Spain, and especially the Spanish costas, are proving increasingly attractive to buy a house for rent (Buy to Let). The average return on investment in Spain is 6.7 percent with peaks of almost 8 percent along the Spanish coast (Costa del Sol, Costa Blanca, Costa Brava).
Tip from InvestinSpain: Scroll to the bottom of the page to download our free investment checklist + 3 of the best buy to let properties for sale in Costa del Sol 2022.
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- Spain: Buy to let paradise inside Europe
- Six Spanish municipalities with above-average interest income
- Some municipalities in Spain have been popular for ten years
- Real estate market Spain very popular with large and small investors
- Why is investing in real estate in Costa del Sol so popular?
Spain: Buy to let paradise inside Europe
In some coastal towns in Spain, the return on renting out purchased properties far exceeded the national average of 6.7 per cent. The online real estate platform Fotocasa recently presented the Spanish news site El Economista with the latest report on the profitability of real estate in coastal towns. Within this study, the purchase prices of properties were compared to the rental income generated.
Six Spanish municipalities with above-average interest income
As mentioned above, a few Spanish municipalities stood out above the average. In Gandía (Valencia), an interest rate of 7.9 percent was achieved in June 2021; in Algeciras (Cadiz), Marbella and Estepona (Málaga), the interest rate was 7.4 percent last month; in the municipality of Roquetas de Mar in Almeria, renting out homes yielded an average of 7.2 percent interest; rentals in Castro-Urdiales (Cantabria) yielded 7 percent; Cartagena (Murcia) showed an average yield of 6.7 percent, as did the capital Almería.
Some municipalities in Spain have been popular for ten years
Municipalities such as Gandía, Málaga and Algeciras were already in demand in 2011. Ten years ago, renting out properties in these municipalities already produced above-average yields compared to other municipalities in Spain.
Today, at the time of publishing this article, this is still the case. The Costa del Sol has long been a magnet for people looking for second homes and holiday rentals thanks to its unique microclimate with 300 days of sunshine a year and its constantly growing infrastructure.
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Location location location
The Marbella area is popular since the 60’s, but even hotspots have their best sides. In Marbella’s case, the west is the best place to be. Not only the west of the city itself and the Golden Mile that stretches to Puerto Banus, but also places like Nueva Andalucia, Benahavis, El Paraiso and Estepona, to name but a few.
Besides benefiting from advantages such as weather and proximity to the beach, these places offer secure gated communities, rolling golf courses, great restaurants and bars and, more than anywhere else, exclusive property that is worth investing in. Added to this are the well-known attractions nearby such as the Los Flamingos Golf Resort with its 5-star hotel, the Puro Beach in Estepona (which will be reconstructed in 22/23), hotel Kempinski and hotel Puento Romano. All these things attract people who live a luxury lifestyle, which means a high demand for exclusive properties.
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Discover the most popular new developments for sale in Costa del Sol. This is a selection based on the projects that were most in demand in 2021.
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Real estate market Spain very popular with large and small investors
A spokesperson for Fotocasa tells El Economista: “There are few financial products that yield as much return as real estate. This is exactly why Spain is one of the favourite markets for investors. Especially since the pandemic, the demand for buying properties for rent has increased, both among large investors and individuals who are just new to this market.”
Investing in real estate abroad is often a good idea, especially if you plan to rent out your property. For the rental prices, you are then largely dependent on the local market. Spain is very interesting these days as rental prices have increased considerably in recent years, especially in Marbella, Puerto Banus (Nueva Andalucia), San Pedro de Alcántara and Estepona.
Compared to last year, rental prices in Marbella are on average 10% higher, and in the Estepona region even 17% higher. This is according to research by TecniTasa (*Source: Tecnitasa – https://www.tecnitasa.es/), which is responsible for property valuations in Spain. These rental prices are similar to those of, say, Ibiza, with the difference that the purchase value of properties in the Marbella region is a lot lower! A boost for your yield calculation!
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Why is investing in real estate in Costa del Sol so popular?
The Costa del Sol remains a magical place to stay for northern Europeans despite the coronavirus. The dark and cold winters and changeable summers in northern Europe also mean that people are strongly attracted to the climate of southern Spain.
The Costa del Sol has always been a draw for holidaymakers with its wide range of resorts, beautiful beaches, climate and gastronomy.
The Costa del Sol enjoys an average of 320 days of sunshine a year and is the ultimate place to buy a second home. In the last 20 years, the numbers have only grown, partly due to the arrival of low-budget airlines such as Easyjet and Ryanair. Many second home owners, after a time, choose to live permanently on the Costa del Sol due to its climate, lifestyle, infrastructure and international schools.
COVID-19 has only strengthened the desire to travel to the Costa del Sol. Many northern Europeans have been in lockdown, not having a holiday for a year and having to spend the dark months in their own country. Many long for a summer holiday or perhaps a longer stay. Why work at home in the northern European climates and stress, when you can also work from your own home in the sun on the Costa del Sol!
Positive investment market conditions
A number of favourable market conditions are currently creating a good opportunity to invest in Spanish property, including the lowest recession prices, low interest rates, an increase in mortgage approvals and high rental potential.
The Spanish property market has been boosted rapidly in recent years by the increasing interest from private national and international buyers and business investors all over the coast. Property prices and transactions have seen a stable increase in 2021 and will continue to rise in 2022. For further information on the Spanish property market, please refer to our news section for updated and report based statistics and new developments.
We offer a variety of investment opportunities for a wide range of investors on the Costa del Sol. Our carefully selected investment properties include flats, terraced houses and villas in some of the most popular top tourist locations in Europe, such as Marbella, Nueva Andalucia and Benamaldena.
Please contact us for more information on any of the investment projects below, or to speak directly with one of our property specialists.
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