Spanish Rental Yields Look Attractive, Especially In Madrid

Spanish rental yields in Madrid

Rental yields in Madrid by district, 1Q 2015, source: Idealista

Data from the property portal idealista.com reveals the average gross rental yield in Spain in the first quarter was 5.3 per cent, with yields as high as 7.4 per cent in some districts of Madrid.

Looking exclusively at provincial capitals, the best residential rental yields to be had in all Spain in Q1 were to be found in Las Palmas (Canary Islands) with 6 per cent, and Palma de Mallorca (Balearics) with 5.7%.

Idealista calculates rental yields based on asking prices, using the average of rental prices and sales prices for each district. So the yields they use are not actual yields based on rentals and sales, but implied yields based on advertised rental and sales prices (vendor expectations).

Using this method, the average Spanish rental yield in Q1 was up 13 per cent compared to the same time last year, when it stood at 4.7 per cent.

MADRID HOT AT THE CHEAP END

Some of the best gross yields are to be found in districts of Madrid, where other news sources paint a picture of a property market roaring back to life. The best yields were to be found in the cheapest areas.

The average rental yield for the city was 5 per cent, but some districts offer much better yields than that, for example Villaverde (7.4 per cent), Puente de Vallecas (7 per cent) and Usera (6.8 per cent).

At the other end of the scale, some of the most upmarket districts in town offered some of the lowest yields, for example Salamanca with a 3.9 per cent yield, Retiro with 4.3 per cent, and Chamberí with 4.4 per cent.

Idealista point out that the current yield on a 10-year Spanish Government bond is 1.4 per cent, making Spanish property look comparatively attractive with a 5.3 per cent gross yield and upside potential on capital gains.

TABLE OF RENTAL YIELDS BY PROVINCIAL CAPITAL – IDEALISTA

Comments

comments

Leave a Reply