The Spanish real estate market is very fragmented. When it comes to housing, there are a few paces: big cities like Madrid or Barcelona where prices are much higher than in other areas like those in so-called ‘Empty Spain’. Sales and rental prices increased significantly in the most dynamic provinces. In recent years, it has risen above the figures before the 2008 housing bubble burst.
This The average profitability of renting a house in Spain is 6.78%., according to calculations made by this newspaper based on those published by the Idealista real estate portal. Here, as in other investment markets, risk-return binomial. In general, it is much more profitable to buy a house for rent in provinces where the market is less dynamic.
“There is a ceiling for rental prices, while sales have no ceiling because there is financing. While it is always wrong to generalize in the real estate market, it is often markets with higher selling prices have lower rental returnslike in San Sebastián, Palma or Barcelona,” explains Francisco Iñareta, spokesperson for the real estate portal.
Which provinces are the most profitable?
Cuenca most profitable province to buy a house and use it to rent it. According to Idealista, a standard two-room apartment of 75 square meters costs €58,575 and is rented for €450 per month with a gross annual return of 9.22%. Toledo and Ciudad Real In the ranking of the most profitable provinces, they rank second and third with a gross return of 9.18% and 9.13%, respectively.
Outside this region, The province of Valencia is the fourth most profitableTogether average gross return 8.83%. There is a big difference in this between the capital city and other municipalities.
The number of provinces is increasing with a return of over 7%: Leon (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%), Almeria (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%).
Which provinces are the least profitable?
The Balearic Islands (4.86%), Guipúzcoa (4.97%), Málaga (5.39%) and Madrid (5.8%) are some of the states. less profitable to rent in Spain. Because? They are the ones with the greatest dynamism, attracting a lot of economic activity and tourism. In the case of the archipelago, the prices reached during the bubble have recovered. Murcia (4.72%) or Álava (5.51%) are also among the least profitable.
Gross return does not equal net return
Profitability is linked to risk: more risk, higher return and lower risk, lower return. Therefore, markets with tighter returns are safer. Properties are more liquid, sell faster, or markets are more dynamic, and it’s easier to re-lease if the property is vacant.
Moreover Areas with higher monthly payment provides greater peace of mind to the investor when faced with maintenance your house. Replacing the boiler for an apartment in Cuenca, where the tenant pays 300 euros a month, is not the same as doing it in Madrid, where it pays more than 600 or 700 euros.
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