How can you make a second home in Costa Blanca profitable? What options are available to you to invest in property in this area?
The demand for second homes continues the upward trend that began in the pandemic. Specifically, and according to the Fotocasa study “Profile of the second home buyer, 2022”, the demand for second homes now represents 13% of the total national demand, which places it at the highest levels seen since 2017.
However, this boom in second homes hasn’t happened in all parts of Spain, as there have been drops in areas that historically led demand, such as Catalonia and Madrid, and growth in others, such as Andalusia and the Valencia Region.
Furthermore, according to a consultation carried out by our team in June 2023 on the National Statistics Institute website, there are 2,916,000 second homes in Spain, 1,029,614 of which are in the same province as the owners’ main residence.
Total number of second homes in Spain | INE web consultation in June 2023. “Households’ second homes (National data)”:
Second home Households: 2.916.000 units
Second homes in Costa Blanca as an investment
Continuing with the same Fotocasa study, we can see how the demand for buying a second home in Costa Blanca has increased by 4 percentage points from 2021 to 2022, going from 7% to 11% of the total number of property purchases made.
The main reasons mentioned in the study for wanting to buy a second home include the following:
- As a long-term investment (for 45% of respondents).
- As a way of making money (for 39% of respondents).
- Good insurance for the future given the current climate of inflation and rising interest rates (for 22% of respondents).
However, when it comes to investing in a second home, buyers have different access routes available to them. Below we will focus on the different ways to buy a second home in Costa Blanca for investment purposes.
Buying to sell in Costa Blanca
This is the most convenient option as there is no need to deal with the tenant management involved in renting. However, you must bear in mind that you need to have sufficient liquidity to be able to afford the purchase.
According to our analysis of the Profitability of buying and selling in Costa Blanca in 2023, housing in the area has increased in value between 17.29% and 49.29% over the last 5 years, with the municipalities of Polop, Benitachell, Benissa and Jávea the most profitable. This means that investing by buying and selling property in Costa Blanca provides very interesting financial benefits over and above other Spanish coastal regions.
Furthermore, and due to the rapid increase in the price per square metre in the area, buying a second home in Costa Blanca to invest by means of buying and selling allows us to enjoy great profitability in the medium term (about 5 years) without having to wait for long periods of time for the property to appreciate in value.
Buying to let in Costa Blanca
Another interesting option when acquiring a second home in Costa Blanca for investment purposes is to rent it out, for either long-term or holiday rentals.
According to INE data referring to February 2023, Alicante has 33,115 holiday rental properties, which makes it one of the Spanish provinces with the highest number of tourist flats.
Tourist properties in the province of Alicante: INE data February 2023
Despite the large supply of holiday properties available, demand in this region remains very high, making buy-to-let in Costa Blanca a very attractive option despite the large supply.
Proof of this is the study carried out by the Tourism Department of Teulada Town Council between July and October 2022. According to their data, 95.3% of the tourists who come to this municipality stay in tourist accommodation. Moreover, they spend an average of 13 nights in the municipality and claim to visit the area with some regularity. It is also worth noting the large number of foreign tourists, specifically, 12.5% of the tourists that visit Teulada Moraira come from the United Kingdom.
95% of the tourists who come to Moraira stay in tourist accommodation.
Buying to let and then sell in Costa Blanca
Finally, another option that small and medium-sized investors have available to them when buying a second home in Costa Blanca for investment purposes is to buy a property in the area, rent it out for a few years and then sell it.
This option is especially interesting for those who wish to enjoy a second home in Costa Blanca for a few weeks a year without sacrificing the profitability that can be obtained by renting the property during the rest of the year. After some time, the owner can proceed to sell it, further increasing the profit they can obtain from it.
Investing in Costa Blanca with a real estate agency
Real estate agencies are a recommended option whenever it comes to buying, selling or renting, however, we would dare to say that in operations in which you are looking to invest, they become essential. Buying and selling property in Costa Blanca is a profitable option, however, poor asset management can not only cause us to lose part of the profits we could aspire to, but also to lose a significant amount of money.
If you want to buy a second home in Costa Blanca as an investment, you can take a look at our Costa Blanca Sellers Guide. As well as finding information about the process you are about to embark on, you will also find selling tips from our real estate agents related to aspects such as choosing the right selling price or how to make your property more attractive.
