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February 3, 2017

Profitability of investment in the residential real estate in Spain increased

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Investments in residential properties of any type in Spain recorded a higher rate of profitability at the end of 2016 than the previous year, according to the analysis of the portal Idealista. Besides, even in the worst cases, these rates are four times higher than the purchase of 10-year government bonds that offer only 1.4% of annual return. In addition, the return on investment of the residential real estate in Spain for its later rent increased to 6.3% from 5.5% in the previous year, due to higher growth of rental prices in relation to sale prices of apartments and houses in Spain.

According to data from the study, which compares the sale and rental prices of different types of residential properties in Spain for the calculation of its gross profits, commercial areas remain the most profitable investment in the Spanish real estate sector. While buying a home in Spain for its later rent represents a gross profit of 8.5%, compared to 7.3% in 2015. At the same time, garages have registered an increase till 6.1% (from 4.4% in 2015), when commercial premises and offices offer a gross margin of 7.6%, a year ago this figure was 6.7%.

Among the capitals of the Spanish provinces, Lleida and Las Palmas de Gran Canaria are the most profitable in terms of buying a property in Spain for investment, with rates of 7.1% of gross profit. They are followed by Huelva (6.7%), Malaga (6.3%) and Alicante (6.2%). In Barcelona, ​​the profitability of houses and apartments for rent is about 5.5%, which is slightly lower than the index in Madrid (5.9%).

However, the lowest profitability of rented real estate in Spain is obtained by property owners in Orense (3.7%), in La Coruna (3.9%) and in San Sebastian (4.1%). In this group is also included Lugo (4.3%). Renting a home in these Spanish cities will be more economically beneficial for all interested.

At the same time, the profitability of commercial premises is higher in most capitals of the Spanish provinces. The maximum rent is obtained in Malaga (11.1%), Alicante and Santa Cruz de Tenerife (9.4% in both cases). These premises are followed by those which are located in Bilbao (9.1%), Barcelona (8.6%) and Madrid (7.5%).

Castellon offers commercial premises for rent, but with less attractive conditions for investors (only 4.7% of gross profitability). Followed by Almeria (6.1%), Vitoria, Girona and Palma de Mallorca (6.3% in all three cases).

The office market in Spain shows the following information. Offices in Cordoba have some of the most attractive parameters for investors, that is, gross profitability of 7.9%. The offices located in Santa Cruz de Tenerife (7.1%), Almeria (7.1%) and Zaragoza (7%) follow them. In Barcelona, ​​their margin is about 6.5%, while in Madrid it reaches 6.3% of gross profit. On the opposite side in this case are located La Coruna (4.6%), Valencia (4.9%), Santander, Bilbao and Oviedo (5.3% in all three cases).


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