Rental prices reach 11€ per square meter
The average rental price per square meter is now at 11€, which is a historic record. What’s more, 25 Spanish regions’ capital cities surpassed their record levels (ElPais).
Madrid and Barcelona are the most expensive
Unsurprisingly, Madrid (16.10€/m2) and Barcelona (16.50€/m2) lead the ranking. Indeed, these two cities are the most expensive when it comes to renting an house or flat in Spain. In the meantime, Valencia, which is Spain’s 3rd biggest city, is way behind at 8.80€/m2.
Barceloneta is the most expensive neighborhood in Spain, with 22.80€/m2. Here below are the top 10 most expensive neighborhoods to rent a home in Spain, which are all in Madrid and Barcelona:
Best sources of information about rental prices in Spain
To find out how rental prices are evolving in the city which is most interesting for you, I recommend that you use the following market reports:
Evolution of rental prices in the country, since 2014
According to Idealista, rental prices grew from 7.40€/m2 in August 2014, to 11€/m2 in June 2019, which is a +49% growth in 5 years. Naturally, this should be compared to the evolution of transaction prices. Well, this is where things get funny. Nationally, property prices (for sale) barely increased by 10% (Tinsa, Idealista). Indeed, they went from 1550€/m2 to 1732€/m2, still sticking to Idealista’s data, which gives the same conclusions are TINSA‘s data.
Why are rentals rising so much?
Renting an apartment is becoming more expensive because fewer people can afford to buy. Indeed, 17% of the Spanish people are now renting, while they were 13% before the crisis, in 2007 (ElPais). Way worse, among young people aged 16 to 29, this proportion reaches 48%! And this is not just pure luck, this is because young people earn less than they did 10 years ago, for the same jobs.
Rental investment in Spain: what profitability?
So what does that mean for the profitability of rental investments in Spain? Why are there more than 10% of acquisitions which are now rental investments (Expansion)?
According to Fotocasa, gross profitability of rental investments in Spain is now at 8.2%. While this data is close to what Idealista claims (7.5%, also see this dynamic graph), it is vastly contradicted by Banco de Espana, which claims that ROI on rental investments is at 4% (grey line on the graph below).
However if you include in the ROI another factor, the increase in transaction prices, profitability is above 10% now, as you can see below in red (ElMundo).
