Investment in CRE Duplicates Return of 10-Year Bonds

23/04/2014 – El Confidencial

Buying commercial real estate in Spain with view to lease it can bring up to 6.3% gross return, the latest report drawn by portal Idealista.com says. It bases on analysis of relation between sales prices and rent by examining each product type.

It turns out that the yield coming from renting trading premises is much higher than returns offered by offices (5.6%), residential (4.7%) or garages (3.6%). Still, any of these wins in comparison with state-issued, 10-year bonds with mere 3.3%.

Premises

Trading premises offer the best returns in large majority of Spanish cities. They hit highest in Cordoba (11.1%) and Pamplona (8.1%), followed by Ourense (7.8%), Leon (7.6%), Alicante and Logroño (both 7.4%). Barcelona gives 7%, while Madrid allows a 6.7% profit. Premises in Girona are the least attractive for investors (only 5%), as well as those in Salamanca (5.2%) and in Castellon de la Plana (5.3%).

Residential Real Estate

Among all Spanish capitals, Lleida brings top 6.3% profits. Next there are Las Palmas de Gran Canaria (5.2%), Huesca (5.1%), Huelva (4.8%), Alicante and Cordoba (both 4.7%). In Madrid, investors may gain a 4.2%, whereas in Barcelona a 4.1% yield.

On the other side, the landlords in Ourense (3.2%), San Sebastian (3.2%), A Coruña (3.3%) and in Santander (3.5%) receive the poorest returns.

Office Spaces

Not only the offices found in Vitoria tempt with 9.1% gross returns, but also the product located in A Coruña (6.7%), Palma de Mallorca (6.4%) and Santa Cruz de Tenerife (6.4%). In Madrid and Barcelona the yield posts 5.6%.

Santander (4.4%), Alicante (4.8%) and Valladolid (5.1%) score lowest. The office market is not uniform, therefore obtaining data from more than half of Spanish capitals casts a serious challenge.

Garages

Garages are the products bringing the smallest returns in many large cities. In fact, in 13 capitals it is even lesser than the yield offered by the state 10-year bonds. They rank as follows:  A Coruña with a 2.5% return, Vitoria with 2.6%, San Sebastian, Salamanca and Granada with 2.7% each, and Madrid with 2.9% profits.

The biggest yield receive garage owners in Almeraa (6%), Pamplona (5.4%), Santa Cruz de Tenerife (5.2%) and in Barcelona (3.5%).

 

 

Original article: El Confidencial (by E. S.)

Translation: AURA REE

 

55