Explore Spain’s top cities for rental housing investment, boasting an average gross return of 5.9%. Discover why Spain remains attractive for real estate investors.

As of the end of November, the average gross return on rental real estate investments in Spain has reached a commendable 5.9%. This figure, while slightly elevated from the previous month’s 5.87%, still lags behind the 6.1% recorded a year prior. The landscape of real estate investment in Europe reveals that Spain, despite its challenges in profitability, continues to enhance its allure for real estate investors.

Investment in residential properties remains a favored avenue for small savers eager to maximize their capital. According to recent data from pisos.com, the upward trend in profitability, albeit modest, signals a potential shift in the market dynamics. The rising prices of homes for sale may indeed catalyze an increase in rental rates, as new buyers often seek to capitalize on their acquisitions through leasing.

To illustrate, consider the typical 90 m² residence in Spain, which commands an average purchase price of €218,160 (equating to €2,424 per m²). With the average monthly rent pegged at €1,073, property owners can anticipate a gross annual income of €12,884, translating to a gross return of 5.90%. However, this percentage is not uniform across the nation; it fluctuates significantly based on geographical location and property type, with returns ranging from a robust 7.33% to a modest 3.2%.

Zamora emerges as the most attractive provincial capital for prospective landlords, boasting an impressive return of 7.33%. Other cities that surpass the 7% threshold include Lleida (7.33%), Teruel (7.21%), Ávila (7.06%), Segovia (7.01%), and Castellón de la Plana (7%). Following closely are Ciudad Real (6.93%), Córdoba (6.89%), Tarragona (6.79%), and Huelva (6.71%).

Conversely, the cities yielding the lowest returns are Donostia – San Sebastián (3.20%), Palma de Mallorca (4.23%), Pamplona (4.50%), Madrid (4.59%), Cádiz (4.61%), Soria (4.65%), Malaga (4.72%), A Coruña (4.75%), Granada (4.94%), and Valladolid (4.96%). Notably, the two principal provincial capitals have experienced slight fluctuations since October; Madrid’s return has risen from 4.54% to 4.59%, while Barcelona has seen a decline from 6.63% to 6.48%.

Experts caution potential investors to meticulously consider various factors before diving into the Spain real estate market. Key considerations include the purchase price, anticipated rental income, associated charges and taxes, as well as ongoing maintenance costs. In the intricate dance of real estate investment, knowledge is indeed power, and a well-informed investor is likely to waltz away with the best returns.