BUILDING a home from scratch is currently the most profitable real estate strategy in Spain, according to one architect.
But a trail of broken promises and unfinished homes across the Costa del Sol serves as a warning to expats looking to buy off-plan.
Leading architect Jose Luis Esteban Penelas argues that buying a plot and creating a custom home offers a ‘double appreciation’ that ready-made properties cannot match.
READ MORE: ‘Like living in the wild west’: The Otero scandal that has hurt thousands
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This financial advantage comes from the combined increase in value of both the land – a scarce resource – and the modern, energy-efficient structure you build on it.
By cutting out the commercial developer’s margin, owners can also significantly increase their long-term equity.
Flexibility is one of the major factors in any investment consideration, with self-builders being able to customise the orientation, layout and energy-saving systems to suit their specific lifestyle needs.
This freedom does, of course, require a robust financial plan and significant patience with the builders and contractors who tend to work at their own speed.
Surprisingly, land costs typically account for between 30% and 60% of the total budget.
The off-plan process also demands an additional budget for a variety of extra expenses, including architects fees, municipal licenses, a plethora of taxes and the inevitable material cost fluctuations.
Building from the ground up usually takes between one and two years to complete.
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Yet, for those with a clear plan in their minds and in the blueprints, the potential rewards remain formidable.
But warnings from history litter the Costa del Sol with the wreckage of dream homes that never materialised and investments lost.
Expats must be wary of handing over massive deposits to promoters without iron-clad independent guarantees.
The 2023 collapse of the Otero Group serves as just one reminder of the risks involved.
Dozens of foreign investors saw their dreams shattered when the firm halted projects across Marbella, Estepona and Manilva.
In some cases, desperate unpaid contractors even stripped unfinished villas of windows and kitchens to recoup their losses.
Another notorious example is the By Nok development scandal in 2022.
The Marbella-based promoter halted luxury projects like the La Boladilla Village Resort, leaving foreign buyers who had forked out huge payments with little recourse.
Then there is the fallout from the historic Ocean View Properties saga.
Nearly 1,000 British investors lost an average of €90,000 each on a project that never even secured planning permission.
While there are plenty of reputable and solid developers on the Costa del Sol, these scandals highlight the vital importance of professional due diligence.
Before spending a single euro, buyers should engage an independent lawyer to verify land ownership and confirm that all mandatory bank guarantees are in place.
It is only by pairing a meticulous technical team with a realistic budget can expats successfully navigate the Spanish construction sector.
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