Environmental assessments for real estate development

Environmental assessment is a legal process designed to identify and evaluate the effects of plans and projects on the environment before they are approved. In the Canary Islands, with extensive protected areas and sensitive ecosystems, it frequently shapes whether and how real estate development can proceed.

Two levels of assessment

• Strategic environmental assessment applies to plans and programmes, such as planning instruments that enable development.
• Environmental impact assessment applies to specific projects that meet certain thresholds or affect sensitive areas.

Spanish national legislation (principally Ley 21/2013 de evaluación ambiental) sets the framework, supplemented by regional rules. Whether a particular project needs ordinary or simplified assessment depends on its characteristics and location.

Why it matters to investors

• Timing: assessment can add months or more to a development schedule.
• Conditions: approval may impose design changes, mitigation measures or monitoring obligations with cost implications.
• Challenge risk: planning approvals and licences may be challenged on the ground that assessment was missing or deficient.
• Protected areas: proximity to designated natural spaces or habitats can trigger additional requirements.

Questions to ask

• Did the planning instrument enabling the project undergo strategic assessment?
• Does the project itself require assessment, and has it been completed?
• What conditions were imposed and are they being complied with?
• Are any approvals subject to pending administrative or judicial challenge?

Hypothetical scenario: the example below is invented for illustration. It does not describe any real property, project, company or person. An investor considers funding a resort extension. The licence is in place, but the environmental conditions require habitat monitoring and a reduced building footprint not reflected in the business plan. The financial model is revised before funds are committed.