Kategora Communications Dept.
9 min read

In light of the new Wealth Tax for Large Fortunes, understanding all investment models and alternatives is essential for private capital investors: Pablo Orbegozo, CFO of Kategora Real Estate, shares key insights

Challenging times lie ahead for wealth management in Spain. The new wealth tax, officially known as the Solidarity Tax on Large Fortunes, marks a turning point in the tax planning of high-net-worth individuals.

⁣⁣This is a direct, personal tax that complements the existing Wealth Tax (IP), and it applies to individuals with net assets exceeding €3,000,000 (excluding a general exemption of €700,000, initially applicable only to personal obligation taxpayers—i.e., residents). The tax is applicable across all autonomous communities and is enforced as of December 31 of each year. ⁣⁣

In general terms, the tax rates are:

  • ⁣⁣1.7% for net assets between €3 million and €5.3 million ⁣⁣
  • 2.1% between €5.3 million and €10.6 million
  • ⁣⁣3.5% for net assets exceeding €10.6 million ⁣⁣

The amount paid is reduced by the sum already paid to the corresponding autonomous community through the Wealth Tax. Consequently, the most affected regions are Madrid and Andalusia, where a 100% rebate had previously been in place. For regions with special tax status like Navarre and the Basque Country, adaptations to their Economic Agreement are expected.

New Models and Investment Alternatives ⁣⁣

In this new context, it’s crucial for private capital investors to explore every possible investment model. As Pablo Orbegozo, CFO of Kategora Real Estate, explains: «Our deal-club model not only protects wealth from a tax perspective but also provides highly attractive returns.» ⁣⁣

Holding a stake of 5% or more in these types of economically active vehicles grants access to tax exemptions of up to 95% (even 100% in the Basque Country) on capital gains and dividends for operating legal entities—something not offered by listed securities or investment funds.

⁣⁣Additionally, a stake of 5% or more in any of Kategora’s investment vehicles may qualify as an asset linked to economic activity for operating legal entities, thus making it eligible for tax incentives applicable to “family businesses” under the Wealth Tax and the Inheritance and Gift Tax—provided all legal conditions are met.

Kategora Real Estate: Sustainable Investment, Deal Club Model, and Equity Partner Profile

⁣⁣Kategora Real Estate promotes real estate investment opportunities in Spain, particularly in urban and vacation sectors, by designing and developing modern, sustainable accommodation complexes. Their environmental responsibility approach generates broad value—for investors, clients, and society as a whole. ⁣⁣

Their real estate development activity is inseparable from their investment partners. ⁣«Our growth strategy is to identify unique opportunities and offer them to our partners, who—acting as equity partners—delegate to us the full operational management of the project, from beginning to end, » says Orbegozo. ⁣⁣

Deal-clubs: Collective Investment

For each investment opportunity, Kategora Real Estate creates a specific vehicle—a deal club—in which they always hold a minority stake of 5%-15%. New investors are brought in through several funding rounds until the required equity is secured. «We’re the first to invest in our own projects. That alignment with our investors is a guarantee of our commitment,» emphasizes Orbegozo. ⁣⁣

Each project typically lasts 3 to 4 years and concludes with delivery of the property, deed transfer of sold units, and profit distribution. ⁣⁣

Capital Needs: Tailored Strategies ⁣⁣

Depending on the type of project, Kategora Real Estate typically seeks 60%-70% leverage. Once the equity requirement is calculated, financing rounds are planned accordingly.

⁣⁣These are structured based on the project’s timelines and liquidity needs, and offered to different investor profiles according to risk appetite. «Understanding the risks associated with a real estate project is essential,» says Orbegozo, «as returns vary depending on your position within the capital structure.»

⁣⁣Choose the Best Investment Option for Your Strategy ⁣⁣

A core strength of Kategora’s investment model is its adaptability to different risk profiles and financial goals. Through modular capital structures and project-specific vehicles (deal clubs), each investor can choose when and how to join a project, and at what level of exposure.

Returns of 18%-22% ⁣⁣

At this early stage, the land purchase is still under negotiation, and the project design and licensing process is underway. Entry prices are more competitive, with significantly higher return expectations. This phase is ideal for investors seeking high-return opportunities by entering at nominal value. ⁣⁣

Returns of 15%-17% ⁣

When the land is deeded, building permits are approved, pre-sales are high, and bank financing is secured, a second funding round begins. «This phase attracts investors who still want strong returns,» says Orbegozo. ⁣⁣

To balance return expectations across investor types, Kategora Real Estate uses vehicle valuation systems (pre-money and post-money) and share premiums as legal tools. ⁣⁣

Returns of 9%-11%

⁣⁣Lastly, in its most recent investment vehicles, Kategora Real Estate has introduced a structure specifically designed for investors who prioritize security and predictability: preferred equity. This instrument is tailored for more risk-averse investors who wish to take an active stake in the vehicle’s share capital while maintaining a more conservative exposure. Preferred equity occupies a middle ground in the capital stack—ranking above common equity but below debt—when it comes to rights to dividend payments or asset distribution. ⁣⁣

In other words, these are equity holdings with preferential economic rights compared to ordinary shareholders, yet subordinate to lenders. Investors opting for this structure typically prefer a fixed, priority return ranging from 9% to 11%, rather than seeking exposure to the potential upside or capital gains generated by the vehicle.

Hybrid Investors ⁣⁣

Kategora Real Estate offers a broad range of investment instruments designed to adapt to each partner’s risk tolerance. Beyond traditional equity, the company also makes use of alternative financing solutions at strategic stages, such as mezzanine or bridge funding, particularly between the acquisition of land and the securing of senior financing. Some investors choose to combine debt and equity (yielding around 6%), which allows them to benefit from attractive average returns while also accelerating liquidity recovery.

Proven Investment Model: Success Cases and New Opportunities

In addition, once a development project is completed, Kategora Real Estate takes full charge of operating the accommodation units across short-, medium-, and long-term stays through its hotel management firm, Kora Living. The goal is to ensure a consistent and recurring return for its clients. ⁣⁣

Because these are essential real estate assets that tend to perform well in any market environment, it is common for Kategora’s investment partners to acquire multiple units in each development. This generates a net annual return of 4%–7% over the long term, excluding expenses, along with the potential upside on resale. Kategora’s main investors typically include family offices and private wealth managers who seek diversification, long-term value, and tax-efficient returns.

Success Stories ⁣⁣

Over the past year, Kategora Real Estate has successfully completed the funding rounds for its projects in Valencia, Barcelona, Andorra, Pamplona, and Alicante, even amidst a challenging investment landscape marked by a “wait and see” attitude from many institutional investors. ⁣Despite this context, interest from private capital has grown significantly, especially following the implementation of the new Solidarity Tax on Large Fortunes, which has accelerated decision-making among affected investors ahead of the fiscal year-end.

⁣⁣Kategora Real Estate’s business model is built on a 360º value proposition, combining development and operation under one unified structure. This integrated approach enables full asset management and greater investment efficiency. A prime example of this strategy is Kora Green City, a ‘Flex’ residential complex in Vitoria-Gasteiz comprising 180 units, developed under a deal-club capital structure.

⁣⁣Kora Green City was consolidated through two financing rounds totaling €4.5 million. The first round, amounting to €2.1 million, secured the land purchase option and advanced the design, permitting, and commercial phases. The second round closed swiftly, backed by over 50% pre-sales and a fully approved license. Both rounds required a minimum ticket of €300,000. The project achieved an average internal rate of return (IRR) of 21.5%, with a post-tax return of 75%, thus reinforcing the strength of Kategora’s model and its ability to generate value within competitive timeframes.

Trust, Loyalty, and Results

⁣⁣Participating in the investment vehicles promoted by Kategora Real Estate offers enhanced tax efficiency, both in terms of dividends and wealth tax. According to CFO Pablo Orbegozo, the key differentiator of this business model, confirmed through its long-term partnerships, lies in the security it offers investors by fully managing the project and maintaining complete transparency throughout the entire investment process. «In all our projects to date, we have built strong, trust-based relationships with our partners—reflected in a high reinvestment rate. Without a doubt, that trust has been a cornerstone of our growth,» the CFO of Kategora Real Estate affirms. ⁣⁣ ⁣⁣

With over 19 years of experience in cities such as Budapest, Warsaw, and Andorra la Vella, as well as major national markets including the Canary Islands, Vitoria, Barcelona, Valencia, Pamplona, and Alicante, Kategora Real Estate is now entering a new phase of expansion. The company aims to launch at least four new projects per year, providing its investors with a broad, diversified portfolio across various asset types and locations.

A Promising Future ⁣⁣

Kategora Real Estate is currently leading two flagship projects: Kora Green City in Vitoria, its pioneering ‘Flex’ complex, which has earned multiple certifications and awards positioning it among the most efficient accommodations in the world; and Kora Nivaria Beach in Tenerife, part of its ‘Beach’ collection, renowned for its sustainable, eco-friendly design. ⁣⁣

Looking ahead, Kora Tigot, also in Tenerife, with 100% of its units sold, will be the next to open. On the same island, Kora Tamaragua is now in the commercial phase, along with Kora Maresía in Lanzarote. In Valencia, Kora Lluna is set to become the city’s largest ‘Flex’ complex by 2025, with 428 apartments ranging from 20 m² to 72 m². Other upcoming openings include Kora Pamplona, slated for launch this year, and Kora Andorra, expected in 2026 and currently in its final sales phase. The company has also announced new projects in Alicante and Kora Mostra, located in the cultural heart of L’Hospitalet de Llobregat (Barcelona). ⁣⁣

Guided by the motto “invest to leave a legacy”, Kategora Real Estate currently has 3 operating projects and 13 in design or construction, with plans to manage more than 2,500 housing units by 2026. If you would like to learn more about how to apply the new wealth tax legislation to Kategora Real Estate’s projects, do not hesitate to reach out to their team.

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