1.65 MILLION EUROS. Mijas, Costa Del Sol. Development Site For 44 Apartments.

  • Price: 1.65 $
  • Bedrooms: 1
  • Bathrooms: 0

Mijas Pueblo is a well-maintained traditional Spanish village, a 15-minute drive from the beaches of Mijas. The village is popular with visitors who come to sample the traditional style, donkey taxis, views and food. While it remains very well-preserved, the last decade has seen it become increasingly popular with overseas buyers looking for a slower pace of life and a quieter, more tranquil area, with good amenities on hand. Built on a hillside, the village has extremely limited space for construction and due to this restriction, there are no other significant new developments within easy walking distance of the old village of Mijas Pueblo.
 
DEVELOPMENT 
The total cost of the project is assessed at €4.315M. This includes all pre-studies, certifications, construction work, project management, marketing, utilities, local taxes, insurance and certification. An experienced team is available to deliver the project on specification. The first 12 months are for planning, licensing and project preparation, with construction due to start in month 13. Detailed project costings are available from the project partner under NDA and following the proof of investor funds. The combination of pre-sales and drawdown finance will limit the working capital to just €272,000. Nonetheless, allowance has been made for an additional contingency of €576,000 – 12% of development costs.
 
MARKET 
Bank-owned repossessions continue to distort average prices in the area, but most of these are low quality and proving difficult to sell. On the other hand, demand for high-quality, modern new build projects is rising sharply. It is very unusual to find a project that is a genuinely short (and flat) walk into the heart of an old village, with its wide choice of places for residents to spend time, eat out and socialise. This kind of location is particularly popular with older retirees, who don’t need as much space and are prepared to pay a premium for modern apartments in a peaceful environment with the convenience of easy access to village amenities.
 
MORTGAGE FINANCE 
A loan facility has been provisionally agreed with a major Spanish lender on the following terms:
 
• Land must initially be purchased outright

• Plans are then submitted for a TINSA valuation

• The bank will lend up to 60% of the appraised value

• Funds will be released on a drawdown basis on architect signoff

• The rate during the first 12 months will be 2.30% on an interest-only basis

• For the remainder of the construction phase, the rate will be 2.70% to 3.20%, interest only

• Thereafter, the rate will be the 12-month Euribor plus 2.60% to 3.20%, on a repayment basis

• Loan insurance will be required

• An exit penalty of approximately 0.5% of the loan balance will apply for the first 5 years
 
FINANCIAL MODEL 
A full financial model and cash flow simulation are available to investors on request.
 
PROJECT SUMMARY 
• Land Purchase Price: €1.65M
• Transaction Fees: €511K
• Development Cost: €4.8M
• Total Resale Value: €9.3M
• 44 apartments, totalling 3580m2
• 2 bed, 2 bath apartments averaging 81m2
• Target sales price of €2,600 /m2
 
INVESTMENT HIGHLIGHTS 
• Provide €3M private equity for a development of 44 apartments with sea views

• Located 15 minutes from the beach, with sea views from an elevated position

• Great position in a well-kept village with virtually no space for new construction

• Experienced project management team in place to enable a hands-off investment

• Low cost, drawdown development finance available from a major Spanish lender

• Target resale value of 1225 euros per m2, approximately 10% below market value
 
PROFITABILITY FORECAST 
• 27-month target timeframe to construct & sell all units

• 87% cash-on-cash return if financed at 60% loan to GDV

• Annualised ROI of 39% and a Project IRR of 61%

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