Average rental returns increase y-o-y
Buying a property in Spain and putting it out to rent seems to increase in profitability year on year. This is according to analysis by property portal fotocasa.
Their data shows that the annual profitability that can be obtained from renting out a property is currently 5.3%. In 2015 it was 5.2%, in 2014 it was 5% and in 2013 the profitability was 4.8%.
Communities
By autonomous community, the most profitable for owners to rent their property are Catalonia, Murcia, the Canady Islands and Madrid. In Catalonia, the average return is 6.1% (compared to 5.4% in 2015). In Murcia the average return is 5.7% (5.1% in 2015.) Renting out your property on the Canary Islands will generate an average return of 5.6% (5.5% in 2015), while in Madrid you can expect an average return of 5.6% (5.2% in 2015). It is interesting to note that the Canary Islands have dropped from being the most profitable in 2015 to placing third in 2016.
Galicia, the Basque Country, Cantabria and Asturias, although offering positive returns, are lower than the average. Those communities have average returns of 4.1%, 4.6%, 4.8% and 4.8%, respectively.
Beatriz Toribio, Head of Studies at fotocasa, explains “One of the engines of the reactivation that is taking place in the real estate market is the appetite of medium and large investors, who buy housing in Spain not with a speculative eagerness like before, but in search of the high returns offered by the rental market. This market has a lot of movement in Spain and in the context of low interest rates and the absence of high returns in the financial markets, it seems like a safe bet.”
Cities
The fotocasa data also shows the profitability of renting in the 20 largest cities (by population). Hospitalet de Llobregat, Las Palmas de Gran Canaria, Cordoba and Palma de Mallorca are the most profitable. In those cities, you can expect an average rental return of 6.3%, 5.6%, 5.4%, and 5.4%, respectively.
The least profitable cities for owners renting their property are A Caruña (3.6%) and Vigo (4.2%). Bilbao and Granada both have an average return of 4.5%.
