Long-term rentals on the coast deliver above average returns claims new study

Beach-front holiday rental on the Costa Brava

Beach-front rental on the Costa Brava

“Non-tourism residential rentals on the beach are also very profitable” is the principal conclusion of a new study by urban Data Analytics (uDA), explains an article in the Spanish daily El Mundo reporting the study.

Gross rental yields first and second line from the beach are 5.67%, up from 5.37% in 2016, and considerably higher than the 4.3% national average (according to Bank of Spain figures).

By region, the best yields on the beach are in the Balearics (7.32%) followed by Barcelona (7.21%).

“It’s a good moment in general for the rental market, and the good times have reached the Spanish coast, the first and second line,” says Carlos Olmos, Director of uDA, who points out the average long-term rental yield on the coast of 5.67% is close to the yields of Madrid (6.29%) and Barcelona (5.74%).

Once again Ibiza leads the field when it comes to long-term rental yields on the beach, with 8.95%, followed by Puerto de la Cruz in Tenerife (7.13%), and Vilaseca (7.05%) in Tarragona (Costa Dorada).

“Just like the big cities, you can’t make generalisations about rental yields on the coast,” says Olmos. “Results are very unequal. It’s important to do a more micro-segmented analysis, by zone and type of property, in order to find the best yields for average risk.”

One reason why long-term rentals frontline on the beach are rising in price and delivering higher yields on a par with Barcelona and Madrid is because record demand for holiday rentals from tourists is reducing the supply of long-term rental accommodation, pushing up the price. “Rising demand for holiday apartments is encouraging many landlords to switch to this market,” a spokesperson from the real estate servicer Solvia is quoted as saying.

uDA say rents on the coast have increased 8.95% in the last year, to an average of €1,005/month, ranging from 354 €/month in Lugo, to 2,290 €/month in Ibiza.

The data also shows that homes with a pool can charge a 14% rental premium.

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SPI News Feed provides general news about the Spanish property market and related articles translated from the Spanish press. For more in depth news, analysis, and opinion, see Mark Stücklin's blog.

3 thoughts on “Long-term rentals on the coast deliver above average returns claims new study”

  1. Profile photo of GordonuGordonu

    This s all very Interesting but out of say long term rental return of 1.000 per month the owners has to pay the community fees, agents yearly fee, council tax and house insurance so basically you have only about 650 per month the in your pocket.
    Then your income declaration to you home tax authorities makes it a futile
    exercise for owners. That’s why long term rental is so scarce fans
    Live in the Costa del Sol

  2. Profile photo of SurveySpainSurveySpain

    Yield is a relationship of capital value to rent achieved. Is it purchase price now, including all costs such as agent’s fees, etc i.e 13+%? Is it net rent, after all expenses and tax.? Is it net rent plus estimated annual capital appreciation? No details and can’t see the source report on the uDA website. Good for a headline, but not for making decisions.

  3. Profile photo of nsouldiensouldie

    The recognised methodology (formula) for calculating NET Rental Yield on commercial property is as follows:

    Annual Rental Income (MINUS) Running Costs (DIVIDED BY) Market Price (PLUS) Costs of Buying

    So a property with 12,000 of Annual Rental Income, Running costs of 2,400 with a market price of 240,000 and 20,000 of costs associated with purchase works like this:

    12,000 – 2,400 = 9,600
    240,000 + 20,000 = 260,000

    9,600/260,000 = RENTAL YIELD OF 3.69%

    Hope this helps

    Richard McGarvey
    MD
    Richard McGarvey & Co Wealth Management Limited

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