Best Cities in Spain to Buy Rental Property

Best Cities in Spain to Buy Rental Property

The Spanish housing market shows different yields depending on the region. According to Fotocasa’s 2021 analysis, the overall rental yield in the third quarter was 6.4%, down from 7% a year earlier due to falling rental rates.

Housing yields remain above historical averages: “1.2 points higher than 5 years ago (5.2% in 2016) and 2.2 points higher than 10 years ago (4.3% in 2011).”

Real estate investment gained momentum amid economic instability. Maria Matos, director of Fotocasa’s analytical department, explains: “Real estate investment became a safe haven in the face of uncertainty caused by the health crisis.”

Which municipalities are most profitable?

The most attractive cities for investment:

Yields above 7%:

• Gandia (Valencia): 8.9%
• Lleida: 7.7%
• Aguimes (Gran Canaria): 7.6%
• Algeciras (Cadiz): 7.3%
• Manresa (Barcelona): 7.2%
• Cartagena (Murcia): 7.2%
• Jerez de la Frontera (Cadiz): 7.2%

21% of the municipalities studied exceeded Spain’s average yield level.

Which cities are least attractive for investment?

Cities with the lowest yields: San Sebastian (3.7%), Sant Cugat del Valles (3.8%) and Santiago de Compostela (4.0%).

Housing yields by cities

Rental yields declined in the third quarter of 2021 for the first time since 2010. New housing legislation limiting rental rates in “stressed” areas may further impact yields in specific regions.