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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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Missing Belarus activist found hanged in Kyiv park

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Belarus updates

A Belarusian opposition activist has been found hanged from a tree in a park near his home in Ukraine, a day after he was reported missing. Local police said his death could have been made to look like suicide.

Vitaly Shishov, who led the Kyiv-based organisation Belarusian House, which helps Belarusians fleeing persecution find their feet in Ukraine, had been reported missing by his partner on Monday after not returning from a run.

Shishov’s death follows weeks of increased pressure in Belarus by authorities against civil society activists and independent media as part of what the country’s authoritarian president Alexander Lukashenko has called a “mopping-up operation” of “bandits and foreign agents”.

Many Belarusians have fled the country since Lukashenko launched a brutal crackdown last summer after nationwide protests erupted following his disputed victory in presidential elections. About 35,000 people have been arrested in Belarus and more than 150,000 are thought to have crossed into neighbouring Ukraine.

Franak Viacorka, an aide to Belarusian opposition leader Sviatlana Tsikhanouskaya who met UK prime minister Boris Johnson on Tuesday in London, said Shishov’s death was “absolutely shocking and unexpected to all of us”.

“He [Shishov] and his friends helped people who were moving to Ukraine,” Viacorka told the Financial Times. “They were very helpful, especially for those who have just arrived and didn’t know what to do.”

Viacorka said many activists living in Ukraine, such as Shishov who fled Belarus in 2020, had “complained about possibly being followed, and receiving threats”.

Kyiv park where Vitaly Shyshov’s body was found
The Kyiv park where Vitaly Shishov’s body was found after he failed to return home following a run © Gleb Garanich/Reuters

Downing Street said that after meeting Tsikhanouskaya, Johnson condemned the Lukashenko regime’s severe human rights violations. “The UK stands in solidarity of the people of Belarus and will continue to take action to support them,” a spokesperson said.

Ukrainian police have now launched a criminal case for the suspected murder of Shishov, including the possibility of “murder disguised as suicide”.

Yuriy Shchutsko, an acquaintance and fellow Belarus refugee who found Shishov’s body, ruled out suicide, pointing out that Shishov’s nose was broken.

“I suspect this was the action of the [Belarus] KGB . . . we knew they were hunting for us,” he told Ukrainian television.

Ihor Klymenko, head of the National Police of Ukraine, subsequently said Shishov’s body had what appeared to be “torn tissue” on his nose and other wounds, but stressed it would be up to medical examiners to determine if these were caused by beatings or the result of suicide.

There was no immediate comment from Lukashenko or his administration.

Belarusian House said: “There is no doubt that this is an operation planned by the Chekists [the Belarusian KGB] to eliminate someone truly dangerous for the regime.

“Vitalik was under surveillance,” it added. “We were repeatedly warned by both local sources and our people in the Republic of Belarus about all kinds of provocations up to kidnapping and liquidation.”

Adding to the swirl of attention on Belarus this week, Tokyo Olympics sprinter Krystsina Tsimanouskaya on Monday took refuge in Poland’s embassy after alleging she had been taken to the airport against her will, having criticised her Belarusian coaches.

The athlete has said she feared punishment if she went back to Belarus but has so far declined to link her problems to the country’s divisions.

Shishov’s death comes five years after Pavel Sheremet, a prominent Belarus-born opposition figure and journalist, was killed in an improvised bomb explosion in downtown Kyiv while driving to work at a local radio station. Lukashenko has ruled Belarus since 1994.

Ukrainian authorities at first suggested Belarusian or Russian security services could have been involved in the hit, as Sheremet was close to opposition movements in Russia as well.

Instead, officials charged three Ukrainian volunteers who supported war efforts against Russia-backed separatists in eastern Ukraine — although they steadfastly denied involvement and authorities were unable to provide a motive in what has been widely described as a flimsy case.

Additional reporting by Jasmine Cameron-Chileshe in London



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EU pledges aid to Lithuania to combat illegal migration from Belarus

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EU immigration updates

In the latest sign of deteriorating relations between the EU and Belarus, Brussels has promised extra financial aid and increased diplomatic heft to help Lithuania tackle a migrant crisis that it blames on neighbouring Belarus and its dictator Alexander Lukashenko.

Lithuania detained 287 illegal migrants on Sunday, more than it did in the entirety of 2018, 2019, and 2020 combined, the vast majority of them Iraqis who had flown to Belarus’s capital Minsk before heading north to cross into the EU state. Almost 4,000 migrants have been detained this year, compared with 81 for the whole of 2020. 

“What we are facing is an aggressive act from the Lukashenko regime designed to provoke,” Ylva Johansson, the EU commissioner for home affairs told reporters on Monday after talks with Lithuania’s prime minister Ingrida Simonyte. “The situation is getting worse and deteriorating . . . There is no free access to EU territory.”

The EU imposed sweeping sanctions against Lukashenko’s regime in June, after he fraudulently claimed victory in last year’s presidential election and then led a brutal campaign to violently suppress protesters and jail political opponents. Lukashenko has ruled Belarus since 1994.

The rising concern over the migrant crossings, which EU officials say is a campaign co-ordinated by Lukashenko’s administration, comes as one of the country’s athletes competing in the Tokyo Olympic Games sought refuge in Poland after team management attempted to fly her home against her will after she publicly criticised their actions.

Johansson said the EU would provide €10m-€12m of immediate emergency funding and would send a team of officials to the country to assess the requirements for longer-term financial assistance, including for extra border security and facilities to process those attempting to enter.

Simonyte said that Vilnuis would require “tens of millions of euros” by the end of the year if the number of people attempting to cross the border continued at the current pace.

Lithuania’s foreign minister Gabrielius Landsbergis told the Financial Times in June that Belarus was “weaponising” illegal immigration to put pressure on the Baltic country over its housing of several opposition leaders. Since then, the flow of illegal immigrants from Iraq, Syria, and several African countries has increased sharply.

Iraqi diplomats visited Vilnius at the end of last week after Lithuania’s foreign minister flew to Baghdad in mid-July. Johannson said on Monday that EU diplomats were engaged in “intensive contacts” with Iraqi officials, which she said were “more constructive than we had hoped”.

State carrier Iraqi Airways offers flights from four Iraqi airports to Minsk, according to its website. Former Estonian president Toomas Ilves suggested on Twitter that the EU could cut its aid to Iraq “immediately until they stop these flights”.

Speaking at the border with Belarus on Monday, Johansson added that the tents provided by Lithuania were unsuitable for families. Lithuania’s interior minister Agne Bilotaite said she hoped the number of illegal migrants would subside in the coming months but that Vilnius was planning to build some housing to accommodate them over the upcoming winter.



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Britain’s wrong-headed approach to refugees

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UK immigration updates

Thanks to the bravery of volunteers who run towards storms at sea to rescue ships’ crews, few British institutions command as much respect as the Royal National Lifeboat Institution. The charity, however, has recently had to negotiate a different kind of storm, over its efforts to help refugees who get into difficulties crossing the Channel from France. Nigel Farage, the former Brexit party leader, accused it of running a taxi service for illegal trafficking gangs. Last week, the RNLI said it had received hundreds of thousands of pounds of extra donations in response.

The RNLI has become embroiled in a now familiar story when the summer months allow more small boats to make the Channel crossing. Compared with the flows to other countries such as Spain, Italy and Greece, only a handful of migrants attempt the journey. That makes the UK’s inability to control the border in an effective and humane way — and shabby treatment of those who do make it across — no less of a scandal.

Britain’s strategy for stemming the flow has relied mostly on paying the French authorities to limit the number of boats crossing and return any that leave to France, while deterring would-be migrants through the unwelcoming environment that awaits them. Just as EU countries are dependent on their neighbours for keeping entrants down — whether Morocco for Spain or Belarus for Lithuania — the UK needs French co-operation to control the mutual border. Diplomatic spats, whether over Brexit or extra Covid quarantine restrictions on arrivals from France, have made that harder.

The UK approach manages to be simultaneously ineffective and cruel. Yvette Cooper, chair of the home affairs select committee, wrote last week to home secretary Priti Patel to complain of unacceptable conditions in the holding facility for migrants who make it to the Kent coast. A recent unannounced visit by MPs found most of those remaining in the overcrowded facility sitting on a thin mattress on the floor, with women and children in the same room as adult men.

Earlier this year, the High Court ruled that “squalid” conditions in the Napier Barracks, a temporary centre set up last year to house asylum seekers during the pandemic, were so bad as to be unlawful. While arrivals have declined since the peak seven years ago, cutbacks have led to a backlog in processing claims, leaving more in a legal limbo.

Since the start of the pandemic Britain has shut down other paths into the country, ending a resettlement scheme. This has ceded the ground to people traffickers. The “push factors” of the risk of violence and torture at home and “pull factors” of higher living standards mean many are still willing to resort to risky and illegal methods to try to reach the UK. Creating a harsh environment for those who make it has done little to dispel the widespread belief among migrants that Britain is a better destination than other European countries, and stem the flow.

That will not stop the government trying. Barristers have warned that a clause in draft border legislation could potentially make it a crime to help asylum seekers arrive in the UK, with a maximum penalty of life imprisonment; at present it is illegal to do so to earn a profit. The Home Office says the clause is aimed at criminal traffickers. But along with a suggestion to set up offshore processing centres, the provision has rightly earned criticism from human rights groups. If the government is unwilling to create safe and legal routes, its only option is to prevent people from coming in the first place. That, ultimately, will mean relying on France.



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