Buying a buy-to-let property in Spain offers an average yield of 7.7%, according to data from the Masteos Index in 2022. The choice of where to invest is a key question for many small and medium-sized savers considering this type of purchase, due to the significant variations in returns between different areas.
With this in mind, Masteos, a company specialising in providing comprehensive advice on the purchase of homes for rent, has carried out an analysis of the most lucrative areas to invest in rental properties in Madrid, Valencia and Barcelona.
The districts of Villaverde and Puente de Vallecas in Madrid have yields of over 7%, compared to the average of 3.4% offered by the most exclusive areas such as Salamanca, Chamartín, Chamberí and Retiro. This means that investing in these neighbourhoods of the Spanish capital is approximately 45% more profitable than in districts with higher prices.
"If we look back 20 years, rental yields were still positive"
"Housing is and will continue to be a very attractive investment alternative because it is safe, profitable and not very volatile. Increasingly, small and medium-sized savers are channelling their money into rental housing, aware of the lack of supply and its positive evolution over time. Even if we look back 20 years, rental yields are still positive," explains Beatriz Toribio, Deputy Managing Director of Masteos for Spain.
Villaverde, the most profitable and cheapest district in Madrid
For example, investing in Villaverde, the most affordable district in the capital, is 45.3% more profitable than in Salamanca. Salamanca is considered the most expensive district in Madrid, where the price per square metre of purchase reaches 7,000 euros and rent exceeds 19€/sqm/month.
In contrast, Villaverde is the only district in Madrid with a purchase price below 2,000 euros per square metre, while renting stands at 11.4 euros per square metre, in line with other districts such as Villa de Vallecas (11.2 euros per square metre), Vicálvaro (11 euros) and Moratalaz (11.7 euros per square metre).
On the other hand, Salamanca is the most expensive district to rent, with a price of 19 euros per square metre, followed by Centro (18.7€/sqm) and Chamberí (18.2€/sqm).
The profitability of Barcelona's cheapest districts is 61% higher than in prime districts
In Barcelona, the yields of the districts are the lowest in comparison with the other two cities analysed. This is due to the fact that Barcelona has the highest average sale and rental prices. None of Barcelona's districts has an average sale price below 2,000 euros per square metre.
This also explains, according to Masteos, why rental profitability is lower in Barcelona compared to Madrid or Valencia. Only one district, Nou Barris, offers a return above 6% and is the only one with a price below 3,000 euros per square metre, with an average of 2,522 euros per square metre.
In second place is Sant Martí, with an average yield of around 5.9% and an average purchase price of 3,629 euros per square metre.
Buying a property to rent in the areas with the lowest prices can be up to 61% more profitable than some of the most expensive districts, such as Sarriá-Sant Gervasi (5,452 euros per square metre), Les Corts (4,881 euros per square metre) or Eixample (4,695 euros per square metre), among others.
In contrast to the profitability of close to 6% in Nou Barris and Sant Martí, the average profitability of rental properties in prime areas is around 4%.
The most profitable districts in Valencia: Rescanya and Campanar
The districts of Valencia stand out among the three cities analysed as offering the highest yields. In fact, three districts in this city exceed the national average of 7.7%. Rascanya and Campanar offer yields above 8% with purchase prices below 1,250 euros per square metre.
The profitability of buying a property to rent in these districts can be 50% higher than in more expensive districts such as L'Eixample or El Pla del Real, where purchase prices are around 3,000 euros per square metre and the profitability is around 4.5%.
In Valencia, only two districts exceed 3,000 euros per square metre in purchase prices: L'Eixample and Ciutat Vella. In addition, seven districts have prices below 1,500 euros per square metre, a characteristic that is not found in Madrid or Barcelona.
In terms of rent, Ciutat Vella is the most expensive district (12.7€/sqm/month), followed by L'Eixample (11.6 euros per square metre) and Poblats Maritims (11.1 euros per square metre). On the other hand, the cheapest districts are Pobles de Nord (6.9 euros per square metre), Campanar (8 euros per square metre) and Jesús (8.4 euros per square metre).