At Urbanitae, we believe that transparency is an essential part of responsible investing. That’s why, in addition to sharing projects that meet or exceed their goals, we also explain in detail those that, for various reasons, do not progress as planned. This is the case of The Collection, a development of five luxury villas in the Cascada de Camoján area, financed in early 2023.
The initial objective of the project was to develop five high-end villas in one of the most exclusive areas of Marbella. The development, managed by Inversiones Reygonza (RGZ), offered a unique product and a solid target market in a location with strong demand for prime housing.
The estimated timelines in the original plan indicated a duration of 38 months and a target annualized return of 22.4% IRR. However, the actual project evolution was affected by external and internal factors that altered its viability and required strategic decisions to protect investors’ capital.
Licensing and Approvals: The First Major Obstacle
From the outset, the project faced a longer-than-expected approval process. The building permit, initially estimated for month 10, was not granted until April 2024, significantly delaying the schedule.
During this period, initial sales efforts failed to close transactions, reducing the developer’s ability to access bank financing and move forward with construction. Despite management efforts, the lack of commercial visibility and the overall increase in construction costs – from €8.17 million to €19 million – put the feasibility of continuing under the original conditions into question.
Market Context and Management Decisions
The macroeconomic environment also had a significant impact. Throughout 2023 and 2024, the sector experienced rising material costs and high interest rates, limiting promoter credit even for projects in prime locations.
In addition, differences of opinion among partners regarding the final design and scope of the villas made alignment necessary to start construction difficult.
Faced with this situation, Urbanitae decided to intervene proactively, evaluating different alternatives to protect investors’ interests. After analyzing various scenarios, it was decided not to continue the development under existing market conditions and to seek an orderly exit.
A Favorable Resolution for Investors
The agreement reached, approved in the Shareholders’ Meeting, allowed investors to recover their capital plus a profit, equivalent to a 3.3% IRR and a 9.39% gross cash-on-cash return.
Although these results are far below the initially projected 22.4% IRR, the management avoided exposing capital to a high-risk scenario and allowed the operation to close with positive returns and no losses.
As the closing report states: “Although the project did not proceed according to the initial plan, the management carried out allowed the operation to be resolved satisfactorily, ensuring a positive return for investors and avoiding the risks associated with development under particularly complex market and financing conditions.”
Commitment to Transparency
The case of The Collection clearly illustrates Urbanitae’s role as an intermediary and protector of investor interests. The priority is always to safeguard capital, even if that means forgoing potentially higher returns to avoid risky scenarios.
Every project at Urbanitae undergoes a thorough analysis before publication and is monitored throughout execution. When conditions change significantly—whether due to administrative delays, cost overruns, or market deviations—the platform acts to find the best possible alternative, always with the manager’s consensus and investors’ approval.
Cases like this, or the previous Adaptis project, reflect the importance of maintaining clear communication and a decision-making framework oriented toward prudence. Investing in real estate carries risks, and part of Urbanitae’s commitment is to explain, manage, and provide transparent information at every stage of the process.
A Responsible Closing
The project The Collection did not achieve the expected returns, but it did preserve invested capital and generate a positive return, demonstrating that even in adverse scenarios, active and prudent management can make a difference.
At Urbanitae, we remain committed to offering diversified investment opportunities, analyzed and managed with rigor, as well as maintaining transparent communication on the results of each project, whatever they may be.
