As mentioned in our Guide to Construct a Property in Spain the construction sector can both be very lucrative but also very risk full if the right advice is not obtained from the initial stage of the investment.

This article shows in 3 different examples taken from real projects highlighting the cost and benefits involved with constructing different types of properties. (Although the figures are taken from real projects they can still only be used as a guideline).

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Villas in Mijas
Urban plot in-between Mijas and Fuengirola of 10.200M2 to construct 9 villas of a maximum size of 294M2.

* (taken on a 800€ per M2 cost, which is equal to a good standard villa).

**When calculating the capital needed for a given project it is custom to assume that around 50% of the properties available will have been sold before the construction has finished. Although this figure will normally be much higher (normally around 80-90%) a worst case scenario should always be taken into account to make sure there is no lack of capital during the project.
The initial earnings provided by the buyers who have bought before the completion will on average be 20% of the total price of the property (10-30%).
Regarding to the cost of the construction there will be different payments during the construction. You can roughly count with 30% being due at the beginning of the construction, 40% midway and about 30% upon finishing.

Cash Flow statement for the above project.

1 (-1.172.000 - 0,3* 2.116.800 - 0,7*530.000)
2 (-0,4* 2.116.800 - 0,1*530.000 + 0,25*9*0,2*600.000)
3 (- 0,3* 2.116.800 - 0,2*530.000 + 0,5*9*600.000-0,25*9*0,2*600.000)

Townhouses in Fuengirola
Plot in Torreblanca of 7808M2 to construct 41 townhouses of 114M2.

* (taken on a 700€ per M2 cost, which is equal to a high standard property).

Cash Flow statement for the above project.

1 (-3.100.000 - 0,3* 3.271.800 - 0,7*815.000)
2 (-0,4* 3.271.800 - 0,1*815.000 + 0,25*41*0,2*250.000)
3 (- 0,3* 3.271.800 - 0,2*815.000 + 0,5*41*250.000-0,25*41*0,2*250.000)

Apartments in Marbella Plot in Marbella overlooking golf course of 8800M2 to construct 54 apartments with a total of 6874M2 and an average of 127M2 per apartment.

* (taken on a 900€ per M2 cost, which is equal to a top quality property).

Cash Flow statement for the above project.

1 (-4.740.000 - 0,3* 6.186.600 - 0,7*1.550.000)
2 (-0,4* 6.186.600 - 0,1*1.550.000 + 0,25*54*0,2*350.000)
3 (- 0,3* 6.186.600 - 0,2*1.550.000 + 0,5*54*350.000-0,25*54*0,2*350.000).