Alfredo: I’m with Sean Woolley from Cloud Nine Spain. You’ve just become a developer of sorts, correct?

Sean: Of sorts. Let’s be very careful here. Yeah, because I, as you know, most people know if they watch our videos, I live in Monte Mayor and there is a big plot next door to my house that I’ve always kind of had my eye on. And I always thought it would be great to develop that plot. Because of my proximity to it, my knowledge of it, it makes life very easy for me to show people, but also because I can see the potential in it. And so my initial idea was to develop the plot myself and to offer it for sale and make some money, and also get a happy client at the end of the day. Things have changed a little bit since those initial thoughts because I’ve been through the hoops and I’ve spoken to a lot of people, and now we’re doing things in a slightly different way. But yeah, it’s been an interesting exercise. I mean, we’ve been at this for probably the best part of four or five months now and the project has just been released to the market, so you can see that there’s been quite a lot of work and effort going in in the background, which I’m quite happy to, you know, share with you ’cause it’s been an interesting exercise.

Alfredo: Let’s go back a little. We were talking about Villa Malibu.

Sean: Villa Malibu, yeah.

Alfredo: Which is the first in a series of similar projects that you’re hoping to do called the Marbella Sky Villas, correct?

Sean: Yep.

Alfredo: And these are modern villas perched on very steep inclines on stilts, so very much like a Malibu, Cali, you know, Beverly Hills style hanging villas.

Sean: Yeah, because the landscape here, particularly in Monte Mayor and most of the Benahavis urbanizations, the landscape is very similar to the landscape in Southern California. So I looked at what the Californians had done, how they had developed their land because what a lot of people here in the Costa del Sol do is they’re quite happy, you know, architects and builders, they’re quite happy to develop on fairly flat plots, they’re quite happy to develop on sloping plots, but when they see steep plots, they kind of go, “Ooh,” you know, “No, no, no way. We don’t know how to do that.” You know, “Where do the retaining walls go?” So we needed to look at a different approach and I, you know, naturally the best the plots in terms of the flat ones, have been snapped up and have been developed. So we’re left with a land bank that is a little bit difficult, you know? It’s steep or sloping but a lot of those plots are actually the most dramatic because they have great views, they offer different perspectives. And the plots that I’m looking out for, really, are sloping, I won’t say steep. Sloping but also wide because if you have a sloping plot but it’s quite narrow there’s not a lot you can do with it because obviously you have to build out, and then when you build out the expenses are, you know, ramped up considerably. But if you’ve got a plot that is steep but also very wide it means that you can put the house very close to the, you know, the road but you can still have that hanging effect, that floating effect which I wanted to create. And then if you look at what they’ve done in Southern California, that’s what they did. As you said, they built on pillars or stilts with a concrete base and then you plonk the house on top. I forget the technical term. And then you’ve got a hanging house and what you get with a house like that is drama. You know, you get amazing views, you get that sensation that you are hanging out into the, in this case in Monte Mayor, into the countryside with amazing views. You have the opportunity, if the plot is wide enough, to build everything on, pretty much on one level which makes the house seem enormous. The downside is that because of the way you’re building, you don’t really get much opportunity to put a garden in. If you want a garden, normally, you have to go out deep into the plot. And when you’ve got a plot that’s very steep or sloping, it, as I say it, it becomes prohibitive in terms of the costs. So these houses aren’t for everyone but we analyze the market, obviously it helps being in real estate for 21 years. We analyze the market, the types of people who are up here in Monte Mayor, who buy here. And it’s not a market that attracts young families because of the location, it’s more, you know, old and gnarly people like me. But it tends to be good quality clients from all over the world but they want a really good space to live in, to work in, and to entertain. And it’s a house they also wanna show off to their friends and family, let’s be honest. And this ticks those boxes. It’s a low maintenance house, it’s eco-friendly but it’s got drama, and there’s not too many villas, in our experience, that offer all those things.

Alfredo: That’s the product.

Sean: Yep.

Alfredo: This has gone out for sale now, hasn’t it? What’s the starting price?

Sean: It’s 1.9975 million.

Alfredo: So you priced it quite low in relation to what it is.

Sean: Too low.

Alfredo: Because it’s the first of them, is that right?

Sean: Yeah, there’s, and there’s also a reason why we did that which comes down to the debate we had about becoming the developer or becoming the, effectively the promoter. And we looked at developing the plot ourselves. Now developing the plot yourself means that you need to look in, very carefully into the financial implications, the legal implications, and the insurance implications because obviously if you’re developing it. So if I were to sell that project to you, I would offer you staged payment terms and I would have to get an insurance policy in place to protect your funds. And there are two different ways of doing that, you can do that with a bank guarantee but that means I can’t really access your money and I’m not a big developer. I haven’t got access to those sorts of funds to build this villa, so that was a no-no. The other opportunity is to get an insurance policy. So effectively you go out to an insurance company and I buy an insurance policy which protects your funds, and we then have to open a special account in a bank, which is controlled by the bank, and I can dip in there, get your money out to build the villa, which is great. I can’t use it for any other source. I have to provide receipts and invoices and God knows what. I can’t go in there and take out, you know, 50 grand and go and buy a BMW. It has to be absolutely relevant to the project and has to be signed off. So that was the other option but effectively, to buy an insurance policy. Obviously, you know, the insurance policy, the insurance company wants to see that you’ve actually, you know, you’ve got that money there, sitting there that could help to finish off the villa. So we could have gone down that route but it became quite onerous and very expensive, I’ll be honest with you. So rather than offering you, Alfredo, the project at two and a half million which is, well, say, 2.3 million, which is probably the eventual retail value of the house, we decided to do it a different way. So we decided to offer it as a traditional plot and build but we also built in some value there for the end user, for the buyer. So it’s become almost a bit of a joint venture really between us, the eco builders, and the buyer of the project.

Alfredo: Right, so what you’re selling is the project with the, and you’re gonna project manage that, or does that then hand, go hand over to the builders?

Sean: That gets handed over to the builders. So what we have is we have control of the plot. Obviously, it’s next door to me, I know the owner and what he’s given us is a period of time very, very kindly to market and to sell this project. So what it means is that the buyer, if someone comes along and sees the plot and sees the project and says, “Yeah, I love this plot but I don’t like the project.” Well, they can’t buy the plot. So they have to go with our builders, they have to go with something like the design that we’ve come up with. There’s still an opportunity to tweak a few things, but bearing in mind the limitations of the plot, there’s not gonna be a lot that you can tweak. You might wanna have a master bedroom on the top level rather than four bedrooms in a row. You might wanna take the home office out, although I can’t see a reason why you’d do that. And there’s also some optional extras that we’ve got there that you might want to have, like a rooftop kitchen and bar and stuff like that. So there are opportunities to customize it, but obviously that’s not something we want to take up too much time. We want someone to come along and say, “Yeah, this is the project for me. I wanna tweak A, B, and C.” And then let’s go, let’s put the application into the town hall and then we start building.

Alfredo: Okay, so and applications for licenses in Monte Mayor are fairly quick these days or?

Sean: Yeah, they should be. I mean, obviously because we have knowledge of the area, I’m on the committee of Monte Mayor, so I kind of know what gets through and what gets blocked. So I would imagine once you submit your plans, and bearing in mind that we’ve done the hard bit insofar as we’ve designed the villa, and bearing in mind it’s not a flat plot of 3,800 square meters, it’s a sloping plot so there is, you are limited to what you can do. So we’ve designed what we feel is the best-looking and most usable villa for that plot. So we’ve done that work, the design is done, the renders are there, the floor plans are there. As I say, you can tweak a couple of things but once someone, you know, a buyer says, “Yep, I’m happy with that” and has paid us a deposit, then that, those plans go to the town hall at Benahavis. That takes about three months for them to come back approved and then you can start building. And because we’re building with the eco construction guys, the actual house is very easy to build. The complicated part of this project is the base, so it’s the pillars, you know, you’ve gotta go down a long way. You’ve gotta build that concrete base on which you can plonk, on which you can put the house. The house is the easy part because we’re building with ICF blocks, we’re building with eco-friendly materials. So it’s probably gonna be six months, no, probably four to five months to do the bottom half and then, again, probably six months for the house, which, you know, so altogether the construction period is probably around 12 months but most of that, or a large chunk of that, really, is for the pillars and the base. But yeah, that’s the plan.

Alfredo: Okay, so now there are plenty of agencies or agents that over the years, no doubt, have either considered doing the same or are approached by sellers of plots and so on to take on a project like this. Your background and the business model of Cloud Nine Spain is heavily towards the new development of plan-type projects. So your experience, the company’s experience in this area is, you know, I would say top two or three probably, if not top in the Costa del Sol. What were you surprised about in terms of how easy or how hard the process has been and how is it different from what you expected?

Sean: I think, I mean, I’ve always had a tendency to get involved and want to get involved in new construction. I did so in England and I’ve done so here, you know, for my own reasons. I think it’s a natural kind of move for us to get involved in developing because we understand the market and we understand what buyers want. A lot of people with a 3,800 square metre plot would go big. They would build big, they would say, you know, “I want six bedrooms.” “I want this, I want that, and I want.” Actually, people don’t want that. You know, particularly the market up here, people with, you know, who buy up here haven’t got five toddlers, they don’t need lots of different bedrooms. They just need a really nice space and to take advantage of the landscape and the view. So I think that’s where there’s a natural move from the real estate side into developing, for us, because we understand the market. We’ve been around for 21 years. We’ve seen what people like, we’ve seen what people don’t like and we don’t get carried away with ourselves, you know? Try not to. I think what shocked me, not shocked me, but when I sat down, you know, I got a bit overexcited at the start. We had the plans, we had the renders. Oh great, you know, fantastic. Isn’t this amazing? And it’s very easy to become self-indulgent and that’s always the, you know, whenever you’ve got your, anyone who’s got their own business, you know, it’s a problem. You need someone like you, Alfredo, to drag you back, to say, “Hang on,” you know, “Stop messing around. Stick to what you’re good at.” And that’s what we did. We actually said, okay, we are very good at developments but we are not developers. So we hired a really good architect whose clients, you know, in the past have included Mercedes-Benz and Deutsche Bank, and stuff like that. We hired a really good architect to look at that plot and come up with the best possible design, the sexiest renders, you know, the best that we could possibly produce to get people interested. We did that, and we did that well, I think? We also, I wanted it to be an eco-friendly villa so we identified a construction company that could offer us all those traits. And also with the eco construction, it means that we get out of the project quite quickly. That doesn’t mean to say we’re not caring about due diligence and about making sure this a fantastic project, ’cause it will be and it has to be ’cause I’m living next door. I don’t want someone coming knocking on my door saying, “Hey, hang on a minute.” You know, if that tap doesn’t work. No I don’t want any of that so it has to be a good project. I’m, you know, that’s our first Marbella Sky Villa and he and she are my next door neighbours, so it’s gotta be right. But once we got into the detail of it, it was something that I realised if we were gonna be the developer, there are, as I say, enormous, sort of, financial implications, which is understandable and fine to a degree. There are enormous legal implications. But more than that, it was the time that it would take to oversee this development. And I know what I’m like, I know that once I get into a project, I’ll be on it 24/7. And to be honest with you, it would become a distraction from our day-to-day business so we took a decision to be, effectively, the promoter rather than the developer. So someone who would oversee the project rather than be boots on the ground every day making sure the builders are doing their job. So we decided to do it from a different tack. And what we also, as I say, decided to do, because it’s our first project in the area of this type of house. And because we want a satisfied client and we wanna sell this quite quickly so that we can move on to other things, we decided to promote it at a really good price. I mean, we round-tabled this, we spoke to a lot of people locally and the consensus of opinion was that the house when it’s finished will be worth, as I say, around 2.3 million. We’re marketing it at just under the 2 million so we’re building in some value for the buyer. And I would rather do that, get it sold quickly, take a smaller margin and move on to something else. And I had a chat with the builder yesterday, who is like-minded. We could hold out for 2.3 million, no problem at all, and we might well get it but I don’t wanna be tied to one thing. I wanna, you know, ease some cash flow. I wanna be known for offering a really good product at a really good value and people who deliver on time, to specification, and get a good reputation that way rather than sitting on stock and then worrying about not selling and selling. You know, I don’t need that stress in my life.

Alfredo: You’ve obviously done the numbers on this and what it can, what the margin would be for yourself or for Cloud Nine Spain. And the amount of effort it’s taken so far and the amount of attention it’s taken so far and investment. And the time it will take ’cause you still, throughout the whole process, there’s still gonna be your involvement.

Sean: Yep.

Alfredo: Is it worth it?

Sean: The thing is, everything’s relative, isn’t it? Is it worth it compared to what money you earn doing your day job? And that’s the balance. I think it is worth it. And I also think it’s, you know, that again, coming into that equation you have to consider, do you enjoy it? You know, I’m getting to a stage in life now where I actually wanna enjoy what I do, I don’t wanna be a slave to it, and I enjoy that kind of work. I enjoy having 500 spreadsheets surrounding my desk, you know, with all these figures on and working out, you know, how we can make a bit of money out of it, how I can offer value to a buyer. I love all that and I love the inception, the conception. What’s the word? I dunno. But the bit where you’re getting the thing off the ground in terms of plans and renders, and seeing it come to life that way. But I’m not a builder so at that point I need to partner with a builder who knows what they’re doing, who can work on that type of land, who can deliver my idea, and that’s what I enjoy doing. So to answer your question, the money that I’m likely to make out of it, I think, is worth that effort and that heartache and that stress, because actually I kind of enjoy it. If I didn’t enjoy it, I’d be like, nah, I’ll stick to real estate, you know? But I actually do like it and I see this as a bit of an evolution in terms of the business. I wouldn’t wanna build a block of apartments, I wouldn’t wanna build 50 villas a year. It would do my nut in. But I think, you know, if it was one or two in an area that I know, in an area that I understand and to a potential market base of people who I understand because they’re probably a little bit like me, then yeah, I’m all over it and I wanna do it. I mean we’ve identified two other plots, well, three other plots but one of our clients bought the other one the other week, which was a bit disappointing but, you know, I had to sort of stand back. And we’ve had approaches from various people to fund these developments, you know, like just buy the plots and do the, but then, you know, they want their cut, they want their return and then I, you know, I’m answerable to them. So yeah, maybe one day, but at the moment I’m quite happy ticking along with the model that we have.

Alfredo: What was the most surprisingly expensive part of this process so far for you?

Sean: Well, I mean, there’s kind of four elements of the whole project in terms of cost. The first one is the plot and I think the plot is reasonable value. The second part is the build, so the actual house. The third part is the what I call the engineering, which is the bits that give you the base on which to build the house. And normally that’s retaining walls, in this case, it’s pillars and a concrete base. And the fourth part, which is often overlooked, is the extra fees. So the licenses, you know, the bits you have to pay for a surveyor, for a geotechnical, for. And that is the bit, that fourth element is the bit that just keeps on stacking up because I’ve got a pretty fair idea of how much it costs to build a house and how much it costs to build the kind of infrastructure that we need to support the house. That wasn’t too much of a surprise. It was the extra fees and the extra costs and what you have to pay to the town hall and the licenses and the architect, and blah, blah, blah. So you have to, you know, you have to allow for, you know, for that and I had done but I was a little bit short on my estimations. I should have been an architect because obviously I would’ve been a far wealthier guy.

Alfredo: So you, there are some costs that you’ve mentioned that you would only pay or one would only, they would only incur when the project goes ahead and, right? But there must have been some of those fees that you’ve had to eat in advance before you even knew whether you were gonna fully go with this project. Is that right?

Sean: Yeah, so, you know, we have to prepare something for the market to look at and go, “Ooh.” So the, what I’ve had to fork out so far is effectively to the architect for his work on evaluating the plot and coming up with the floor plans and the section plans and the renders. So that’s what I have committed to and paid for, which, yeah, it’s a five-figure sum. It’s not nothing but, you know, I, you know, that’s what you have to do. You have to invest in the project. The next investment for us would be the geotechnical because we have the topographical, so the geotechnical and you know, any reservation would be subject to the geotechnical being satisfactory. And the geotechnical, for those who don’t know, is when they actually pile into the land to see what is there, what you’re standing on. Is it sand, is it rock? The good thing about this particular plot is it’s sandwiched between my house and another house that we actually sold as well. So you would think, bearing in mind it’s part of the same hillside, that the land would be pretty similar to the land that is underneath the two existing houses, which is good solid rock but we won’t know 100% for certain until we’ve drilled down. So what we are going to do is when we get, you know, when we’ve agreed to sell the project to a buyer, the buyer will send a deposit to a special holding account and at that stage we will do the geotechnical survey. And if the geotechnical survey is okay or within, you know, within certain parameters that is okay for us as promoters and builders. So for instance, if we’re expecting, I don’t know the, those costs to be €100,000 and it ends up that the geotechnical report says there’s something nasty there and they end up being €300,000, then we would have to go back to the buyer and say, “Okay, sorry, but our costs are considerably higher. We’re gonna have to change the price of the project. This is the new price, or you get your money back. Absolutely no problem at all.”

Alfredo: All right, so they can step out at that point?

Sean: Yeah. Yeah, yeah, absolutely. But it’s their, but basically, they’re holding it until we’ve just done that geotechnical, which can be done in a couple of weeks. But we are fully expecting, we’re 99% sure that the geotechnical is not going to deliver any nasty surprises or if it does, there’ll be surprises that we can cope with within the budget that we’ve allowed for that. So I’d be very, very surprised if the geotechnical says, you know, sorry, but you’re building on sand. And if that’s the case, then the buyer gets their deposit back.

Alfredo: Putting your agent head on for a second, what would be your advice to the buyer who is interested in a project like this? What should be their due diligence?

Sean: There’s two elements. When you are looking at it from a buyer point of view, there’s two elements. The first is the plot so you need to make sure that what we’re saying can be built on the plot can be built. And that’s just, excuse me, that’s just a check that your lawyer will do with the town hall at Benahavis. I mean, I can provide that information anyway but on each plot of land you have a coefficient on what you can build. Here in, on this plot it’s 12.2% and that is what you can build above ground and habitable. Doesn’t include terraces because they’re not considered as habitable, so we’re well within that. So your lawyer will confirm that all that is good. We’re not inventing something that can’t be built. That what we have thought of for that land is buildable and relevant and legal. And then the second point is the contract with the building company and that needs to be checked to make sure that it’s fair to both parties and that the buyer is protected in the event of anything happening. And the key thing here, it’s a bit like doing a plot and build yourself but without all the hassle. You know, whenever you, if you were to buy a plot and develop, you have those, you know, conversations with architects, with builders, you enter into a building contact. It’s pretty much exactly the same but what we’re doing is we’re taking away 90% of the pain, I would say, and we’re offering probably a similar price to what you could do it for yourself. There’s a little bit of margin in there but that’s because we’re taking away the grief. So it’s almost like a halfway house between a plot and build and paying a developer to build the whole thing for you and add their huge margin on at the end. We’re kind of in between that, which is a fairly new concept here really because normally it’s one or the other. So we’re offering that input into the design, if you wanna get involved on a month-to-month, day-to-day basis, feel free but actually we’re taking care of that. We know what we’re doing, we know what we’re building, we’re doing that. But also what we’re doing is we’re offering you a, you know, a margin almost like a joint venture, like a partner. Like you would do on a plot and build, you would build in some margin there for the buyer. Whereas with a development you don’t do that because the developer takes more of a cut, even though there’s probably a little bit more surety around the structure. We put it to market I think a few days ago. I’m just waiting on the final payment terms from the builder, that should be ready today actually, then we can put those forward ’cause we have three people very interested already but they just wanna see the, work out their cash flow. But yeah, we have three people interested. We haven’t really pushed it so I’m hoping, I’m hoping that it will go very quickly and then we’ll be onto promoting the next one. But obviously, we wanna make sure that we’re delivering on this one. We don’t wanna overstretch ourselves in any way at all.

Alfredo: Okay, well thank you very much for sharing all these ins and outs. We shall definitely reconvene in a few months time-

Sean: Oh yes.

Alfredo: and see where the story takes us.

Sean: Now, you never know, we might have the concrete base up in three months’ time. We’ll be able to stand there and do this.

Alfredo: Are you gonna have any say in who buys it?

Sean: Well.

Alfredo: Because they’re gonna be your neighbours, right?

Sean: Yeah, so once you’ve agreed to buy the project you then have to go through a vetting procedure which is like 15 interviews. No, no, no. I mean look, obviously if there’s someone who wants to buy it who is an absolute nightmare, look, I’ve gotta be honest about this, we are in control of that plot. If someone comes along and they are hillbillies with 15 children and 25 barking dogs, sorry, it’s not gonna happen. It’s not gonna happen.

Alfredo: Yeah, and you’d be doing them a favour to be fair, wouldn’t ya? Because that’s not the place for some, and the place for that sort of setup.

Sean: No, it’s not. But the people who’ve expressed an interest so far are, you know, they seem to be lovely, lovely people.

Alfredo: And are you hoping that they will invite you over for dinner in the fancy Sky Villa with some jazz in the background?

Sean: Well, I’m hoping they’ll never be there. That’s. No, I, the thing about Monte Mayor, it’s a weird, I mean, you’ve been up here, it’s a strange place. It’s very beautiful, it’s very scenic but it’s a sort of place you would expect to hear things like the occasional dog or the occasional baby. There’s nothing, it’s just silent. It’s, you know, you might hear the deer in rutting season, you know, oh my God, but that’s about it. It’s a strange place ’cause there are dogs here, you know, people, a lot of people have pets. Don’t hear a thing. So I, yeah, of course I wanna. Wow, I want to go around for a dinner party, of course I do. I mean, the problem I’m gonna have is that we built this thing and because it is spectacular. I mean, you’ll probably be showing some renders on this video but it’s gonna be a great space. And Paul and I were talking, you know, ’cause the villa we’re in, it’s very under the sea and it’s got lots of steps and blah, blah. You know, there’s gonna come a time if we make it 20 years down the line, you know, like we might be looking to that for that spectacular one level space. No maintenance. That’s the villa, isn’t it?

Alfredo: Yeah, for sure. For sure. Okay, well Sean, thank you very much for sharing all this with us. We shall keep in touch and see where this goes.

Sean: Absolutely. Look forward to it. Take care.

Alfredo: Thank you.

Sean: Thank you.