Rental Yield on Homes, Retail, Offices & Garages Rises in Third Quarter

31/10/2014 – Idealista

Buy-to-let scheme in Spain becomes more and more profitable to investors, claims portal In the third quarter of 2014, all real estate products scrutinized by the leading property web site showed yields higher than in the previous quarter.

As per the report, which compares sale and rental prices of different products to obtain a gross yield on each of them, shops remain the most lucrative assets. Buying it to let gives back 7%, while assets like offices, residential or garages return 6.4%, 5.3% and 4.6% respectively. Still, real estate investments offer higher yields than 10-year governmental bonds (2.2%).

Quarter-on-quarter, yield on garages rose most, by 100 bps. Also, retail premises appreciated by 80 bps, homes by 40 bps, whereas offices by only 30 bps.

Yield on Homes

Talking of Spanish regions’ capitals, Lleida turns out to be the most money-making city with a 7.1% yield, followed by Las Palmas de Gran Canaria (5.9%), Huesca (5.8%), Huelva (5.6%) and Alicante (5,4%). Madrid assures a 5% yield and Barcelona 4.6%.

However, rather no-go in terms of investment in residential property are Ourense, A Coruña (both 3.4%), San Sebastian (3.7%) and Lugo (3.8%).

Yield on Retail Units

Shops return most in majority of Spanish cities with unquestionable winner Malaga (15.8%), followed by Cordoba (9.6%), Pamplona (8%), Ourense (7.8%) and Alicante (7.5%). Barcelona posts 7% and Madrid 7.2%.

In Castellon retail property returns the least (low 4.7% yield), and so it does in Salamanca (4.9%) and Tarragona (5%).

Yield on Offices

Juicy Vitoria office spaces bring an 8.1% gross annual yield. A little bit behind fall offices in Santa Cruz de Tenerife (6.3%), Palma de Mallorca (6%), Castellon and Pamplona (both 5.9%). In Barcelona and Madrid landlords may gain 5.8% and 5.6% respectively.

Idealista calculates that the poorest yields among all main cities of Spain are found in Valencia (4.4%), Santander (4.7%) and Oviedo (4.7%). As the office market is not as homogenous as of the other products, it is pretty impossible to obtain data from more than half of the regional capitals.

Yield on Garages

Garages seem to be the least lucrative assets to invest in in many big cities. Still, buying them to let is much more tempting that investing in 10-year governmental bonds which offer a 2.2% return.

Namely, in such munipalities as Almeria (5.7%), Pamplona (5.4%), Santa Cruz de Tenerife (5.1%) and Ciudad Real (5%) the yield is no further from refusal.

However, it indeed is in Vitoria (2.5%), Zamora, Salamanca and Valladolid, in all showing a mere 2.8%. In Madrid, the yield averages at 2.9% and in Barcelona it goes up to 3.9%.


Original article: Idealista

Translation: AURA REE