How to Easily Calculate the Total Investment for a Housing Project

To guide your client on the costs to consider for building a house, you need to consider the following concepts:

1. How Many Square Meters Can Be Built?

This depends on urban planning regulations, based on the location of the plot or site, the municipality, etc.

This is called “buildability” and is calculated as a percentage of the surface area of the plot or site.

For villas or detached single-family homes, the percentage can vary between 25% and 40%. The percentage is usually inverse: for larger plots, the percentage is lower and vice versa.

For homes in urban lots, the percentage can be much higher, reaching 200% or more.

For an initial calculation, it’s enough to know the built-up or enclosed area permitted by the local authorities for that plot or site.

In summary, the first thing you need to know is how many square meters you’re going to build.

2. How Much Does Construction Cost?

This value will depend on several factors: the type of house, the quality of materials and finishes, the specific conditions of the site, and many other factors.

But let’s break it down for a few types of housing (as of August 2025):

• Price of a prime quality villa: €3,200 – €4,000/m²
• Price of a medium-high quality villa: €2,600 – €3,500/m²
• Price of a single-family home, medium quality: €2,200 – €3,000/m²
• Price of a high-quality home in the old town: €2,000 – €3,000/m²
• Price of a medium-quality home in the old town: €1,800 – €2,200/m²

Important: Construction costs have been rising steadily in recent years, and this trend doesn’t seem to be slowing down.

Also, from the time the client takes the first steps to the time prices are requested from contractors, months, or even a year, may pass. It’s important to account for potential price increases.

3. How Much Does the Project Cost?

In Spain, architect fees have been deregulated for some time. Still, many architects continue to use the references provided by the Architects’ Association to calculate their fees.

In general, fees can be calculated as a percentage of the construction cost.

Keep in mind that the architect will budget for both the project and the supervision of the work. Everything required by law to ensure the home is built.

If the architect also provides additional services (initial studies, handling permits, managing contractors, etc.), these will need to be added to the initial percentage.

It’s important to remember that during the construction phase, hiring a building surveyor or technical architect is mandatory under Spanish law.

The surveyor has different functions and responsibilities from the architect.
Their fees can also be calculated as a percentage of the construction cost.

The combined cost of architect and surveyor fees, depending on the type of project, ranges between 7% and 10% of the actual construction cost.

Usually, for larger projects, the percentage applied for calculating fees is lower. Conversely, for smaller projects, the percentage will be closer to 10%.

4. How Much Does the Permit Cost?

As with the previous items, the permit is calculated as a percentage of the costs involved, and it varies from one municipality to another.

For these initial calculations, it’s enough to consider the actual construction cost.

However, for a more detailed study, the “official cost” declared by the architect in their project can be used. There are ways to reduce the permit cost with the help of the architect.

The percentage applied by local governments varies between 3.3% and 6.2% in municipalities such as San Roque, Manilva, Casares, Estepona, Benahavís, Marbella and Mijas.

To be on the safe side, it’s best to use the actual construction cost and multiply it by the corresponding percentage.

5. What Other Expenses Should I Consider?

In addition to the above, there are three groups of expenses to consider: the decennial insurance, miscellaneous expenses, and taxes.

5.1. Decennial Insurance.

Decennial insurance is mandatory when building to sell. However, for personal-use housing, it’s also recommended if you plan to sell the property within 10 years of construction completion.

This insurance covers that if any construction issues arise in the first 10 years, they’ll be addressed. People often think they’ll live in the house for many years, but they may end up selling after 5 years. For this reason, I see this insurance as advisable, even for personal-use homes (I can think of several cases).

To calculate it, the total insured amount, which can be considered the sum of all the amounts discussed in previous sections (construction cost + project fees + permit), is taken as the base.

A percentage of between 0.4% and 1.5% is then applied to this amount.

5.2. Miscellaneous Expenses.

These include a set of additional costs that vary from one project to another.

They cover things like topographical surveys and geotechnical studies, both of which are mandatory for the project design.

Depending on the project’s location and specific circumstances, other requirements such as archaeological studies or acoustic tests may be necessary (though these are less common).

To estimate these costs, take between 0.1% and 1.0% of the construction cost.

5.3. Taxes.

All the aforementioned costs, except the permit, are subject to VAT.

The VAT rate will be 10% for new residential construction, applied to the construction costs. For most other costs, which are typically services (architect fees, surveyor, geotechnical study…), the VAT rate is 21%.

Additionally, I recommend adding 5% of the total cost (excluding taxes) to cover unforeseen expenses.