Buying a house in Spain and then renting it out yields slightly less profit than a year ago. This is the result of a study by Spanish real estate platform Fotocasa ‘La rentabilidad de la vivienda en España en 2021′.
Gross revenues were estimated at 6.45% in the third quarter of the year by renting out your property. This is 0.6% lower than the same period last year. However, compared to 5 years ago, it is up 1.2% (5.2% in 2016) and 2.2% higher than 10 years ago (4.3% in 2011).
‘The increase in profitability is a trend that repeats itself year after year, with the exception of 2021. From the beginning of that year, there was a decline in rents. However, the economic benefit of buying homes and then renting them out is higher than in 2019. In fact, it is higher than in the past five years and also higher than in the past decade. The figures for this third quarter are therefore very positive. Also, they are considered very productive by investors,’ explains María Matos, director, and spokesperson of Fotocasa.
Real estate as a haven
Matos adds that real estate investments have become a refuge from the uncertainty caused by the health crisis. Since the start of the pandemic, houses have risen by 5%. ‘Many individuals have taken the plunge to invest. Because they see the property market as safe after the positive development and recovery from the pandemic. ‘This is why we launched ‘Fotocasa Inversión‘. It´s a new information portal for small investors who are betting on housing as a safe investment value. Moreover, it is very likely that this performance figure will improve in the coming year,’ said Matos.
Differences per sub-region
Rental income varies by autonomous community. Fotocasa’s research shows that six regions have profitability equal to or higher than the Spanish average (6.8%). They are: Murcia (7.9%), Navarra (7.2%), region Valencia (7.1%), Catalonia (6.6%), Canary Islands (6.5%) and Cantabria (6.4%). Below average are the communities of Balearic Islands (5.0%), Madrid (5.2%), Galicia (5.4%), Basque Country (5.6%), Extremadura (5.8%), Andalucia (5.9%), La Rioja (6.0%), Castile and León (6.0%), Asturias (6.1%), Aragon (6.2%) and Castile-La Mancha (6.3%).
Profitability by municipality
The study also provides profitability data by municipality. This analysis shows 21% of the municipalities surveyed (100 municipalities in total) have profitability levels equal to or higher than the average for Spain (6.4%).
The profitability in the coastal municipality of Gandía (province of Valencia) has increased from 4.5% to 8.9% in 10 years. Therefore, making it the most profitable municipality in Spain in the third quarter of 2021. Lerida (Lerida) follows with 7.7%, Agüimes (Gran Canaria) with 7.6%, Algeciras (Cadiz) with 7.3%, Manresa (Catalonia) with 7.2%, Cartagena (Cartagena) with 7.2% and Jerez de la Frontera (Cadiz) with 7.2%.
The 10 least profitable cities in the country are: Donostia – San Sebastián (Gipuzkoa) with 3.7%, Sant Cugat del Vallès (Barcelona) with 3.8%, Santiago de Compostela (A Coruña) with 4.0%, Pozuelo de Alarcón (Madrid) with 4.1%, Getxo (Vizcaya) with 4.1%, Estepona (Málaga) with 4.2%, Barcelona capital with 4.3%, Fuengirola (Málaga) with 4.3%, Sitges (Barcelona) with 4.4% and A Coruña capital with 4.4%.
Profitability by district
The property portal’s analysis also provides data on the most profitable districts for buying and renting a property in Spain. The ranking is headed by the North district of Granada city, with a profitability of 8.4%, followed by the Cerro Amate district in Seville with 8.2% and the Pla Carolinas in Alicante with 8.1%.
The areas with profitability below 3% are El Sardinero in Santander with 2.7%, and Centro in Donostia-San Sebastián with 2.8%. As for the capital Madrid, the Villaverde district has increased from 6.8% to 7.8% profitability in 5 years, making it the most profitable district in Madrid in the third quarter of 2021. Puente de Vallecas follows with 7.1%, followed by Usera with 6.5%, Carabanchel with 6.1%, Latina with 5.8%, Villa de Vallecas with 5.5%, Moratalaz with 5.0%, Vicálvaro with 5.0% and San Blas with 5.0%.