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Price per m² in the construction of a hotel

Price per m² in the construction of a hotel

Hotel construction is an exciting and, at the same time, challenging undertaking. But an important factor to consider is how much does it cost per square metre? This is one of the crucial factors facing developers and builders, a determining metric that varies significantly from region to region. That is why we at IHCS are […]

Hotel construction is an exciting and, at the same time, challenging undertaking. But an important factor to consider is how much does it cost per square metre?

This is one of the crucial factors facing developers and builders, a determining metric that varies significantly from region to region.

That is why we at IHCS are going to present you with a detailed analysis of the prices per square metre of hotel construction in various autonomous communities in Spain.

 

Factors to take into account for the cost per m²

When assessing the price per square metre in construction, there are two crucial factors to consider. These are location and construction costs. To illustrate the importance of these elements, let us compare two very different destinations: The Riviera Maya in Mexico and Madrid in Spain.

 

Location

The Riviera Maya, known for its paradisiacal beaches and tourist attractions, presents a unique dynamic in terms of location. In this region, the price per square metre tends to be more affordable compared to European cities such as Madrid.

Accessibility to land and less development pressure contribute to this lower cost. In addition, this privileged enclave of Mexico offers a diverse range of real estate investment opportunities, with land available for tourism projects at relatively competitive prices.

In contrast, Madrid, as the capital and financial centre of Spain, experiences a constant demand for space and property. This high demand, combined with the limited availability of land in the city centre, drives up prices per square metre. Madrid’s strategic location, developed infrastructure and cultural offerings contribute to the attraction of investors and residents, but also increase land acquisition costs.

 

Production costs

On the other hand, the production costs have to be weighed up. These costs take into account factors such as the cost of labour and construction materials.

In this case study we are analysing, in the Riviera Maya, construction costs tend to be lower compared to European cities such as Madrid. The availability of local labour and construction materials at competitive prices contributes to this difference. In addition, the tropical climate reduces the need for significant investments in thermal conditioning, which positively influences total construction costs.

In contrast, in Madrid, construction costs are higher due to the need to comply with strict quality and design regulations, as well as higher wages for skilled labour. The stringent regulations in Europe, in terms of safety and construction standards, increase costs as well as the demand for high quality materials.

You see how when assessing the price per square metre in construction, it is essential to weigh both location and construction costs. Each location presents unique opportunities and challenges, and investors must take these factors into account when planning real estate projects to ensure optimal return on investment and successful construction.

 

How much does it cost per m² in Spain?

Now we are going to delve deeper by comparing prices in Spain. To do so, we are going to focus on a study that reveals that building a hotel in the Community of Madrid involves a considerable economic challenge, with an average cost of 3,857 euros per square metre.

 

Cost per m² by Autonomous Region

This figure places Madrid as the Spanish region where building a hotel establishment is the most expensive. In stark contrast, Murcia emerges as the most affordable alternative, with a staggering 657 euros per square metre, representing a staggering 487% difference compared to the capital.

Following the ranking, Catalonia is the second most expensive region, with a value of 3,000 euros per square metre, followed by Navarre in third place, with 2,114 euros. On the other hand, the cheapest autonomous communities, apart from Murcia, are the Valencian Community, with 861 euros per square metre, and La Rioja, with 952 euros.

This comparative study of construction costs by type of establishment and by Autonomous Community covers a broad sample of 5,500 construction projects carried out in the last two years in more than 2,000 municipalities in Spain.

In addition, this study includes different typologies, from hotels to nursing homes, housing, shopping centres, offices, industrial warehouses and car parks, among others. Among these, 56 correspond to hotel establishments.

 

What causes this price disparity?

Disparities in construction costs are explained by a number of factors. The report highlights the crucial role of labour and materials, the final quality required and the price the end client is willing to pay.

Overall, the report reveals that building a hotel is 60% more expensive than building a house, and the consultancy responsible for the study suggests that this discrepancy is mainly attributed to the level of demand from the end client and the specific regulations that hotels have to meet, which are more stringent than other buildings.

The consultant also points out that the additional cost is related to specific design demands, as hotel developers tend to require higher quality standards and stricter delivery times compared to residential developers.

Remember, at IHCS we will advise you so that you can successfully complete a project where the m² is as tight as possible.

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