Renting homes in Alicante has become more profitable than it was in 2019, even before the pandemic reshaped markets. A study by Euroval and the Instai Real Estate Analysis Institute shows that the average yield in 2022 reached 6.1 percent. This marks an increase of half a point from the previous year and a tenth higher than the four-year average. The growth in profitability came on the back of about a 15 percent rise in rental prices in 2022, although the surge in home prices tempered overall results.
The rental market in Alicante continues to deliver solid returns for property owners. The published report compares the province’s average total housing price with the average housing prices reported by the Ministry of Transport, Mobility and Urban Agenda. The data indicate a notable uptick in rents in 2021 and 2022, underscoring tightening price dynamics in this region.
Compared with pre-pandemic levels, yields remain elevated, and the gains are more pronounced when set against 2020, when the yield was 5.6 percent, and 2021, when it reached 5.3 percent.
Nevertheless, the report cautions that the profitability of leasing is still weighed down by the rapid increase in buying prices. While rents stayed lower than purchase costs, the gap widened, limiting overall profitability. The study explains that profitability stems from the ratio of rental price to house price, meaning rents can appear high or low, but the gross profitability largely reflects the house price in the denominator.
Last year, the province reported an average annual rental price of 9,405 euros. This figure reflects a near 15 percent jump in profitability versus 2021, yet it is partly offset by a 6 percent rise in the average house price to 155,023 euros in 2022.
The report acknowledges the paradox at play. Over long periods, rents tend to rise faster than broader housing prices, which can squeeze profitability. Yet the authors note that 2022 defied this tendency, with rents outpacing the growth in housing prices in Alicante.
Rental price increased by 7.2% in the province of Alicante
In the broader Valencian Community, Valencia province is the standout for rental profitability, recording an average annual yield of 8.3 percent. Castellón follows with an average profitability of 7.6 percent. Across all three provinces, profitability surpassed the national average of 5.8 percent in 2022.
Citation: Euroval and the Instai Real Estate Analysis Institute report on rental yields in Alicante and the Valencian Community, 2022.