Buying Commercial Property in Spain

There are two group of people who buy commercial property. Those who need it for their own use and those who like it as an investment vehicle. Both groups need to make sure they buy the right property.

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This guide covers…

This guide deals with the extra things that you will need to take into account when buying commercial property in Spain. By commercial property, we mean things such as offices, shops, bars, restaurants and warehouses.

It is supplemental to our main guide about Buying Property in Spain, so you should ideally read that before reading this. This guide deals only with the additional issues specific to buying a commercial property.

It describes, in particular, how to buy a commercial property in the area of Andalusia/Andalucía – which contains the Costa del Sol. See a map here. Please note that certain aspects of the law in Spain vary from one “autonomous community” (comunidad autónomalightbulb image - click here for more information on this subject to another.


Increasing numbers of foreigners are buying commercial property on the Costa del Sol. This is sometimes as part of their plan to open a business in Spain and it is sometimes as a straightforward investment.

Video guide to buying commercial real estate in Spain

You can get a quick overview of buying real estate for your business in Spain by watching this video interview (below) with Spanish lawyer Miguel Manzanares. Learn more by scrolling down and reading the detailed guide he has written with us.

Buying commercial property in Spain for your own use

Buying commercial property can be a little more complicated than buying residential property.

Should you buy or rent a commercial property in Spain?

Advantages of buying

  • You don’t need to worry about rent increases
  • You may be able to fix your monthly mortgage payments for the whole duration of the mortgage, so giving you certainty as to your outgoings
  • Your mortgage payments are likely to be the same as your rent would have been
  • Property tends to go up in value over time and your business will benefit from the capital growth
  • If the property goes up in value you may be able to re-mortgage it to release additional funds for your business or for yourself
  • You will be more free to make alterations to the building to suit your particular business requirements
  • Any alterations will add value to your property and not benefit a landlord
  • Your occupation of the property will be secure
  • You will not risk handing a landlord a thriving and valuable business if you leave the property. If your business has value, it will all come yo you.
  • Under Spanish tax law any mortgage interest payments will be tax deductable in the same way that your rent would have been

Disadvantages of buying

  • Even if you can obtain a mortgage, you will have to make a deposit of 20%-30% of the price of the property. This ties up money that could, perhaps, be used better elsewhere
  • Mortgages are not as easy to obtain as they used to be (but banks are re-entering this field, and mortgages of 60%-70% of the value of the property are now available)
  • You will have to pay for the maintenance and upkeep of the property – although this is also often a requirement if you rent commercial property
  • If mortgage rates change, your mortgage payments could go up – but so could your rent
  • If the property loses value – as they did over the last few years – this will reduce the value of your business
  • Owning the property restricts your flexibility – particularly if your business needs to grow into larger premises
  • You are in business as (say) a plumber, not a property speculator!

Probably the most significant disadvantage of buying property is inflexibility. If you want your business to double in size quickly it will be much more difficult (and expensive) selling your property and buying another than it would be finding another place to rent.

The advantages and disadvantages of renting are the flip-side of the advantages and disadvantages of buying!

What kind of premises should you buy?

  • How much room do you think you’re going to need now and in the foreseeable future?
  • If you can afford to buy more space than you need now, will you easily be able to let the extra space until you need it?
  • Is the location important?
  • Do you need parking?
  • Do you need your premises to give a particular image: stability, elegance, high-tech or whatever?
  • Do you need lots of storage space? If so, it can be cheaper to buy one unit for your active business use and another (much cheaper) for the storage of things that you will only need to access rarely.
  • Do you want a modern building or a traditional/historic building? Modern buildings are generally much cheaper to run.
  • What are your requirements for power and water? Will this be available in this building?
  • Does the building already have a licence to be used in the way in which you want? If not, will it be easy to obtain?
  • How much will it cost you to repair and improve the building?


Location is as important for commercial buildings as it is for residential buildings: possibly more so. The price you will pay for the building can vary dramatically depending on its location. For example, a shop on a main shopping street or beach-front location in Marbella can be five times as expensive as a shop in a second- or third-level location.

Do you have a requirement to be in a particular place? If not, you can save a lot of money by choosing a place only a few hundred metres away from the prime location – and often get the side benefits of easier access and more available parking.

Finding the premises

Most of the larger estate agency firms in Spain deal with commercial as well as residential property.

Legal steps and due diligence

A contract for the purchase of commercial property is likely to be more complex than a contract for the purchase of a house and so, unless you are very experienced and your Spanish is fluent, you would be foolish not to use a lawyer to assist you.

There are a number of steps that will need to be taken before you sign a contract:

  • Your lawyer will check that the property has all of the permits and licences necessary to use in the way in which you want or that they will be easily obtainable.
  • If the licences are not already in place you may try to negotiate a holding contract – either an option to buy or a contract with a ‘get out’ clause saying that you can cancel it if you don’t get the necessary permissions.
  • You will probably need to do a survey (inspection) of the building. This will not only look at its structural condition but also at the questions of whether you will be able to obtain adequate electricity, water, drainage, broadband, telephone and other services on the site and whether your proposed use is likely to create any special environmental or other issues.
  • You would be wise to obtain detailed estimates for any improvement works, repairs or decorating that you intend to do to make sure that the overall cost of the project is within your budget.
  • Depending upon what you intend to use the premises for, you may need other professional advisers such as hotel or restaurant consultants.

Raising the money

As already indicated, you are likely to need to find at least 30% and probably 40% of the price of the property from your own resources. You will also need to find all of the cost of improvements, repairs and redecoration and the legal and other fees involved in buying the property.

If you are new to Spain – for example, if you are moving to Spain for the purposes of setting up a business – finding a bank to lend to you can be difficult to the point of impossible. See below.

The legal fees and taxes payable will depend upon its price, size, type and location. Your lawyer will be able to give you an estimate early on in the process.

Most people will seek to obtain a mortgage on their commercial property.

Although up to 80% of the price is available by way of mortgage, foreigners will seldom be able to negotiate more than 70% – especially if they’ve only recently arrived in Spain. If you have only just arrived in Spain and have little or no experience in this type of business, you will probably not be able to obtain a mortgage at all.

Mortgages on commercial properties are usually from 10-20 years in duration. The norm is about 15 years.

To be granted a mortgage you will have to provide extensive details about yourself (even if the property is being bought through a limited company) and you will have to produce a business plan showing that you can afford to repay the mortgage and your accounts – typically for the last three years – showing the way your business has performed.

Until the crash of 2007, banks were prepared to take a flexible approach to people who had only recently arrived in Spain but who had comparable experience with businesses elsewhere. This is now less common but there are still situations in which a bank will lend you money to buy a commercial property in Spain even if your business is new. Expect to be able to borrow well below 70% of the cost of the building in these circumstances.

Negotiating such a loan can be seen as the first test of your negotiating powers in Spain!

There are few mortgage brokers operating in Spain but if you can find a good one it can make your life a lot easier.

Which is cheaper – buying or renting?

Obviously, this all depends on your particular case but there is a general rule of thumb that says that the overall cost of buying a property – mortgage, legal expenses etc – will be higher for the first five years that you own it than you would pay by way of rent. For the second five years, the figures will probably be pretty much the same. For the third five years and beyond, ownership will probably be cheaper than rental.

Buying commercial property in Spain for investment purposes

See our Guide to Investment Property in Spain.

Recently, any property investment – including investment in commercial property – has been a bit of a roller-coaster ride. After years of steadily rising commercial property values, the crash of 2007/8 saw them fall by up to 50% – and in some cases becoming totally unsaleable due to lack of demand (and so, in effect, worth nothing at all) – leaving lots of owners with large losses and/or properties they couldn’t get rid of.

Prices on the Costa del Sol have now begun to rise again and the price of prime property – top quality office blocks, shops, hotels etc in the best locations – is now (June 2017) almost back at 2007 levels. In other parts of Spain prices have a long way to go until the recover to 2007 levels.

Is the increase going to continue or have the price rises gone too far with the result that there will be a downwards correction? Frankly, nobody knows. The consensus of professional advisers is that commercial property prices will continue to grow for the next few years. This is based on the analysis that there is very limited availability of top-quality property and that the success of the Spanish economy is generating more demand than there is supply.

If you are thinking of investing in commercial property, you will need to decide which particular type of commercial property is of interest to you. Some smaller investors buy individual shop or office units in secondary locations whereas others swear by prime prestige stores and hotels. Obviously, there is a big difference in the cost of these approaches!

Rather strangely, in Spain the rental yield you can expect to obtain from commercial property is pretty much the same whichever type of unit you buy. It averages about 5% per annum of the value of the property. However, those who sing the praises of prime property will tell you that they have fewer problems collecting the rent, fewer voids and much less trouble selling the property when the time comes.

The key issues

If you’re thinking of investing in commercial property in Spain there are four main things you need to bear in mind:

  1. Volatility. The market has proved that it can go up and down quite violently.
  2. Diversification. Because of the high cost of much commercial property you have to be very rich to build up a diversified portfolio and so you’re exposed to the danger of something going wrong with your one building.
  3. Liquidity. It will always be slow – months not weeks – if you need to sell your commercial property. In bad economic times it can be virtually impossible to do so.
  4. Management. The success or failure of any commercial property project depends on good management. You will probably not be willing or able to manage the property yourself, at a distance of thousands of miles or kilometres, and so you will need to find a good, reliable property management company.


Buying a commercial property on the Costa del Sol has made a lot of sense for a lot of people but you do need to be careful when you’re checking that everything about the property is right.

A combination of a good estate agent and a good lawyer will make the process as painless as possible.

Further Information

Please contact the author if you would like any further information. See the sidebar for their contact details.

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