Buy-To-Let Properties Generate Returns Of 10%+ In Spain’s Large Cities

30 May 2017 – Expansión

Buy to let / The gross annual return from buying a home and putting it up for rent amounted to 4.3% in the first quarter of 2017, according to the Bank of Spain. If we add to that the fact that the price per square metre rose more sharply than during the previous quarter, then the total return exceeds 9%. And the equivalent figures are in the double digits in the largest provincial capitals.

After seven years of crisis and three years of recovery, investment in housing is now enjoying a new golden age. Without the excesses of yesteryear and with the lesson of the bubble very much learned, professionals and individuals alike have set their sights on the residential sector once again as the generator of profits. (…).

The major indicator in the sector nowadays is not so much house prices – which are still important – but rather returns. In the main Spanish provincial capitals, the average gross yield from rental homes is 5.93%, according to a study of the yield on rental homes in 2017, compiled by Invermax. (…).

That 5.93% is higher than the overall average for Spain, which amounted to 4.3% in the first quarter of the year, according to the Bank of Spain. If to this return, we add capital gains, the average gross rate of return per annum increases to more than 10% in Spain. To calculate the return from capital gains, the Bank of Spain uses house price data from INE, which will be published on 8 June. But, taking into account the registrars’ statistics, which revealed an increase of 7.7%, the analysts are convinced that the average return, including capital gains, now exceeds 9%. Moreover, in the large cities, these figures are comfortably in the double digits. For example, the annual return in Barcelona is 17.7% and in Madrid, it is 13.4%, if we combine Invermax’s yield data by city with the local prices published by Tinsa. (…).

The economic environment “is completely favouring the yields on these kinds of assets…” said Jesús Martí, author of the report compiled by Invermax, a company that belongs to the Enacom group. “The reasons driving the increase in the gross rental yield are….the fact that house prices in Spain’s major cities have bottomed out, demand is continuing to rise, especially for rental properties…”. Also, unemployment rates in the provincial capitals stand at around 10% and there is a persistent shortage of available homes for rent. (…).

According to Beatriz Toribio, Head of Research at Fotocasa, “The rental market still has a lot of potential in Spain. The country mainly comprises homeowners, but consumers are gradually opening up to the rental culture, as a result of the economic, socio-demographic and employment changes that are happening across Spanish society”, she said. (…).

According to data from Fotocasa, the most profitable autonomous regions for buying a home and subsequently renting it out are Cataluña, Madrid, the Canary Islands and the Balearic Islands, where yields amount to more than 6%. In some towns in Cataluña and Madrid, that percentage increases to 7% in certain areas and even to 8% in one district in the capital, specifically, Villaverde. (…).

And so we ask the million-dollar question once again: Is now a good time to buy a home and put it on the rental market to obtain returns? The general answer from the real estate experts is a resounding “Yes”, with increasingly less hesitation. However, the choice of investment (area, size, features and the level of demand for rental housing, amongst other factors) is fundamental.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Pozuelo Consolidates Its Position As The Richest City In Spain

2 March 2016 – Expansión

Families living in Pozuelo have the highest incomes in Spain (€70,298) and Parla has the highest active population rate, at 70.5%. The cities with the highest average incomes in Spain are the Madrilenian suburbs of Pozuelo and Majadahonda – €56,164 – and Sant Cugat del Vallès, in Barcelona – €52,881 – which quintuple the average income in Torreviaje (Alicante) – €13,977 – the lowest.

The figures relate to 2013 and have been extracted from the Urban Indicators study published yesterday by the National Institute of Statistics (INE) for the European Urban Audit project, which compiles information about the living conditions in European cities and in the case of Spain, includes information about the 109 largest towns, on the basis of population density and the size of the urban centre.

After Torrevieja, the lowest average incomes are found in Sanlúcar de Barrameda and La Línea de la Concepción, both in Cádiz, with averages of just over €17,000.

The four cities with the highest active population rate in Spain are located in Madrid. Behind Parla, the ranking includes Fuenlabrada (69.4%), Torrejón de Ardoz (67.7%) and San Sebastián de los Reyes (67%). By contrast, the towns with the lowest active population rates are located in the North of the country. The lowest rate is in León (50.6%), followed by Ferrol (51.4%), Gijón (51.5%) and Avilés (52.1%).

The study also shows that the richest city in Spain, i.e. Pozuelo, is the one where unemployment is lowest, at 9%, followed by Las Rozas (10.2%), San Cugat de Vallès (10.4%) and Majadahonda (10.7%). These figures come in stark contrast to the rates of 42.3%, 40.1% and 39.4% registered in the towns with the most unemployment, namely Sanlúcar de Barrameda, La Línea de la Concepción and Jerez de la Frontera, all in Cádiz. (…).

If we consider employment by sector, then Elda (Alicante), Rubí (Barcelona) and Torrejón de Ardoz are the towns with the highest proportion of jobs in the industrial sector, whilst Pozuelo de Alarcón, Benidorm (Alicante) and Girona are the employment leaders in the services sector.

Barcelona is the city with the highest number of overnight tourists, with more than 18 million, followed by Madrid, with just over 17.5 million, Benidorm with 13 million and Palma de Mallorca with 8 million. Finally, the cities with the largest average household size were Pozuelo, Melilla and Ceuta, and those with the lowest were Huelva, Salamanca and Torrevieja.

Original story: Expansión (Mercedes Serraller).

Translation: Carmel Drake