Next to the island being a perfect place to rewind and relax, it is possible to earn a good ROI / Return on Investment in Ibiza. With the right team of experts which consists of at least a technical architect, an architect, a lawyer, and a local project manager, you can accurately assess the potential of a (construction) project.
In the 3rd quarter of last year, we have listed an old ruin in the hills of San Agustin, which basically is a big plot (divided into 2) as the old construction needs to be taken down. At first sight, a big project which needs (building) licenses to be requested. On closer examination, there are 2 advantages:
- We have done a study here with a technical architect to see what the possibilities are within the current legislation.
- The neighbourhood will benefit from the reconstruction of this building. So, it is in the interest of the local government as well to get the plot fixed up.
- The more needs to be done (in terms of licenses & project management), the higher your future return on investment will be.
In short, if you are not in hurry (let us say 2-3 years) and up for a nice project with a good return, this should be yours.
Two Plots
The total surface of the two plots is 2.886m2 and it now has an old ruin of a Spanish mansion on the biggest plot, and a guesthouse on the plot adjacent. Our recommendation would be to construct:
- Two new villas on the bigger land
- Renovate the casita on the smaller land
One could also tear down all of it and create one big villa of more than 800m2 or 2 smaller ones of 432,9m2. There are some incredible sea- and mountain views if you were to create a nice chill-out rooftop.
Promotors who have bought similar plots are commercializing developments with similar characteristics at €1.800.000 as you can see here: https://letusibiza.com/properties/new-development-with-striking-architecture-close-t/
The Numbers
We have made 2 scenarios for the acquisition cost of this plot and projected construction costs. Looking at the area and the neighboring properties we would advise against a very high-end construction. However, people are looking more and more for good qualities, so going for the cheap might make you end up with a product which is not sellable and just has too much competition from poorly constructed villas on the island.
* 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 is ready (and if you have done the operation within a Limited Liability Company (Spanish S.L.). If it is built for own use, you will not be able to offset the paid VAT. Again, there are many different scenarios, and it is 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.
How to Start?
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 must make…
Contact us for a quick coffee or schedule a call so we can give you some more information about this project.
More info about the property: https://letusibiza.com/properties/land-to-construct-1-or-2-villas-in-ibiza/
