Is It Profitable to Convert a Commercial Space into a Residential Property?
After the transformation of multiple premises and shops into homes across Spain, today we ask ourselves if it is profitable to convert a commercial premises into a dwelling, since such a conversion of the space requires complex procedures both administrative and operational, needing in any case administrative authorisation that permits the change.
If you have a commercial premises and are considering transforming it, you can consult all the steps to convert a commercial premises into a dwelling within the real estate and contractual services on our website.
Profitability of Premises Converted into Housing
If you are thinking about the profitability that a commercial premises converted into a dwelling can offer you, you should take into account different factors which we list below:
- The amount of renovations to be carried out so that the premises meet the requirements and comply with current legal regulations.
- The costs of the renovation you need to carry out. Take into account the renovations and modifications to electrical installations, plumbing, changes in the layout of the spaces, and all the administrative procedures you will have to pay for. These include the licence and execution of works, obtaining the final work certificate, the energy efficiency certificate and the habitation certificate, and the first occupancy licence. In addition, you will have to grant a deed of change of use from commercial premises to dwelling and register it in the Land Registry. We recommend that you add up the budget for all of this.
- Research the market value of dwellings in the area and compare them with the value of your premises. To know if it is profitable to convert a commercial premises into a dwelling, it is important that you take this into account.
- Make sure there is a demand for housing in the area in case you want to sell or rent a commercial premises dwelling.
- Are you going to finance the operation to convert the premises into a dwelling? Take into account possible costs in interest or amortisation.
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Once these aspects have been considered, evaluate the return on investment time, that is, the time it will take you to recover the initial investment through the rental or the sale of the commercial premises as a dwelling and thus you will be able to determine if it is profitable to convert this premises into a dwelling in your locality. Here you should assess the price at which you will sell or rent it. This will depend, among other aspects, on its size, the location of your commercial premises as a dwelling, or its aesthetics.
So, how much can a renovation of a commercial premises into a dwelling cost?
When you have added up the budget for the renovation procedures, you will be able to decide if the conversion is profitable. Approximately, for a medium-sized premises, the cost can range between €50,000 and €100,000.
How much could a residential premises be sold for?
Obviously, there are many factors that prevent giving an adequate answer to this question, but if we take the example of Barcelona, where we provide our services, the average price of an 80m2 flat ranges between €256,000 and €320,000, so, provided that the renovation complies with legal conditions, it can be said that it is indeed profitable to convert a commercial premises into a dwelling to sell it. However, it is essential to have the authorisation of the administration in order to make the change from commercial premises to dwelling.
How much could I rent out a residential premises for?
Renting a residential commercial premises in Barcelona also depends on its location and characteristics, but approximately, an average residential commercial premises rent could range between €1,200 and €1,600 per month.
Local Housing in Barcelona
Given the increase in property values and high demand, converting your commercial premises and adapting it as a residence can provide a profitability that you may not have anticipated and that could even help diversify your investments.
As this process is intrinsically linked to the services of our Notary Office in Barcelona, we offer you our services when you carry out your procedure and need to grant the deed of change of use from commercial premises to residence. We are Notaries with excellent reviews and very high recommendations, as you can see online, for example, on our Google Maps profile.
To carry out this procedure you can contact us through our contact form or by sending an email to bcn@jlanotarios.com. We hope this article about whether it is profitable to convert a commercial premises into a residence helps you to assess and budget the procedures before deciding to transform it!
