Explore Spain’s top cities for rental real estate investment, boasting an average gross return of 5.9%. Uncover lucrative opportunities in real estate.

As of the conclusion of November, the average gross return on Spain real estate investment has reached an intriguing 5.9%. This figure, while slightly elevated from the previous month’s 5.87%, remains a tad shy of the 6.1% recorded a year prior. The current trajectory indicates a modest resurgence in profitability following a protracted period of decline, yet it still lingers below the 6% threshold. 

The burgeoning prices of residential properties for sale may catalyze an uptick in rental rates, particularly as new buyers, motivated by investment potential, seek to capitalize on their acquisitions through the rental market. To illustrate, consider the average purchase price of a standard 90 m² residence in Spain, which stands at approximately €218,160 (equating to €2,424 per m²). With the average monthly rent hovering around €1,073, a property owner could anticipate a gross annual income of €12,884, translating to a commendable gross return of 5.90%. However, it is imperative to note that this profitability is not uniform across the nation; returns can oscillate dramatically, ranging from a robust 7.33% to a meager 3.2%, contingent upon geographic location and property type.

Zamora emerges as the most lucrative provincial capital for prospective landlords, boasting an impressive return of 7.33%. It is joined by Lleida (7.33%), Teruel (7.21%), Ávila (7.06%), Segovia (7.01%), and Castellón de la Plana (7%), all of which surpass the 7% mark. The list of attractive markets continues with Ciudad Real (6.93%), Córdoba (6.89%), Tarragona (6.79%), and Huelva (6.71%).

Conversely, the cities with the least favorable returns include Donostia – San Sebastián (3.20%), Palma de Mallorca (4.23%), Pamplona (4.50%), and Madrid (4.59%), among others. Notably, the two principal provincial capitals have exhibited slight fluctuations since October; Madrid has seen a modest increase from 4.54% to 4.59%, while Barcelona has experienced a decline from 6.63% to 6.48%.

Experts in the field emphasize that potential investors must meticulously consider various factors prior to committing to a real estate venture. These considerations include the acquisition cost, anticipated rental income, associated charges and taxes, as well as ongoing maintenance expenses. In the intricate dance of Spain real estate investment, knowledge is indeed power, and a well-informed investor is likely to navigate the complexities of the market with greater success.