Looking to buy investment property in Ibiza? It’s a sound choice, yet one that must be executed correctly. This article tells you about buying investment property in Ibiza, the types of deals available and the likely returns. Remember, buying property in Ibiza has, on average, yielded in excess of 8% returns per year, and significant capital asset growth.
Buying investment property in Ibiza with cash outright is also a sure fire hedge against any rise in interest rates. Some investors look to buy properties in need of renovation or a change of purpose. They then renovate those properties and rent them out on a long term or short terms basis. Many investment properties in Ibiza are purchased by non Spanish Nationals and are either used as a holiday homes or straightforward by and hold investments in Ibiza.
Once these properties have been renovated and rented then investors in Ibiza may refinance the property by taking a mortgage over the property at a higher value, using the income to pay the mortgage and reinvesting the profit from the deal into more property in Ibiza or elsewhere.
How easy is it to buy investment property in Ibiza?
Buying an investment property in Ibiza might be more complex, but Spain is a very welcoming country for foreign buyers as foreign ownership of properties in Ibiza has really helped lift and stabilize the local economy.
The procedures for buying a property in Spain as an expat are relatively straightforward. Before buying, you’ll require a financial number, which can be obtained by visiting a police station with your passport. This is typically processed on the same day for Spanish or EU citizens, but may take a little longer for other nationalities.
Financing an investment property in Ibiza can be done by cash or mortgage charge. It is often easier for expats to finance the purchase from their home country. Pre 2008 many Spanish banks in Ibiza would lend to international investors although they have been reluctant to do again, so even now.
What is the average price of investment property in Ibiza?
Average property costs per square meter in Ibiza are €1,722 per square meter, representing a solid, year on year growth trajectory of 8%.
Map of Ibiza
Ibiza (natively and officially in Catalan: Eivissa,see below) is a Spanish island in the Mediterranean Sea off the eastern coast of the Iberian Peninsula. It is 150 kilometres (93 miles) from the city of Valencia. It is the third largest of the Balearic Islands, in Spain. Its largest settlements are Ibiza Town (Catalan: Vila d’Eivissa, or simply Vila), Santa Eulària des Riu, and Sant Antoni de Portmany. Its highest point, called Sa Talaiassa (or Sa Talaia), is 475 metres (1,558 feet) above sea level.
Ibiza is well known for its nightlife and electronic dance music club scene in the summer, which attract large numbers of tourists. The island’s government and the Spanish Tourist Office have worked toward promoting more family-oriented tourism.
Ibiza is a UNESCO World Heritage Site. Ibiza and the nearby island of Formentera to its south are called the Pine Islands, or “Pityuses”.
Making Money on Investment Property in Ibiza
The best way to make money on Ibiza Property is via an expert international investment fund.
Your Financial Advisor or Accountant won’t bring you the opportunities because of course they won’t receive their greasy commissions.
Investment funds are not even allowed to advertise so you’ll never hear of them unless a friend recommends them.
You will need at least some experience with previous investments to be eligible and of course these funds are extremely picky about the investors they accept. They can afford to be. They don’t need your money, but they can put your money to work for you like never before.
Costs of buying a property in Ibiza
Fees for buying a property in Ibiza vary from area-to-area, and many are negotiable – for example, there are no fixed fees for lawyers or estate agents. Buyers must pay the majority of the costs, which are generally as follows:
Property transfer tax in Ibiza: 6–10% (existing properties) / VAT (or IVA) at 10% (new properties in Ibiza)
Notary costs, title deed tax, and land registration fee in Ibiza: 1–2.5%
Legal fees for buying investment property in Ibiza: 1–2% (including VAT)
The seller usually pays the estate agent fees in Spain. Estate agents usually charge their fees as a percentage, typically around 3% of the final sale price.
Who is the Best Real Estate Agent in Spain?
PRestates is a multi-award winning Luxury Real Estate broker in Ibiza, with a 18 year track record the agency has been directly or indirectly responsible for the largest volume of transactions in Ibiza in the past two decades.
Types of investment property in Ibiza
It is important to understand the main types of Investment Property in Ibiza
Undeveloped land in Ibiza
Commercial property in Ibiza
Residential real estate property in Ibiza
Operating property investment in Ibiza
Distressed property investment in Ibiza
Investing in a World Class fund with activities in Spain, and in Ibiza
The Most Successful Property Investment Fund 2020 : Click Image to Download Prospectus
Buy to hold in Ibiza
Long-term rental property in Ibiza is widely considered one of the best ways to diversify your property portfolio. So buying and owning property means much more than just investing in a single property, it can bring you a variety of benefits, such as access to a variety of investment opportunities and the benefits of long-term ownership.
While some investors in Ibiza may be confused or intimidated when they start, buying and owning property can be one of the best investments you can make if you do your due diligence before you start.
The rental income from investment property in Ibiza generates short-term income that can be used to pay off a mortgage or to invest money. The strategy of buying and holding property is one of the most common investment options.
The value of the Ibiza property will increase over time and the investor will benefit if he is willing to sell it later. The investor benefits from being bought in the expectation that the value of the property will rise over time.
Investors considering a Ibiza property purchase and holding strategy should do their best to calculate the potential income from renting out the property. The bottom line is that monthly income should exceed the cost of rent in the first year of ownership and annual rental income over the next five years.
If the investor plans to sell the Ibiza property later, possible profits should also be taken into account. Finally, any losses from taking out a mortgage or other type of property financing must be taken into account, as well as any gains from the sale.
Convert Ibiza property to Holiday Accommodation
For property investors in Ibiza, converting a home into a serviced apartment would mean higher rents than the normal rent increase. As a result, many people are buying investment property in Ibiza and then converting these homes into serviced apartments to maximize yield.
The types of property used for serviced accommodation in Ibiza are often the same as those you would use to buy to let. Where you have a guaranteed short-term rent, it’s not as rigid as renting out a property.
Lease Ibiza property to the Worlds Best Rehab
Remedy Wellbeing is a bespoke, luxury treatment center with a significant corporate footprint in Spain. This means they treat just one client at a time in luxury 6* accommodations. All properties used by Remedy Wellbeing are as unique as they are inspiring. If you own or represent some of the most exceptional, unique and luxurious accommodations in Spain, Remedy Wellbeing can be contacted via their dedicated property management company, Physis Realty.
Disadvantages of investing in Serviced Accommodation in Ibiza
Holiday accommodation is more of a business strategy than a property strategy, and the workload is far more intensive.
You’ll need to furnish your holiday rental accommodation in Ibiza
You’ll need to clean the rooms and change the sheets every time your guests leave.
Who does all the laundry?
Who does all the cleaning?
Who’s going to do all the work for you in Ibiza
How are the guests actually going to get in?
Are you going to have somebody to do a meet and greet?
Buying investment property in Ibiza to convert into serviced accommodation or holiday lets is not really considered an investment, because the amount of work involved make it a full time job.