Buying land in Ibiza and building your own home might be a very smart move when you are looking to invest in Ibiza. Obviously, it really depends on your personal situation, but it’s worth having a deeper look into a live case study.
Last week we have listed a building plot in the area close to Bambuddha Ibiza. This is one of the most famous Asian restaurants on a very central location on the island. This plot has a project that is expected to get the Town Hall approval very shortly, as it complies with the latest legal and environmental requirements. Keep reading for a calculation example including building cost and potential return on investment (ROI).
THE PLOT
The land is very close to Morna College. 24.834m2 of land on which you can build 266m2 (plus 23,47m2 of terraces). This excludes 199,47m2 of other areas like the pool & pergolas. All of the m2 are distributed over one level. The surroundings are filled with fruit & olive trees, a true Ibizan landscape. The green hills in the back give a feeling of security and privacy.
THE NUMBERS
Looking at the plot offered, we have created a few scenarios that could bring you an interesting ROI in the next 2-3 years. So many people, so many different desires, opinions and scenarios. You could do a very basic construction and the minimal investment if you are looking to sell directly, but you could also be the relocator that is putting maximum design and emotion into the property to live there with your family. A combination of both might be your story when you are looking for a property for a while, but just couldn’t find it. Now there is the opportunity to create your own house, your future.
As we have done a couple of construction projects in the past and currently finishing one, we know the numbers and therefore would like to share those with you. You might want to play around with the figures, but this is what you in general will end up with. Will the extra investment increase market value or overvalue the property? Important things to consider when starting construction.
* This scenario is based on the current situation where the buyer would need to pay Property Transfer Tax (ITP). When the building license is in place, one will need to pay VAT on the purchase which is 21%. This VAT, however, could be offset when selling the property once it’s ready (and if you have done the operation within a Limited Liability Company (Spanish S.L.). If it’s built for own use, you won’t be able to offset the paid VAT. Again, there are many different scenarios and it’s advisable to have a (tax) lawyer make a calculation based on your personal situation. Contact us in case you would like to have a simulation tailored to your situation.
Needless to say, when starting a project like this, you will need a good team of professionals working on the project. You might want to be involved in the fun part of the project, the design. The technical part is a different ballgame and needs the right eyes in order to make it a safe investment.
Once you have made the decision to build your villa in Ibiza you will be pleased to know that the market value is already quite a bit higher than the cash you have invested. That is the big advantage of the extra little effort you have to make…
