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Solvia: Buy-to-Let Returns Reach 11% in Alicante

Posted by: In: Real Estate 07 Mar 2018 Comments: 0 Tags: , , , , , , , , , , ,
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3 March 2018 – El Mundo

If you want to generate some decent returns from your savings and are thinking about getting into the world of real estate, to buy a home and let it out, then the best options in Alicante can be found in the neighbourhoods of Carolinas Altas and Bon Repós, where rental yields currently exceed 11%. The lowest returns are being recorded in the centre and in the old town, with 5.8% and 5.6%, respectively. That is according to the report Solvia Market Overview: Alicante, the forecast for 2018, prepared by Solvia, the real estate arm of Banco Sabadell.

The analysis indicates that in the local rental market “prices are rising at a faster rate than sales prices, taking the average rent to €614/month, up by 9.6% compared to one year ago”. Tenants paid €6.6/m2/month. The stock of rental homes has increased to 3,297 units, up by 0.5% compared to the previous quarter. The average return on a rental property in Alicante amounts to 6%, which significantly exceeds the returns generated by other conservative investment options such as bank deposits and treasury bonds, whose yields are in tatters. The average return on rental properties across Spain is 6.1%.

The most expensive rental prices are located in the centre of the city: €8.65/m2/month, which means that for a 90m2 home, the monthly rent amounts to around €778 on average. Playa de San Juan is the second most expensive location, at €8.61/m2/month, which corresponds to an average monthly rent of €774.

The most affordable areas are La Florida Alta and Florida Baja, with rents of €5.64/m2/month and €6.23/m2/month, respectively. Moreover, the most profitable neighbourhood for a landlord to rent out a flat is Carolinas Altas. The €560 that can be obtained for the rent on average, taking into account the sales prices in the area at the moment (around €60,000 per property on average) allow for the generation of a return of 11.2%; that is much higher than, for example, the dividend yield of any company listed on the Ibex.

Upwards trend

In its report, Solvia highlights that the forecast for 2018 is that house prices “are going to continue to rise in the city, with an expected increase of 5.3%, slightly below the 6.1% that is forecast for the whole of Spain”.

Property prices in Alicante recorded a YoY increase of 4.1% at the end of 2017 to reach €1,258/m2, above the national average. Specifically, second-hand properties reached a sales price of €1,207/m2, whilst new build homes cost €1,653/m2. “The amount per square metre is still considerably lower than the highest peak, reached in 2007 in the case of second-hand homes (€1,765/m2) and in 2008 in the case of new build properties (€2,041/m2). The most expensive areas are in the centre (€2,250/m2), the old town (€2,126/m2) and Playa de San Juan, where prices have soared by 9.7% over the last year.

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

The post Solvia: Buy-to-Let Returns Reach 11% in Alicante appeared first on Aura Real Estate Experts.

Source:: AURA Real Estate Experts

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