16 Oct The Evolution of The Luxury Rental Market in Marbella

The luxury rental market in Marbella has evolved over the past few years, growing in sophistication. Not only has there been a marked increase in demand for high-end rental properties, and consequently, more options for renters in the luxury segment are available, but service and quality standards have also improved.

As a property developer, CEO and owner of Matterhorn Estates, and someone who has personally rented in Marbella over the past several years, I have noticed the changes. Here I outline my own observations combined with insight from Karen Ayat, CEO of Swish Marbella, a luxury rentals company in the area. From the point of view of both tenants and owners, here are the reasons why the industry is booming and advice for owners on how to maximise their return in the current climate.

 

 

 

The Changing Face of the Luxury Rentals Market in Marbella 

“In just the seven years that I have seen the Marbella property market up close, there has been a marked transformation that has made high-end rentals a more interesting option than ever.”

The rental market for luxury villas and apartments in Marbella is currently at a highpoint. This is not only the case because demand has seldom been stronger – resulting in very high rental prices, occupancy rates and accompanying returns – but also because it is an environment that has come of age in terms of professional standards and market conditions. Taken together, this produces an ideal setting for homeowners and investors alike.

Even though Marbella is a luxury destination, for most of its modern history the rental market has existed in the shadow of property development and sales. Focused on the latter, property agents have rather neglected to develop the rental segment, and for a long time it showed.¡

 

My Own Experience of Renting in Marbella in 2015

I moved to Marbella with my family in 2015 to take charge of family investments here and in Madrid; we rented a spacious villa in which to live as a family and use as the base from which to work, but soon encountered a series of problems:

• A lack of quality properties to rent for longer term periods
• The inability of many of the renting agents to provide the level of service required – preferring to focus on sales instead

 

My personal example:

We rented a villa for a very high sum. It should have been luxurious, but the property was riddled with construction defects and we suffered from a complete lack of support and service from the agents. We ended up moving and rented a large and supposedly luxurious duplex apartment in one of the best areas of Marbella, but it turned out to be a deception too. The once-exclusive property felt tired and neglected, which resulted in a huge heating bill.

Professional observation has since been added to these personal experiences, leading me to the conclusion that the rental market on the Costa del Sol in spite of being overpriced was still sorely lacking in being able to provide up to date luxury homes, sufficient support services and even properly professional rental management. It was also much lacking in any degree of digitalisation.

 

My Observations of the Transformation in the Rental Industry Since 2015

Over the past few years, the situation for luxury rentals in Marbella has begun to improve significantly, thanks to:

• A new generation of stylish modern villas, apartments and penthouses coming onto the market that satisfy the needs of today’s clients
• The sale of key-ready properties equipped, fitted and decorated to the required standard
• The growing availability of such properties for upmarket rentals, as their owners and/or investors increasingly become aware of the income potential
• The arrival of professional new specialist firms such as Swish, which have taken service standards up to international levels

The result is a fast-developing, new-generation market dedicated to luxury rentals that is not only making this activity more appealing than ever before, but is also creating an important economic sector in the area.

 

Why Has the Luxury Rentals Market in Marbella Developed?

Several factors have led to the development of Marbella’s luxury rentals market.  For ‘guests’, the incentives of renting a private home are many: from an economic perspective, the cost per head is often lower than the equivalent of a luxurious hotel. Renting a private villa offers additional perks such as more privacy, more space, the ability to use a kitchen and cook breakfast or bring a personal chef, the pleasure of being a ‘host’ and inviting friends over for a barbecue, as well as being child and pet friendly, and enabling clients to bring a nanny.

Swish has an interesting model as their purist dedication to rentals (and not sales) in the area has helped give owners more ways to monetise their luxury properties. Their platform aggregates and curates a fragmented supply of luxury homes into one portal.

 

Additional Reasons Why the Industry has Developed are:

1. Insufficient Hotel Accommodation

The rapid development of this industry has been aided by a booming tourist market with limited hotel accommodation provided by Marbella’s 65 hotels and 14.055 rooms.

2. The ‘post-Covid’ Effect

Post pandemic, many have decided to make the move and opt for a lifestyle choice in a desirable location such as Marbella. This, in turn, has greatly augmented the demand for quality, modern long and medium-term rental accommodation, in addition to the buoyant holiday rental market.

3. High Number Of Properties for Sale

The relatively large number of properties for sale or under renovation (with 3.284, Marbella is the city in Spain with the fifth-highest number of homes on the property market), does little to suppress rental rates, which have been rising for some time and now stand at an average of €4.891 per month in August – and for luxury properties a multiple of this figure.

4. Improved Service and Standards

Along with strong demand and a new generation of quality properties to accommodate the luxury rentals market, a new level of professional service and concierge management that draws more from the hospitality, rather than the real estate sector has also bolstered the segment. Given this evolving situation, and the excellent returns being earned, many a buyer of even exclusive properties are far more open to letting their properties than before – leaving them in the hands of professional organisations such as Swish.

 

 

How to Rent Out your Luxury Property in Marbella  

Renting a property makes sense for several reasons, achieving a rental income and avoiding the house becoming a liability.  It also helps to ensure the property is well run/maintained throughout the year. Lastly, renting gives exposure to potential buyers, as guests who rent luxury properties are usually HNW individuals.

Many owners are now earning a gross ROI of 5-8% during a five-month season while also enjoying the right to use the residence during the remaining seven months. 

 

How to Get Over Rental Nerves – Advice from Swish Marbella

Despite the booming market, owners may still feel unsure. As Swish Marbella specialises in rentals, their advice may be particularly fitting for those who are ready to rent but have a few concerns. Here are Karen Ayat’s tips for new renters:

1. Ask for a high deposit – owners who feel unsure about the possible damages that could result from renting their properties can be reassured that an appropriate deposit usually covers any possible damage
2. Demand a good check-out report – a reputable rental agency will have systems in place to ensure the property is inspected prior to the tenants entering the home and after they leave in order to assess any damages to be deducted from the deposit
3. Guest vetting – the same is true of a vetting process. Guests should be vetted so you can make sure only suitable guests can rent the property

 

Tips to Make A Property Rental-Ready

To make your property rental ready, it’s important to buy all the basics, sticking to clean and simple white sheets, towels and luxury products. All personal objects should be removed. This helps prospective tenants feel at home and can actually increase the rental value of your property.

 

Renting is the new normal for owners and tenants alike

In effect, renting has become the new ‘modus operandi’ for both parties. Karen Ayat, CEO of Swish explains:

“There has been a shift in the upper end of the market, making both renting a luxurious property and letting yours out more and more acceptable. Not so long ago this was still not the case, but it is fast becoming as firmly entrenched as in other segments of the market that have benefitted so much from the Airbnb boom. At Swish we saw this trend early and identified a gap in the Marbella market. Noting that there has been a significant lack of quality rental properties, we were determined to provide those that meet the criteria we set for ourselves. In other words, top quality up-to-date homes in Marbella’s finest locations.”

To summarise, the Marbella luxury rental market has never been as strong as it is right now, and this combined with increasingly slick, sophisticated operations such as Swish, which blend high end rental and concierge services, make it something that has suddenly become of true interest to the owners of such properties. Taken together with changing attitudes towards renting and sharing within the top end of the market, this is a sector that has come of age and is suddenly very appealing. However, as with everything – if it’s worth doing, it’s worth doing well, so knowing how to make it work starts with collaborating with the kind of people who ensure success.