The Most Profitable Regions in Spain to Invest in Real Estate in 2022

The Most Profitable Regions in Spain to Invest in Real Estate in 2022

The healthcare crisis has demonstrated the extraordinary resilience of the Spanish real estate market. Investment properties are gaining popularity in the face of inflation, putting it ahead of other financial assets.

Besides, purchasing a house is considered by Spanish society to be easier than making investments into funds or buying shares in the stock market. Ferrand Font, director of research at pisos.com, believes that "high inflation, combined with a slowdown in new real estate developments, reduced availability of re-sale properties and low interest rates, and this forces most investors to move into the real estate sector."

The gross rental yield in Spain reached 6.43% in the 1st quarter of 2022. In March, the average price of a 90-square-meter property was €170,280 (€1,892 per square meter), and the monthly rental value was €912. Thus, the owners of such housing received a total of €10,951 gross per annum. Of course, operating costs, taxes, and utility bills must be deducted from this amount.

Given Spain's territorial diversity and population density, some areas are much more attractive than others. The most profitable autonomous regions are Castile-La Mancha (7.93%), Extremadura (7.88%), and Aragon (7.29%). On the opposite side of the scale we see the Balearic Islands (4.28%), the Basque Country (4.44%), and Madrid (4.76%). Among the capital cities, Murcia (7.5%), Zaragoza (6.33%), and Seville (6.24%) are the leaders, and Palma de Mallorca (4.07%), Madrid (4.51%), and A Coruña (4.60%) round out the list.

While the most popular cities such as Madrid and Barcelona offer profitable properties, prices can be very high and profit margins can be reduced accordingly. However, the ownership of residential properties in these areas has a significant advantage in the form of high rental demand.

In other metropolitan cities, returns are higher due to relatively low prices. But finding local property tenants becomes difficult as there aren't many opportunities for employment or education.

Indeed, since the pandemic, there has been a surge of interest in the vacant part of Spain. This phenomenon can be justified by the massive transition to remote work and changes in customer needs. However, the return to normal life again drew attention to large cities. In any case, tenants are no longer considering only the central areas. Periphery is gaining momentum with new facilities in newly built communities. Investing in these areas is a great idea, but you need to make sure that they are equipped with a public transport network and other important infrastructure.

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