.” Girardin added she would “regret” any action but “we’ll do it if we have to”.

French fishermen and ministers have been complaining for two weeks about the difficulty of gaining access to British waters despite the agreement on fisheries reached at the end of last year.

The anger among French fishermen at the delays in receiving licences for fishing in UK has prompted barricades for lorries arriving in Europe with UK-landed fish.

Clement Beaune, France’s junior minister for European Affairs, last week threatened to block regulations that would allow UK financial firms to do business in the EU if Britain does not respect its Brexit commitments on fishing.

Bertrand Sorre, an MP for President Emmanuel Macron’s governing La République en Marche party, gave the example of a fisherman from Granville in Normandy who had previously fished for scallops and whelks for an average of 40 days a year off Jersey; he had been told he could fish for only 11 days this year, and only for scallops.

Ian Gorst, Jersey’s external relations minister, said it had issued the licences in accordance with the UK’s trade and co-operation agreement with the EU and the new regime would “take time for all to adjust”.

“If French fishermen or the authorities have further evidence they would like to submit, we will update the licences to reflect that evidence,” he said in a statement.

The UK’s Department for Environment, Food and Rural Affairs said: “We are clear that Jersey is responsible for its own territorial waters.”

UK business minister Nadhim Zahawi urged both sides to “iron out” issues with fishing. “We’ve got to look at this urgently and the best way to fix this is to work together,” he told Sky News.

A senior UK official said the government had been taken aback by the strength of the French reaction, which was seen as an “aggressive escalation” given that the UK had been working together on the question of licensing. “It’s a strange way to behave, from what is meant to be a friendly country,” they added.



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Hello, Berlin? Germany’s future raises foreign policy concerns for allies

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The writer is Fritz Stern chair at the Brookings Institution

President Joe Biden has made it clear that he really, really wants to work with Europe. After the four traumatic years of the Trump presidency, that seems an opportunity not to be missed. Also, Moscow and Beijing are undeterred by US and EU sanctions over the jailing of Russian dissident Alexei Navalny and the mistreatment of Uyghurs in China.

They are dialling up the pressure on Europe with countersanctions, expulsions of diplomats and thuggish-sounding threats. But in Brussels, EU Commission president Ursula von der Leyen is fighting with European Council president Charles Michel over charges of sexism and a Turkish sofa, instead of getting a grip on a double-dip recession and the pandemic.

British premier Boris Johnson is in trouble over costly wallpaper. French president Emmanuel Macron, up for re-election in 2022, is neck-and-neck in the polls with his far-right rival Marine Le Pen, while retired and current military officers are warning of civil war.

This would seem to be the moment for Germany, as a responsible neighbour, to step up and help out. But Europe’s most powerful economy is going to the polls even sooner than France: on September 26. As the 16-year tenure of Chancellor Angela Merkel comes to a close, the six parties scrambling to rule in the post-Merkel era are somewhat less than focused on goings-on beyond Germany’s borders.

The reason is the fragmentation of Germany’s colour-coded party landscape. In current polling, the Greens are fighting for first place with the CDU (black) at about 25 per cent, with the Social Democrats (red) far behind at 15 per cent, followed by the liberal Free Democrats (yellow) and the Left party (dark red) at around 11 per cent each.

The far-right Alternative for Germany is so radical that Germany’s domestic intelligence service wants to place it under observation. No other party will work with it, but it still captures about a tenth of the vote. This increases the likelihood that Germany’s next government will be a three-way coalition, with a kaleidoscope of possible combinations: black-green (or the reverse, with the CDU as junior partner); “Jamaica” (CDU-Greens-liberals); “traffic light” (Greens-SPD-liberals); and finally, “R2G” (SPD-Left-Greens).

This is why the small parties’ ideas suddenly matter. But in terms of foreign and security policy, none of the five presents a fully reassuring image to a neighbour or ally of Germany.

The Left party’s only path to government is R2G, a goal the powerful leftwings in the Greens and the SPD have been actively pursuing. But the Left too has radicalised, shedding its once influential east German pragmatists. Its new top duo opposes military engagement abroad of any kind. But it is also apparently clueless about pensions, and that may alienate its base.

The FDP has cabinet-ready experts on finance, digital issues and foreign and security policy — and a liability in Christian Lindner, their leader. The CDU and Greens are still smarting because of his petulant walkout from coalition negotiations in 2017. Last year, he faced a revolt in his own party after supporting the decision of a regional liberal politician to let himself be elected state governor with the AfD’s help.

The SPD’s Olaf Scholz is caught in a double bind. As Merkel’s finance minister, the opposition accuses him of oversight failures in a spate of financial scandals. As candidate for chancellor, he has seen the SPD leadership wrench the party to the left with anti-nuclear slogans reminiscent of the 1980s. Fritz Felgentreu, one of several seasoned legislators to resign in protest, calls his party’s security policy a “smouldering fire”.

Armin Laschet, the CDU candidate, has come under fire for sounding soft on Syria, Russia and China. Yet his real problems are corruption scandals and circling party frenemies. His party may be dealt another blow in next month’s state elections in Saxony-Anhalt, where some polls have the AfD in close pursuit.

All this does much to explain the rise of the Greens and Annalena Baerbock, their laser-focused candidate. Her criticism of China, the Kremlin and the Nord Stream 2 pipeline project is music to Washington’s ears. Yet the party’s feisty base has had ferocious fights over defence spending and nuclear deterrence. Its reliability as a partner is by no means guaranteed.

Of course, elections are generally not fought, or won, on foreign policy. But German voters would do well to remember that their country’s wealth and power depends on the stability and security of its neighbourhood. Maybe it is time to pay attention, and get a little worried. Its neighbours and allies already are.



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