To invest in properties and then renting them out is a popular investment option among Spaniards. Both small and large savers want to get the most out of their money.
According to the latest data from the Spanish real estate portal pisos.com, the gross rental yield – without deduction of costs – was 6.7% at the end of January 2014. The figure for the same month last year shows a slight decrease at 6.30%.
Nevertheless, the return remains in line with that of December last year. Then it was 6.17%. The yields vary from city to city. According to calculations by the real estate portal, the average yield is just over €12,100 for buying and then renting out a property. That is assuming an average price of a 90 m2 apartment of €196,290 (€2,181/m2), and an average monthly rent of €1,009. However, the return can vary quite a bit. It depends on the region or city you want to invest in.
The most attractive cities to invest in
The most attractive returns – and higher than the national average – are those of Lleida (7.80%), Murcia (7.67%) and Ávila (7.63%). They are joined by Zamora (7.29%), Ciudad Real (7.13%), Jaén (7.03%), Almería (6.96%), Valencia (6.81%), Huesca (6.79%) and Las Palmas de Gran Canaria (6.65%).
Below average, but also with attractive returns are Oviedo (6.13%), Seville (6.06%), Burgos (6.05%) and Tarragona (5.92%). In contrast, the provincial capitals with the most modest returns are San Sebastian (3.37%), Pamplona (4.43%), Bilbao (4.67%), Madrid (4.70%), Palma de Mallorca (4.84%), Cádiz (4.85%), A Coruña (4.89%), Girona (4.97%), Granada (5.14%) and Leon (5.23%).
“The current context means that we are seeing a clear decline in the profitability of the two major Spanish provincial capitals. Barcelona drops from 18th place in the ranking to 20th, with a profitability of 6.31%. Madrid goes from 45th to 47th, with 4.70%,” explains Ferrán Font, director of research at pisos.com.
Return on investment when renting out a house
According to the real estate portal’s forecast, rental profitability will remain at current levels, “in line with the cooling and moderation that the entire sector is experiencing in general”. In addition, he adds that “we will have to wait until later this year to see if the trend changes and there is some kind of rebound”.
Things to consider when investing in homes
The experts remind us that anyone who wants to invest in housing must take into account the amount and price at which the property will be rented, the costs and taxes involved in its operation and the cost of maintenance.
Also read: Bargain properties in Spain
