The gross return on buying a house to rent out rose to 7.3% in the first quarter as the offered yield was 7.1%, the same as in the first quarter of 2023. According to a study conducted by Idealista , the yields received are double, at worst, the rates offered by 10-year government bonds (3.2%).
According to this study, which links the sale and rental prices of different properties to calculate their gross margins, offices remain the most profitable real estate investment. Buying an office in Spain with the intention of renting it out offers a gross return of 11.8%, up from 13.1% 12 months ago. Premises offer a yield of 9.9% (9.7% a year ago) , and in the case of garages it is 7%, down from 7.1% in March 2023а.
Profitability of housing
Among the Spanish capitals the most profitable is Lerida, reaching 8.4%, followed by Murcia (7.8%) and Huelva (7.4%). Almeria (7.2%), Segovia (7.2%), Jaén (7.1%) and Zamora (7%) have a return of more than 7%. In contrast, San Sebastian is the city with the lowest profitability (3.8%), followed by Cadiz (4.7%), La Coruña (4.8%), Palma (4.8%), Pamplona (4.9%) and Bilbao (5%). . Madrid achieves a profitability of 5.2% and Barcelona 5.8%.
Profitability of commercial premises
Local stores are the most profitable product in almost all capitals. Stores in Murcia and Ávila show the highest profits among the capitals, with gross margins of 11.6% in both cities. They are followed by Santa Cruz de Tenerife (10.7%), Huelva (10.6%), Lerida and Zaragoza (10.5% in both cases). Barcelona has a profit margin of 8.3% and Madrid 8.1%.
On the opposite side we see the profitability of Palma (6.6%), Cuenca (7.2%), Teruel (7.6%), Pontevedra (7.6%), Salamanca, Jaén and Valencia (7.7% in all three cases).
Office profitability
The highest yields were obtained in Seville (13.7%), Burgos (9.6%), Albacete (9.5%), Almeria (9.4%) and Zaragoza (9.3%). Vitoria (8.8%), Córdoba (8.6%), Lerida (8.5%), Santander (8.4%), Barcelona (8.2%) also have yields above 8%, Valladolid (8.1%), Alicante, Castellón and Oviedo. (8% in all three cases). In Madrid, it remains at 7.2%.
Ourense is the market where office yields are lower at 6%. Rounding out the bottom of the table are Girona and Bilbao (6.3% in both cities). The office real estate market is not as homogeneous as the market for other commodities, which makes it impossible to obtain statistical data for almost half of Spanish capitals.
Garage profitability
Garages, on the other hand, are the least profitable product for the investor in many capitals . The highest returns are obtained in Murcia (10.1%), Avila (10%), Castellón (8.1%) and Lerida (7.2%). In Madrid, the return percentage is 5.4% and in Barcelona it reaches 6.3%.
The capital with the least profitable garages is Salamanca with 2.6%, followed by Granada (3.1%), which are the only two capitals with a return below the 10-year bond. They are followed by Palencia (3.2%), Ourense (3.3%) and Vitoria (3.4%).
To prepare this idealistic study, the proposed sale price was divided by the rental price requested by owners in the different markets, taking into account the quarterly indices of houses, spaces, garages and offices corresponding to the first quarter of 2024. The result obtained: is the gross percentage of profitability that renting a house brings to the owner. This data facilitates the analysis of the current state of the market and is a basic starting point for all those investors who want to buy real estate assets for profit.
Data is collected and analyzed through Idealista/data , Idealista's "proptech" that provides information intended for a professional audience to facilitate strategic decision making in both Spain, Italy and Portugal. It uses all the parameters of the Idealista database in each country, as well as other public and private data sources, to offer valuation, investment, acquisition and market analysis services.
Q1 2024 | Return on real estate investment
Gross profitability of buying real estate for rental purposes: houses, offices, commercial premises and garages:
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