Spain: Higher profits to rent out property

Spain: Higher profits to rent out property

Spain: Higher profits to rent out property

According to Spanish rental property website, fotocasa.es, Madrid, Catalonia and Canary Islands are the autonomous communities in Spain that are the most profitable to purchase property and later rent out, and now offer higher profits than in previous years.

The site has estimated that it would take a property owner one year less than it would have in 2014 to recover their investment. The average amount of time that it would take in 2015 for a property owner to recover the amount is 19.4 years.

SPANISH RENTAL PRICES INCREASING AT FASTER RATE

This study comes as real estate in Spain continues its recovery following the economic crisis, possibly due to increasing access to financing: Spain’s economists have already predicted a 3.2% GDP growth in 2015. Experts say that profitability of renting out property is on the rise due to the fact that the cost of housing is recovering at a slower rate when compared to the cost of renting. This of course makes purchasing property and then later renting it out more profitable than in previous years.

The Balearic Islands also form part of one of the more profitable regions, and this could be due to increased interest from the UK and northern European property buyers who often purchase property in Spain’s coastal and island regions.

PROFITABILITY VARIATION THROUGHOUT SPAIN

An annual return on Spanish property to purchase and later lease in 2015 is set at 5.2%, a slight increase from last year’s figure which was 5% and lower still in 2013 at 4.8%.

To put these figures into perspective, according to the study, an area with a faster investment return such as Canary Islands would take an average of 18.1 years to recover the investment. However, in one of the regions with one of the lowest profitability returns such as Galicia, this length of time increases to 24.8 years. The Basque Country in the north of the Iberian Peninsula joins Galicia as one of the regions offering the lowest profitability rates to buy and then rent out.

According to a study by Easy Piso, another online platform offering Spanish rental properties, the price average for renting out rooms in Spain has risen by 4% to 303€ per month in the third quarter of  this year with an average increase of 20€ per month in Malaga, Madrid and Barcelona. Unsurprisingly, Ibiza, Madrid and Barcelona are the most expensive cities in Spain to rent property.

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