New-build house prices on the Costa del Sol are reaching unprecedented levels thanks to an influx of international buyers, experts have claimed.

According to a report by Savills, foreigners now account for more than half of demand in some of the Malaga coastline’s most popular towns.

The average price of a newly built apartment or flat surged by 23% in 2025 to €5,725 per square metre, according to the latest analysis.

That means the average new-build multi-family home on the Costa del Sol has now broken the €1million barrier for the first time, reaching €1,016,608.

New-build villas and other detached properties are even more expensive, averaging an extraordinary €2.97million, or €6,379 per square metre, also 23% higher than a year earlier.

Behind the increases is a potent combination of record demand, limited housing supply, rising construction costs and an increasing concentration of prime and luxury developments.

But Savills identifies international buyers as a major force transforming the market.

In Marbella, Mijas Costa and Fuengirola, foreigners already account for more than half of demand for new-build homes, with Brits among the most active nationalities alongside Dutch, Swedish and German buyers.

‘The Costa del Sol has ceased to be merely a holiday destination and has become one of the leading international residential markets in southern Europe,’ Savills said.

The firm said the transformation was being driven by permanent residents, remote workers and international buyers attracted by the region’s quality of life, connectivity and economic environment.

Foreign buyers pile into the Costa del Sol

International buyers are particularly prominent in the middle-to-upper and prime ends of the market.

According to Savills, they are seeking high-quality developments with large communal areas, integrated services and sustainability features, as well as proximity to the Mediterranean.

Golf, marinas and high-end restaurants are also helping attract wealthier purchasers.

Demand has become so intense that many developments are selling significant numbers of homes before construction has even started.

Jose Felix Perez-Peña, executive director of Savills Andalucia, said: ‘The most significant thing is not only the increase in prices, but the speed at which developments are being commercialised.

‘Projects that reach the market with a price aligned with demand, in an established location and with a well-designed product, are achieving very high pre-sale rates.

‘In many cases, between 30% and 50% of the homes are being sold before construction has even begun.’

He added: ‘Demand continues to be far higher than available supply, especially in the middle-to-upper and prime segments.’

Just 5,328 new homes available

The scale of the imbalance is illustrated by Savills’ figures for 2025.

Around 12,265 new-build properties were sold during the year, while available stock stood at just 5,328 units.

Savills believes the resulting price increases are being driven by structural rather than temporary factors.

Alongside international demand, there is a shortage of development-ready land and construction costs have increased.

Meanwhile, the type of housing being built is itself becoming more expensive as developers target the wealthy international market with increasingly luxurious projects.

Some parts of the coast are accelerating much faster than others.

Marbella pushes prices into another league

Marbella remains the Costa del Sol’s principal driver of property values.

The municipality accounts for around 14% of the initial supply of new-build homes, but its luxury sector commands prices far above the coastal average.

New-build apartments in Marbella’s luxury market now average almost €2.5million, with prices exceeding €8,000 per square metre.

That is around 41% higher than the Costa del Sol average.

The emergence of ultra-luxury branded residences is pushing the ceiling even higher.

Estepona leads building boom

Estepona has meanwhile established itself as the biggest centre for new residential development.

The town accounts for 28% of the Costa del Sol’s initial new-build supply, more than anywhere else along the coast.

Savills said its ability to produce new housing alongside strong Spanish and international demand had made it one of the region’s most active property markets.

Mijas Costa accounts for another 18% of initial supply and Fuengirola 16%.

Both have traditionally combined permanent homes with second residences, but Savills said they are seeing an increasingly significant presence of foreign buyers.

‘Their ability to attract international demand with medium-high purchasing power has driven rapid absorption of developments and constant upward pressure on prices,’ the consultancy said.

At the luxury villa end of the market, Casares and Sotogrande also stand out.

Limited land availability, low-density planning and increasingly exclusive developments are generating significant increases in property values in both areas.

Prices predicted to rise another 13-16%

There appears to be little relief on the horizon for prospective buyers.

Savills expects the Costa del Sol’s expansionary property cycle to continue throughout 2026 and 2027.

The consultancy forecasts further double-digit price growth of between 13% and 16%, while values per square metre could increase by another 6-7% on average.

Read more Andalucia news at the Spanish Eye.