The Pros and Cons of Buying a Residential Property Requiring Renovation

Introduction:

Marbella, situated on Spain’s Costa del Sol, is one of Europe’s premier luxury real estate markets, attracting high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs). Purchasing a property requiring renovation in such a prime location offers unique opportunities and challenges. This white paper explores the upsides and downsides of investing in a renovation project in Marbella, helping potential buyers make informed decisions.

“Marbella is not just a popular tourist destination; it is a lifestyle choice for high-net-worth individuals. The demand for well designed luxury properties in prime areas and sub prime areas remains consistently strong, ensuring profitable returns for investors. We have acted for a number of private clients in acquiring and project managing the successful renovation to realise significant returns. Our unique market position as a leading advisor to the HNW community gives us far reaching access to source properties off-market” Jack Ballantine Co-Founder of Nueva Vida Group

Upsides of Buying a Property Requiring Renovation

1. Potential for Customisation - Buyers can design the property to their exact preferences, from layout changes to choosing bespoke luxury finishes. This level of personalisation often results in a unique home tailored to individual tastes. For developer investors it’s very important to deliver a market leading end product that matches the lifestyle and design needs of their target buyer.

2. Value Appreciation - Renovating a well-located property can significantly increase its market value. Marbella’s luxury market is driven by demand for premium homes, and a high-quality renovation can yield substantial returns on investment.

3. Prime Locations at Lower Entry Costs - Properties requiring renovation are often priced lower than turnkey homes, allowing buyers access to desirable locations they might otherwise not afford.

4. Opportunity for Modernisation - Older properties may not meet current luxury standards. Renovations offer a chance to integrate modern technologies, energy-efficient systems, and amenities that align with contemporary lifestyles.

5. Tax Incentives - Spanish property laws may offer tax benefits or deductions for certain renovation expenses, depending on the scope and nature of the work. Consulting with local tax advisors can help buyers maximise savings.

Downsides of Buying a Property Requiring Renovation

1. Cost Overruns and Budget Risks - Renovation costs can escalate quickly due to unforeseen issues, such as structural repairs or compliance with local regulations. Buyers should plan for contingencies to avoid financial strain. It’s incredibly important to have a project manager appointed to manage the investors best interest and deliver a successful project.

2. Time-Consuming Process - Renovations can take months or even years, depending on the project’s complexity.

3. Navigating Local Regulations - Marbella has specific building codes and permit requirements that must be adhered to. Navigating these regulations can be time-consuming and may require engaging local professionals, including architects and lawyers. Marbella has a strong track record for creating luxury homes and navigating local regulations. Archtects are specialists in liaising with all of the key stake holders.

4. Dependence on Reliable Contractors - The success of a renovation heavily depends on the quality of contractors and project managers. Finding trustworthy, skilled professionals is critical to the success of the project.

5. Market Risks - While Marbella’s real estate market is robust, fluctuations in demand or broader economic conditions can impact the return on investment, especially if renovations extend during a downturn. There is however a significant lack of supply which is far outweighed by increasing demand. The availabiltiy of land is diminishing and values in prime areas is expected to grow significantly.

6. Disruption and Complexity - Managing renovations remotely or while living in the property can be stressful. For international buyers, having a client representative project manager saves significant time, protects investors best interests, manages costs and timelines.

Conclusion

The Marbella real estate market in 2025 offers compelling opportunities for savvy investors, particularly those interested in renovation and development projects. Marbella’s combination of strong market fundamentals, international appeal, and potential for high returns makes it an attractive hub for investors seeking renovation and development opportunities. By partnering with experienced local agents and professionals, investors can mitigate challenges and maximize the benefits of this dynamic market.

Jack Ballantine CEO & Co-Founder of Nueva Vida Group is recognised as a leading advisor to the HNW and UHNW community concludes “There are significant returns to be found in developing and renovating existing real estate in Marbella. However without the correct guidence there are significant pitfalls that can not only reduce the returns to the investor but also stop construction indefinitely. Any investment project requires extensive due dilligence, strategic planning and intrinsic market knowledge. The risks are low and executed correctly the rewards are significant’.

Nueva Vida Group offer a full spectrum of services to assist their clients search and acquire investment opportunities and project manage the renovation and development of the asset. For more information visit www.nueavavidagroup.com or contact [email protected]