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  • Writer's pictureInvestment Synergy Team

Spain; Property developing for investment in Spain.

Updated: May 26, 2021

For years property developing in Spain was easy; find a dilapidated property, put about 20000 Euros into it, wait a year and sell on for a nice profit thank you…. market was buoyant, purchasers a tad naïve, and regulations seemingly lax. Now you must be a lot more aware, knowledgeable, and professional when considering developing for capital or income generating return in property in Spain for profit.

A popular choice for investing and developing would be typically, a two bedroomed apartment in a city or tourist resort location that is undeveloped, tired or repossessed; this would cost anything from 50000 Euros up to 500000 Euros depending on the city, resort, and even the road and what floor it is on, in other words, location and situation. Even if you put the same investment amount into the redevelopment, which you inevitably will, the return would not be the same. The factors that determine your return are simple; location and situation, impact on investment of purchase taxes and legal costs, time, and in this everchanging world of pandemics: world economics, travel and tourism all effect the market drivers for resell or even rental income. Given the challenges of a constantly changing landscape let’s explore what to look for in a potential property development and ….what to avoid! Location is essential as stated but what makes a great location?

Let's firstly use the 2 bedroomed apartment example; It shouldn't be on a main road unless it is high up well away from the noise. It should have enough space in its current layout to allow modifications to create the feeling of space: a 65m2 flat with three bedrooms always means that really it should be two bedrooms because the bedrooms will be for Lilliputians. If it overlooks a square where events take place or is in a tourist area look into how that will affect your access, parking and noise levels throughout the year. If we are looking at a villa to purchase – again location is key, pools almost a must have along with great views and privacy, however you must bear in mind that maintenance costs can be high, and construction techniques not always suitable to leave empty for long periods, particularly in winter. Older style villas may be of single skin constructions with a flat roof and old windows – meaning that although they may be paradise in the summer, in the winter they may get a tad cold, damp and draughty. This would mean some serious building work done and will inevitably ramp up your price and your original costings will look puny in comparison to the full price.

So….. if you manage to find a property at the right price and right location - how do you start the process?

Your Gestoría who deals with your paperwork in Spain can help with all the building licences required to do most works on a property, an architect also can submit all planning applications, licences and permits and liaise with the town hall – this must all be done before you can start work on any updating or renovations of the property, paperwork in Spain can be a minefield and confusing and its best to use someone who is very familiar with the town you are purchasing in.

Who can help you? There are British builders who work on Spanish construction methods – with varying results… advantage is the communication issues are lessened; however, you could typically pay more for the job, take more time and to come in over budget. There are many highly qualified Spanish tradespeople and the difference in price can be used to your advantage, it is usually a lot cheaper even when hiring a translator or project manager with experience. In all cases make sure the permits are in place and builders' guarantees about timescales and prices are also adhered to, go by recommendation if you can. If you are going to do it yourself to reduce costs, ask around and find out where the experienced companies get their materials from. A bad choice in this area can easily double your costing for the project. And the usual thing applies as anywhere. Caveat Emptor. If something looks too good to be true then it very often is…. make sure you look into the property register, the catastro and development plans for the local area, and be very aware about the difference in planning regulations between Rustico and Urbano land.

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