2023-07-02 09:31:13
The Spanish real estate market is very fragmented. In the case of housing, there are several speeds: large cities, such as Madrid or Barcelona, where prices are much higher than other areas, such as those of the so-called ‘Empty Spain’. In the most dynamic provinces, sales and rental prices have increased a lot in recent years, exceeding the figures reached before the bursting of the housing bubble, in 2008.
The Average profitability for renting a house in Spain is 6.78%according to the calculations made by this newspaper based on those published by the real estate portal Idealistic. As in other investment markets, here too there is the risk-return binomial. In general terms, buying a home to use it for rent is much more profitable in provinces where the market is less dynamic.
“Rental prices have a ceiling, while those for sale do not, as they have the possibility of be financed. Although generalizing in the real estate market is always wrong, it often causes markets with higher sales prices have lower rental yieldsas is the case in San Sebastián, Palma or Barcelona”, explains Francisco Iñareta, spokesman for the real estate portal.
What are the most profitable provinces?
Cuenca is the most profitable province to buy a home and use it for rent. A typical two-bedroom, 75-square-meter apartment costs 58,575 euros and is rented for 450 euros per month, giving a gross annual return of 9.22%, according to Idealista. Toledo and Ciudad Real They occupy the second and third place in the ranking of most profitable provinces, with a gross annual return of 9.18% and 9.13%, respectively.
Outside this region, the Valencia province is the fourth most profitablewith a average gross return of 8.83%. In this there is a big difference between the capital and the rest of the municipalities.
With a return above 7%, the number of provinces increases: León (7.95%), Seville (7.81%), Badajoz (7.75%), Cantabria (7.66%), Burgos (7, 63%), Granada (7.62%), Salamanca (7.59%), Soria (7.48%), Guadalajara (7.46%), Albacete (7.46%), Almería (7.38% ), Córdoba (7.31%), Cáceres (7.3%), Zaragoza (7.23%), Lugo (7.19%), Asturias (7.13%), Las Palmas (7.12%) , A Coruña (7.09%), Castellón (7.09%), Barcelona (7.09%).
What are the least profitable provinces?
The Balearic Islands (4.86%), Guipúzcoa (4.97%), Málaga (5.39%) and Madrid (5.8%) are some of the provinces less profitable to rent in Spainto. Because? They are the ones that have the greatest dynamism by attracting a lot of economic activity and tourism. In the case of the archipelago, the prices reached during the bubble have recovered. Among the least profitable is also Murcia (4.72%) or Álava (5.51%).
Gross return is not equal to net return
Profitability is linked to risk: more risk, higher return, and lower risk, lower return. Therefore, markets with tighter returns are safer. The properties are more liquid, they sell faster, or the markets are more dynamic, if the property remains empty it is easier to rent it again.
Also the areas where the monthly payment is higher gives more peace of mind to the investor when facing maintenance of the house. It is not the same as having to replace the boiler in a flat in Cuenca, where the tenant pays 300 euros a month, than doing it in Madrid, where he pays more than 600 or 700 euros.
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