With Spain going through a sever real estate bust, and the residential construction sector in the eye of the storm, you could be forgiven for thinking that now might be a great time to build your own villa in Spain, taking advantage of plunging material, labour, and land costs.
That would certainly be the case if prices were indeed falling, which I was under the impression they were; After all, hundreds of thousands of construction sector workers have lost their jobs, and builders’ merchants and builders are struggling to survive, so the price of building a house must be coming down, right?
Apparently not, at least not according to one British couple who have been looking into building themselves a house in Marbella, on the Costa del Sol.
“We own a plot of land on a great golf course called the Marbella Club Golf Resort (MCGR), which we have tried unsuccessfully to sell for 2 years,” explains Stephen, who says he is avid reader of this blog. “We had planning approval – since lapsed- for a magnificent villa which we had hoped to build and ultimately retire to in a few years, but then the UK property market started to fold, and we had to shelve our plans to build out our dream house.”
They first looked at building when the boom was in full swing, but the high prices put them off. In those days people in the building trade on the Costa del Sol were drowning in work, and felt confident asking the earth.
“At the start we were quoted an astronomical build price of €1.3m to build a villa of 485m2 ( more like 780m2 with terraces and a basement ) which put us off,” says Stephen. “In fact, we spent almost £100k (Pounds!) on the architect’s fees to design the villa, which I have to admit, we loved.”
What about now? Have build prices come down to reflect excess capacity in labour and materials? Not a bit.
“Since we cannot sell the plot ( valued by the MCGR at €800k ) we decided to look at building again, having been told that build costs would probably have come down due to lack of demand, and…………..heyho, when we make the enquiry only last week, we are quoted the same price of €1.3m that we were quoted 2 years ago!”
“To be honest we were expecting something like a 50% reduction in the cost of the build because: A, it was an unreasonable price to start with, B, the cost of materials has come down dramatically and C, builders should be squeezing their profit margins to attract clients and stay in business,” complains Stephen.
“The moral of this story is that if Spain really wants to attract foreigners back to Spain to help kick start the economy by employing builders, then people are going to have to be more reasonable. If they continue trying to charge the prices they got used to in the boom, foreigners like me will be put off investing in Spain,” says Stephen, who signs off “Cheers, rant over!”