Real estate investment profitability increases in Spain

Real estate investment profitability increases in Spain

Yields offered by real estate investment in housing for rental has grown to 6.3% from 5.5% a year ago, due to the greater rhythm of growth of rent charges compared to sale prices.

According to Idealista’s study, which compares sale prices and rent levels from various real estate products so as to calculate the gross profitability, commercial sites continue to be the most profitable investment. Buying a property to let out in Spain offers a gross yield of 8.5%, compared to 7.3% a year ago. Garages have registered an increase up to 6.1% (from 4.4% in 2015). Contrary to this result, offices offer a profitability of 7.6% (which was 6.7% a year ago).


Yields from housing

From among the Spanish regional capitals, Lleida and Las Palmas de Gran Canaria are those resulting in the highest yields, with rates of 7,1%. These are followed by Huelva (6.7%), Málaga (6.3%) and Alicante (6.2%). Profitability in Barcelona is 5.5%, somewhat less than Madrid (5.9%).

However, the lowest yields in Spain are those bought for rent in (3.7%), A Coruña (3.9%) and San Sebastián (4.1%). Next on the list is Lugo (4.3%).


Yields from commercial sites

Commercial sites are the most profitable in the majority of capitals. The biggest returns can be obtained in Málaga (11.1%), Alicante and Santa Cruz de Tenerife (9.4% each). These are followed by Bilbao (9.1%), Barcelona with 8.6%, and Madrid at 7.5%.

Castellón offers the least attractive prospects for the investor (at only4.7% profitability), followed by Almería (6.1%), Vitoria, Girona and Palma de Mallorca (6.3% in each of the three cases).


Office yields

Cordoba offices give the sweetest returns out of the capitals, with a gross profitability of 7.9%. Santa Cruz de Tenerife (7.1%) follows, then Almeria (7.1%) and Zaragoza (7%). In Barcelona, profitability rises to 6.5%, whilst in Madrid they have lowered to 6.3%.

On the other hand, we find the lower rates of A Coruña (4.6%), Valencia (4.9%), Santander, Bilbao and Oviedo (5.3% all three). The office market is not so uniform as in other products, and it has proved difficult to obtain statistical results from more than half the Spanish regional capitals.


Yields from garages

Garages are the least profitable product for the investor in many capitals. The greatest profitability can be found in Las Palmas de Gran Canaria (8.6%), followed by Palma de Mallorca (6.7%), Almería (5.7%) and Málaga (5.4%).

The cities with the least profit in garages are Salamanca, with 2.4%, Barcelona, with 2.7%, and Bilbao (3%). In Madrid the return is 3.4%.

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