Commercial real estate in Spain is in high demand among foreign investors. This is a tourist country, therefore, by investing in commercial real estate and renting it out for restaurants, cafes, shops and shopping centers, you can count on high returns. However, profit from commercial real estate in Spain is possible not only in the tourism sector - premises that can be rented out for offices, warehouses and businesses are also in demand among local residents.
Advantages of commercial real estate in Spain
There are several advantages to investing in the purchase or construction of commercial real estate.
- Firstly, Spain is a tourist country, so it is very profitable to rent out buildings here both for restaurants and hotels, and for apartments for tourists.
- Secondly, the country's legislation facilitates the inflow of foreign investment, the procedure for buying real estate is not particularly difficult and does not require a large number of documents.
- And thirdly, by investing in real estate, you not only have the opportunity to get high profits, but also a residence permit in Spain (subject to purchases in the amount of more than 500,000 euros).
Popular cities and regions for buying commercial real estate
The most popular regions for the purchase of commercial buildings are Madrid, Valencia and Catalonia (in particular, the city of Barcelona), the cities of Alteo and Moraira are also popular among entrepreneurs.
It is profitable to buy real estate on the sea coast - the most popular are properties in the Costa Blanca, Costa Brava, Costa del Sol and Costa Dorada. The islands of Majorca and Tenerife are no less in demand.
If we talk about seaside resorts, then Alicante, Lloret de Mar, Marbella and Torrevieja are very popular.
Types of commercial real estate
Commercial real estate in Spain can be divided into the following types:
- hotels;
- tourist apartments, hostels;
- shopping centers, shops;
- restaurants, bars, cafes, pastry shops;
- service enterprises;
- entertainment centers;
- offices;
- warehouses;
- land plots, apartment buildings;
- buildings for production;
- fitness centers, beauty salons.
Most often, commercial properties are bought in Spain for restaurants, hotels, offices and shopping or business centers.
Commercial real estate cost
Commercial real estate prices depend on many factors.
- Firstly, the city in which you are going to buy the object is of great importance.
- Secondly, where the building is located - in the center or at the periphery, in a passageway or not.
- In addition, it is not unimportant which type of property you choose. For example, an office in Barcelona with an area of 150 sq. meters can be bought for 400,000 euros, and a restaurant in the same city with an area of 160 sq. meters - for 1,200,000 euros.
If you buy an apartment in order to rent it out to tourists in the future, then the number of bedrooms plays a role here.
Approximate prices for commercial properties in the most popular cities in Spain are given in the table below (the cost is indicated in euros per 1 sq. Meter):
| Madrid | Barcelona | |||
|---|---|---|---|---|
| In the center | On the periphery | In the center | On the periphery | |
| Buying office real estate | 3 500 | 1 600 | 3 150 | 2 500 |
| Purchase of retail real estate | 3 170 | 1 500 | 2 500 | 2 000 |
| Office real estate for rent | 14 | 9 | 13 | 13 |
| Rent of retail real estate | 23 | 8 | 16 | 10 |
How to buy commercial property in Spain
Buying commercial properties in Spain is beneficial for the following reasons:
- loyal attitude of the Spanish state towards foreign investors;
- the possibility of organizing a business in the conditions of liberal Spanish legislation;
- the possibility of buying commercial real estate with a mortgage.
Buying or selling commercial real estate in Spain is quite simple to arrange. For this you need:
- have a passport and financial means for the purchase;
- get an identification number;
- select an object;
- open a bank account from which the purchase will be paid in the future, as well as taxes, insurance, mortgage payments;
- conclude a contract of purchase / sale (Contrato de arras) - for this it is advisable to hire a lawyer who can provide assistance;
- make a 10% deposit of the cost of the object;
- pay the rest of the amount upon signing the deed of purchase (Escritura Publica) at a notary;
- register the object.
Sometimes, prior to the signing of the assignment contract, a reservation agreement is drawn up that confirms the buyer's intention to acquire the object and gives him the right to “book” it for purchase. When drawing up such an agreement, it is necessary to pay 1-1.5% of the value of the property.
Commercial real estate lease
Commercial real estate in the kingdom, like residential real estate, is protected at the legislative level. Moreover, the law protects the rights of not only the lessor, but also the tenant.
A feature of Spanish real estate law is that the tenant is given the opportunity to acquire the rights to lease, equipment, licenses and everything related to doing business within the walls of a commercial facility, with the exception of the building itself.
This scheme for buying a ready-made business in Spain is called traspaso. As a tenant, you pay traspaso once, after which you pay only rent and utilities.
In any case, buying a commercial object under the "traspaso" scheme or not, the landlord enters into an agreement with the tenant, in which all the conditions, rights and obligations of both parties must be clearly spelled out.
How to take out a mortgage for commercial real estate
Both residents and non-residents have the right to take out a mortgage for the purchase or construction of real estate in Spain. The loan amount is often about 50-60% of the appraised value of the object, sometimes it can reach 65-70%.
The loan term is affected by the age of the borrower. Usually mortgages are issued for at least 10 years, maximum - 30 years.
Mortgage debt can be paid off earlier. The initial payment for residents is 20%, for non-residents - 50%.
The annual mortgage rate in Spain averages 3.5-4%.
To obtain a mortgage loan in Spain, you need the following documents:
- international passport;
- certificate of salary or other income;
- credit history;
- any documents confirming the financial viability of a potential borrower (bank statements, documents on the ownership of real estate, shares, bonds, companies in any country).
Since the list of documents may differ slightly in different financial institutions, the specific list of securities should be found out directly from the bank of your choice.
Mortgage loans for foreigners in Spain are provided by the following financial institutions: BBVA, Banco Popular, Unicaja, Deutsche Bank, Caixa Catalunya, Banco Andalucía, Caixa de Girona, Caja Madrid.
How profitable is a business in Spain
A good indicator of the profitability of commercial real estate in Spain is considered to be 5-8%. Although in exceptional cases, with a very favorable location of the facility and competent business conduct, this figure can even reach 20%.
Considering that the average mortgage rate in Spain is around 3.5% -4%, the business will still be quite profitable. But don't forget about Spain's inflation rate of 1.08% in 2021.
When calculating the profitability, you should also take into account the VAT on purchases (21% for commercial properties), stamp duty (1% of the value of the object), notary services (approximately 2% of the value of the object) and the services of a lawyer (about 1% of the value of the object).
When renting out commercial real estate, the landlord must charge the tenant VAT at a rate of 21%, provided that the landlord is a legal entity.
If the lessor is an individual, then personal income tax (20%) must also be indicated in the invoice.
Thus, if we take, for example, rental income in the amount of 1,000 euros, in the first case, the owner of the real estate pays the state VAT in the amount of 210 euros, and in the second - only 10 euros, since 200 euros are paid by the owner as personal income tax.
And finally, it is important to consider the level of competition in your chosen region. To get a high profitability, you need to choose the location of the object with a high degree of traffic of people, to organize your business competently if you yourself are going to use the acquired area, or to conclude a lease agreement on favorable terms for you, taking into account all possible losses.
Finally
Commercial real estate in Spain is quite popular. The inflation rate in the country is not high, so foreign investors are interested in buying and constructing buildings in the kingdom, hoping for high profitability. A big plus is that foreign entrepreneurs are given the opportunity to buy real estate on a mortgage, even without a permanent residence permit.
The choice of commercial real estate in Spain is quite wide - both in the areas of activity for which the objects are designed, and in the regions, in each of which, to a greater or lesser extent, high returns are likely.
It is especially profitable to acquire commercial properties in resort areas, since here you can invest in the development of restaurants, shops, shopping and entertainment complexes. At the same time, the acquisition of buildings for offices and business centers is profitable even in regions remote from the sea line.
