This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
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.
So what?
“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!”
Carrington says:
Hi Stephen,
I was very interested to read your comments on the Mark Stucklin blog as I can quite confidently confirm that construction prices have indeed come down significantly over the last 3/4 years. I know this to be the case as I am regularly going to tender on behalf of clients and can clearly see the sizeable reductions in both material and labour costs. Furthermore the cost of construction finance is significantly cheaper than it was several years ago and certain banks will lend 100% of build costs thus negating the impact of the poor Euro exchange rate.
In fact I have recently contributed to several articles emphasising exactly why now is the ideal time to self build i.e low cost of land, lower construction costs, lower interests rates etc etc. I believe that for many clients sitting on undeveloped plots, the only way to see value from that investment is to build. Otherwise you are left sitting on an investment with no yield in a flat market which will prove very difficult to sell on as the banks will not currently lend against land. Also why not build now and take advantage of the favourable conditions before the inevitable upturn arrives and the constructors have more work on and the cost of borrowing is higher.
Although I haven’t seen either of your quotes I can only assume that you were either quoted too high on the 1st instance or, more unlikely, the builder you have returned to either does not need or want the job! Either way, I would be happy to get the project requoted for you.
I have attached photos of the house I have just constructed in El Madroñal which proves that I have put my money where my mouth is…I have also just started on the project design for the other plot I have in Monte Mayor. (please read more on pages 54-60 of the March issue of Essential magazine) http://www.essentialmagazine.com
Please let me know if I can do anything else to help as I would much rather see you build out on that fantastic plot rather than see some ‘vulture’ investor pick it up for below market value and reap all of the rewards.
Regards
Paul Rossiter, MD, Carrington Estates
Katy says:
Hi Paul,
My husband and i are about to start a self build in Spain. It is our own home and intend to do all the works ourselves, we have been advised that you are not allowed to do this, without setting up a company ?? Would you advise if this is the case. I have an appointment with a local Gestoria but have to wait 2 weeks for this appointment. Any advise would be very much appreciated.
Katy
Philip says:
Hi Stephen,
From my experience here on the Costa del Sol for the last seven years is it has always been a good time to self build but close attention needs to paid to the internal build out specfication to keep costs down. The pricing system for building here is not very flexible when changes are made from the original quote which can lead to major price increases.
I can confirm building prices being used on our current building projects are lower than a year ago but the biggest problem is the avaibility of good plots in good locations. By the sounds of it your plot problem has been solved.
I agree with Paul do not let a good plot be picked up by a ‘vulture’ investor’ and you lose
out.
Regards
Philip, PSI-Properties, Surveys & Inspections