Development Finance Spain Lending

Spanish property development finance hasn’t been easy these past few years and we recommend strongly first seeking advice from a financing expert company such as Platinum Global Bridging Finance prior to you starting your project. As we work with a number of banks in Spain and non-bank lenders we will be able to source and arrange the best deal for:

• Development of a new build from EUR1m up to EUR50m.
• Construction or refurbishment of a number of holiday homes
• Construction of a permanent home in Spain
• Our team can source finance for a percentage of the entire costs of your building project (including the purchase price of the plot and construction costs). We will negotiate the best conditions for you with the banks.

Development Finance for Spain has been for the best part lacking since the 2007 financial crash which made a huge dent in the property market in Spain. The Spanish home-building industry is facing has faced a lack of financing for small and mid-sized developers.

Banks have been reportedly tightening up their lending conditions, meaning that only the biggest developers backed by international funds who can afford to finance 30% to 40% of development costs from equity can now get financing from banks. There are a number of non-bank lenders now accessing the market via specialist lenders. These are large pension funds and institutions looking for a better rate of return on their current investments.

Unlike highly consolidated markets such as the UK and France, where big developers dominate the market, small and mid-sized players are the backbone of the home building industry in Spain. According to industry estimates the top two biggest home builders in Spain have about 1% market share, compared to 19% in the UK, and 23% in France. If financing dries up for small and mid-sized developers it is unlikely that Spain will be able to deliver the 150,000 new homes each year that developers claim the market needs.

We have now seen the emergence of a recovery in the property development market in Spain and through that, we have seen the non-bank lenders willing to take on a little more risk.  People are returning to the Spanish property market from the UK where property holders have seen a vast rise in the value of their UK properties in the last 5 or 6 years. This is leading to the need also for more second homes and retirement properties needed spurring the developers to build.

Spain interest rates are at a historic low and the 12-month Euribor remains in negative figures. Interest rates are extremely competitive in comparison to previous years and are expected to remain low for the foreseeable future, making financing even more attractive.

Documents Required For Spain Property Development Finance

• Land property deed
• Valid building license for the entire period
• Project was approved by the College of architects
• Proposal of building cost
• Contract signed with the construction company
• Proof of payment of the local charges and taxes
• Construction insurance
• Percentage of sold units and corresponding contracts

Spain Property Development Application process

Our consultants here aim to make the process easy and stress-free for all our clients by liaising with:

• the lawyer
• Agents
• Banks or lender offering financing

Click here for more details on our property development financing