Key City Performance: Malaga
Malaga has undergone a significant transformation in recent years, emerging as a major city in Spain and Iberia. With substantial economic growth, a thriving real estate market, and a resurgent tourism sector, Malaga has positioned itself as a highly attractive destination for foreign investment. The city’s strategic location, coupled with its robust economic policies and increasing international recognition among global multinationals, make it a promising hub for businesses and real estate investors alike.
In just 5 years, its GDP has experienced an incredible growth of almost 20%, putting pressure on the hegemony of Seville in Andalusia. This has been attributed, among other factors, to economic policies aimed at create value and a significant influx of foreign investment. The total population of the city of Malaga in 2022 was 579,076, making it the sixth most populated city in Spain. In terms of GDP per capita, Malaga is also well-positioned with remarkable growth in recent years, reaching €27,200 at present. The tertiary sector serves as the primary driving force of the city, representing nearly 78% of the total economic activity, with tourism being a prominent contributor.
Firstly, in regards to the real estate sector, the Office sector in Malaga holds great importance due to the significant influx of international companies into the city, including Google and Citi. The total Office space available is 600,000 sq.m. in Q1 2023, and there is an additional 50,000 sq.m. planned for development between 2023 and 2025. The vacancy rate for Q1 2023 is among the lowest in Spain at 4.5%, surpassing that of major cities like Madrid and Barcelona, which have nearly double this figure. In central areas with high demand, the vacancy rate is even lower, at less than 2%. This situation can be attributed to the scarcity of supply and the high demand that the city has been experiencing for several years. Regarding prices, they have increased by 16% y-o-y.
In the Logistics sector, prime rents reached €5.5/sq.m./month in Q1 2023. The vacancy rate in Q4 2022 stood at 10.8% due to the increase in the construction of large warehouses around ‘Puerto Seco’. However, the pipeline for development is projected to exceed 100,000 sq.m. between 2023 and 2024, offering improved services and high-quality facilities equipped with advanced technologies.
Finally, tourism, the main pillar of Malaga’s economy, has likely benefited the most thanks to the ‘return to normality’ after the pandemic. This has subsequently been reflected in Malaga’ Hospitality sector performance. The total number of tourists arriving in the city reached 1,040,000 in Q1 2023, reflecting a 25% increase compared to the previous year and a 6.4% increase compared to 2019. The number of overnight stays has also experienced remarkable growth, totaling 3,080,000 in Q1 2023, a 27% y-o-y increase. The average occupancy rate in Q1 2023 was 74.3%, surpassing that of Valencia (69.6%) and Barcelona (67%).