Many people buy a house as an investment to rent it out. It is a way for small investors to get the maximum return from their savings. But in which Spanish cities does such an investment yield the most?
At the end of last year, the gross return on homes was 6.4%, a slight decrease compared to the previous year. The fourth best figure since 2016 and the return is higher than that offered on government bonds or bank deposits. However, according to El Economista, there are considerable differences between different areas: the most attractive yields a return of more than 10% and the least interesting remains below 4%.
Highest return of 10.7%
Anyone who wants to invest in a home to rent out must take into account the amount and price at which the home is rented, the charges and taxes of operation and, among other things, the maintenance costs. According to a study by Portal Inmobiliario, which examined 132 municipalities, almost half of the municipalities offer a profitability equal to or higher than the Spanish average.
Also read: More return on real estate through tourist rentals in Spain
The Valencian coastal town of Gandía is the only one with a return of more than 10%. The return has risen from 4.8% to 10.7% over the past ten years and is the most attractive municipality for investors for the fourth year in a row.
Gandía is followed by:
- Laredo in Cantabria (9.7%),
- La Manga del Mar Menor in Murcia (9.7%),
- Lucena in the province of Córdoba (8.9%),
- L’Hospitalet de Llobregat in Barcelona (8.7%),
- La Línea de la Concepción in Cádiz (8.3%),
- Talavera de la Reina in Castilla La Mancha (8.3%),
- El Ejido in Almería (8.2%),
- Algeciras (8.1%),
- Molina de Segura in Murcia (8.0%).
Investing in bricks
Bricks and mortar remain the safest and most profitable investment on the market. This makes it the financial product with the highest profit opportunities. Many savers focus on such an investment in times of economic uncertainty. The number of buyers of a house as an investment has doubled in recent years.
According to El Economista, the slight decrease in returns is due to the fact that house prices have risen more than rental prices. However, rental prices have also risen, so the return on buying and renting a home has remained positive.
Lowest returns
The municipalities examined with the lowest returns in Spain are:
- Ibiza (3.7%),
- Getxo in Biscay (3.9%),
- Donostia – San Sebastián (4%),
- Benahavis in Málaga (4.1%),
Sant Cugat del Vallès in Barcelona (4.3%), - Calvià on Mallorca (4.4%),
- Marbella (4.5%),
- Orihuela in Alicante (4.5%),
Santiago de Compostela (4.5%), - Pamplona (4.5%)
- A Coruña (4.6%).
- The city of Madrid also does not exceed 5%, with an average yield of 4.7%.
What are the most interesting autonomous regions?
Fotocasa made an analysis of the return on housing in the autonomous regions and concluded that it has increased in 12 areas. In seven of these autonomous regions the value is even equal to or higher than the national Spanish average. The most interesting regions to invest at the moment are: Comunitat Valenciana (7.9%), Región de Murcia (7.4%), Cantabria (7.3%), Castilla y León (7.0%), Catalonia (6.9%), Asturias (6.8%) and Navarra (6.4%)
The autonomous regions that are below average are:
- Aragon (6.3%),
- Extremadura (6.3%),
- Canary Islands (6.3%),
- Castilla-La Mancha (6.3%),
- Andalusia (6.1%),
- Galicia (6.0%),
- Basque Country (6.0%),
- La Rioja (5.9%),
- Madrid (5.5%)
- Balearic Islands (5.3%).
Also read: These Spanish destinations in the top 20 for buying luxury holiday homes
