Rental yields in Barcelona and Madrid now better than London and Paris

A new study claims investors now get better gross rental yields in Barcelona and Madrid than in London or Paris.

Tumbling Spanish house prices, plus a credit crunch that forces would-be homebuyers to rent,, are driving up rental yields in Spain, finds a new study by Idealista.com, a leading Spanish property portal.

As a result, gross residential rental yields in Barcelona (4.1pc) and Madrid (4pc) are now better than London (3.4pc) and Paris (3pc) where house prices have not fallen as much, if at all.

Investors get the best Spanish rental yields from Lleida (5.9pc), one of Catalonia’s provincial capitals, followed by Las Palmas de Gran Canaria (4.7pc) and Alicante (4.4pc).

At the other end of the scale are northern Spanish cities like San Sebastian and La Coruña, with yields of just 3pc, below even London and Paris, though not below Monaco (1.6pc).

Rising rental yields will start attracting local investors, argues Fernando Encinar, head of research at Idealista.com. Foreign investors will be more wary. “We shall have to wait and see if the property portfolios offered by the Bad Bank and other financial institutions attract international investors,” says Encinar.

The study by Idealista.com was based on rental and asking prices from its database, compared to global rental yields published by the website globalpropertyguide.com.