Market believed to have reached bottom

With prices for luxury homes at Spanish coastal resorts down by as much as 50 per cent from their peak in 2007, the bottom of the market for these properties may have been reached, according to industry experts.

As a sign of the times, a three-bedroom beachfront penthouse on the Costa del Sol marketed for Euro1.3 million (HK$13.49 million) a couple of years ago was purchased for Euro600,000 recently.

Bank of Spain figures show prices for homes along Spain's Mediterranean coast rose by 200 per cent during a lengthy boom from 1996 to 2007. In Andalucia, the Mediterranean coastal region where the Costa del Sol is located, prices rose 243 per cent over that period.

Buying agents said that prices had fallen back by 40 to 50 per cent for upmarket properties on the Costa del Sol to 2004 levels from the 2007 peak. It is the same situation on the Costa Blanca, which is located further north up the coast.

Today, the entry level for upmarket properties on the Costa del Sol is about Euro500,000, on the Costa Blanca, Euro250,000. Lured by these lower prices, buyers are returning to the market for luxury homes.

Barbara Wood, director of buying agency The Property Finders, said: 'Nobody rings a bell when the bottom of a downturn is reached, but in my opinion the number of buyers who are coming forward to buy now, means we have probably reached it, at least in prime locations. We are now seeing discounts of 40 to 50 per cent compared with the peak. If you can find a really motivated seller who just has to get out, then now is the time to deal.'