23 July 2015 – El País
Investment in real estate in Spain are more profitable now than it was a year ago, according to a report published by Idealista about the second quarter of the year. And even in the worst of cases, the return on property is twice as high as the yield currently offered on 10-year State Bonds (2%).
Retail premises continue to represent the most attractive real estate investments. In fact, buying a shop or store to let in Spain now generates a gross yield of 7.6%, compared with 6.2% a year ago. The highest returns are obtained in Córdoba (9.2%) and Granada (8.5%), followed by Las Palmas de Gran Canaria (8.3%), Málaga (8.1%) and Zaragoza (8%). Yields in Madrid and Barcelona amount to 7.6% and 7.5%, respectively. Castellón offers the least attractive premises for investors (with an average return of just 4.6%), followed by Salamanca (5.3%) and Cádiz (5.6%).
By contrast, garages offer the lowest yields – they ended the second quarter of 2015 with an average return of 4.6%, up from 3.6% in June 2014. Even so, the returns are still more attractive than those offered by 10-year bonds. The highest yields on garages are obtained in Toledo (5.3%), followed by Las Palmas de Gran Canaria (5.3%), Santa Cruz de Tenerife (5.3%) and Pamplona (5.1%). The towns with the least profitable garages are A Coruña (1.6%), Barcelona (2.3%) and Salamanca (2.6%). The yield on garages in Madrid is 3.3%.
Investment in buy-to-let housing has increased over the last twelve months. Such properties offered a gross return of 5.5% at the end of the second quarter versus 4.9% twelve months ago. Lleida is the most profitable of the Spanish capital cities, with an average return of 7.8%. It is followed by Las Palmas de Gran Canaria (6.2%), Palma de Mallorca (5.8%), Huesca (5.7%) and Huelva (5.7%). The rental yield in Madrid is 5%, just above that of Barcelona (4.8%). Nevertheless, the lowest yields in Spain are those received by the owners of rental properties in Ourense (3.3%), A Coruña (3.6%), San Sebastián (3.8%) and Lugo (4%).
Offices generate an average yield of 6.3%. Offices generate the highest returns in Vitoria, where the gross average yield stands at 7.5%. It is followed by Sevilla (6.6%), Santa Cruz de Tenerife (6.5%), Zaragoza (6.3%) and Las Palmas de Gran Canaria (6.1%). In Barcelona, offices yield a return of 5.8%, whilst in Madrid they average 5.6%. At the other end of the scale are the returns in Valencia (4.8%), A Coruña (4.9%) and Alicante (4.9%). The office market is not as uniform as those of other products, and so it is impossible to obtain statistical data about more than half of the Spanish capital cities.
For the preparation of this study, Idealista has divided the ‘average sales price offered’ by the ‘rental price asked by owners’ in different markets for the quarterly indices of homes, retail premises, garages and offices relating to the second quarter of 2015. The result obtained is the percentage gross yield that owners earn from letting out their homes.
Original story: El País
Translation: Carmel Drake