Commercial Property Investment — Costa Blanca

The commercial landscape

The province has three commercial sub-markets. Urban high-street retail in Alicante, Elche, Benidorm and Torrevieja. Tourist-strip hospitality (Benidorm seafront, Albir paseo, Calpe Levante, Cabo Roig boulevard, Moraira centre). Industrial/logistics around the AP-7 corridor and the Port of Alicante. Each plays by different rules.

Investor pool is dominated by Spanish family money plus a growing layer of foreign owner-operators (British, Dutch, German) buying their own restaurant, café or B&B premises rather than leasing.

Yields by asset type

The licence question

On the Costa Blanca, the licence ('licencia de actividad') attached to a commercial premises is often worth as much as the bricks. A restaurant premises with a current Type-III (cooking + extraction) licence trades at 30–60% premium over an identical empty unit because re-licensing can take 12–24 months and €15,000–€60,000 in works.

Always verify: (1) the licence type matches the proposed use; (2) it is current and transferable; (3) the building's structural file ('expediente') has no open infringements; (4) the community of owners' statutes permit the activity (some prohibit restaurants or bars regardless of municipal licence).

IVA, ITP and the rental tax model

• ✦Commercial acquisitions: 21% IVA (not ITP) if from a developer/business, plus 1.5% AJD. Buyer can usually recover the IVA if registered for IVA and the property is let to a business tenant.
• ✦Second-hand commercial: typically ITP 10% (Valencia region) unless both parties opt for IVA via 'renuncia a la exención'. The waiver is standard practice between investors.
• ✦Commercial rental income: subject to 21% IVA charged to the tenant (you collect, you remit). Net rental income taxed at 19% for EU non-resident landlords, 24% for non-EU, or sliding scale for residents.
• ✦Withholding: when renting to a Spanish business, the tenant withholds 19% of the rent and pays it to Hacienda on your behalf — you reconcile at year-end.

Lease structures used here

Spanish commercial leases ('arrendamiento para uso distinto de vivienda') are governed by the LAU but with huge contractual freedom. Typical structure: 5–10 year term, 1–3 month deposit, additional bank guarantee of 6–12 months for hospitality, annual CPI uplift, tenant pays IBI + community + repairs ('triple net' is common in retail).

Hospitality landlords on the Costa Blanca often layer rent: lower fixed base + percentage of turnover above a threshold. This aligns interests when letting to a small operator and captures upside in good summers.

Risks and watch-outs

• ✦Tenant covenant: small independent operators often go bust at the 18-month mark. Insist on personal guarantees or 12-month bank guarantee.
• ✦Seasonality: a tourist-strip café making 70% of its turnover in 4 months can't pay 12-month rent evenly — write the lease accordingly.
• ✦Licence reform: Valencia region has been tightening hospitality noise rules. Music-bar licences ('Tipo III bis') are harder to renew now than 5 years ago.
• ✦Empty-unit reality: secondary retail in declining towns can sit empty for 12–36 months. Buy quality or accept the risk.
• ✦Exit liquidity: commercial resale is far slower than residential. Budget 9–24 months to market a unit.