Is the Costa del Sol Still a Good Place to Invest in Holiday Rentals in 2025?

With all the headlines about “Airbnb restrictions” and “Málaga blocking new tourist licences”, it’s normal to wonder:

“Is it still worth investing in a holiday rental on the Costa del Sol?”

Short answer: yes – if you pick the right area and do it legally.
In some ways, 2025 is actually better for serious investors than the wild-west years.

Let’s look at why.

1). Demand hasn’t gone anywhere

The Costa del Sol is still one of Spain’s star destinations:

  • Málaga–Costa del Sol airport continues to hit record passenger numbers, with strong growth in international arrivals.
  • The province is pushing record figures for overnight stays and tourist spend.
  • The region isn’t just for July–August holidays anymore: city breaks, golf, remote work, festivals and events keep demand spread across much more of the year.

So we still have plenty of guests – from classic tourists to digital nomads and long-stay winter visitors.

2). Supply is no longer exploding everywhere

What has changed is how quickly new properties can enter the market, especially in Málaga city.

For example:

  • Málaga has approved zoning and restrictions that block new VUT registrations in 43 neighbourhoods where tourist flats are already dense.
  • The Junta de Andalucía has cancelled thousands of tourist homes in the province that didn’t meet urban or tourism rules – more than 2,300 in Málaga province alone by early 2025.

At the same time, an OCU study shows that the number of VUTs in Málaga province still grew by 16.7% in the last year, but at a slower pace than before – partly because of stricter controls in the capital.

What does this mean for investors?

  • In saturated and restricted areas (Málaga centre, certain zones), getting new legal stock is difficult.
  • In other municipalities (Marbella, Mijas, Benalmádena, Fuengirola, Estepona, etc.), legal stock can still grow – but with more paperwork and control.

So the era of “infinite new supply” is over. For good, legal units, that’s actually positive.

3). Strong positions in open areas

Because Málaga capital is tightening:

  • New investors are looking more seriously at Marbella, Mijas, Benalmádena, Fuengirola and neighbouring towns, where licences are still possible under Andalusian law and local planning.
  • Municipalities, meanwhile, are getting stricter about documentation and quality – which raises the bar but also filters out casual or non-compliant competition.

Result: in many of these “open but controlled” areas, properly licensed and professionally run holiday rentals are seeing:

  • Healthy occupancy (because demand is strong and new supply is more limited), and
  • Better average rates for well-located, well-managed properties.

4). You must treat it as a business, not a hobby

The catch? You can’t wing it anymore.

To succeed in 2025+, you need to:

  1. Choose the right location and property type
    • Close to the sea, services and transport
    • In a building/community that accepts tourist use
    • With layout and features that guests actually want (outdoor space, AC, good Wi-Fi, parking if possible)
  2. Get the legal framework right
    • Tourist registration as per Decreto 28/2016 and 31/2024
    • Urban compatibility with the town hall (especially in cities that have introduced caps)
    • Respect community statutes – in some cases, communities can now limit new tourist flats and charge higher fees.
  3. Run it professionally
    • Dynamic pricing, multi-platform marketing
    • High-standard cleaning, maintenance, guest handling
    • Transparent accounting and tax planning (with your accountant)

Do that, and you’re not gambling. You’re operating a regulated hospitality asset in a market where guests want to be and new competition is harder to create.

5). Where SunnyCoast Homes adds value

At SunnyCoast Homes, we sit right at this intersection:

  • We understand which areas are still attractive for holiday rentals – legally and commercially
  • We help investors evaluate specific properties (licence potential, community rules, income expectations) before they buy
  • Once purchased, we manage everything: setup, staging, licences (with your lawyer), marketing, guest service, maintenance and reporting

Is the Costa del Sol still a good place to invest in holiday rentals in 2025?

Yes – if you’re prepared to do it properly.
And that’s exactly where we come in.