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Spain: A buy-to-let hotspot?

Posted by: In: Real Estate 08 Jun 2015 Comments: 0 Tags: , , , , , , , , , , ,
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Spain could become Europe’s next buy-to-let hotspot, according to experts, as the country’s rental market doubles in size from 7 per cent just over five years ago to 16.6 per cent in 2014, according to the National Statistics Institute.

Rental property has become the default living choice for a growing number of people around the world since the global financial crisis. With housing markets unbalanced, often facing a lack of supply, potential buyers in countries such as the UK and the US have been left with no choice but to rent, as house prices remain too expensive.

As a result, buy-to-let investors have pounced on Detroit property, while the UK’s private rental sector is now earning landlords a combined total of £112 billion a year.

Spain, on the other hand, has suffered from a glut of property, following its construction boom and bust in the 1990s. Nonetheless, the economic events of the past decade have brought about a shift in the Spanish long-term rentals market, with increasing numbers of people opting to rent either as a lifestyle choice or due to an inability to get onto the housing ladder. Indeed, house prices may have fallen considerably from the market peak pre-recession, but with unemployment still high, many are still struggling to afford to purchase a property.

Martin Dell, Director of Kyero.com, says they have seen a “significant increase” in the number of people looking to rent property on a long-term basis.

“Kyero’s long-term rentals site has experienced strong demand, from Spanish nationals and from foreign residents,” he comments.

Low prices, meanwhile, mean that potential yields can be significantly higher than in other markets, such as London, where soaring values have prompted buy-to-let investors to consider regional cities instead.

Figures from Idealista show that yields in Spain have increased from 4.7 per cent a year ago to 5.3 per cent, while popular tourist areas, such as Las Palmas de Gran Canaria, offered returns of up to 6 per cent. A modern, one-bedroom apartment with sea view can be rented out for €700 per month, while a spacious three bedroom townhouse with sweeping views of the bay and port costs from as little as €145,000.

The highest yielding area, according to Idealista, is the Catalonian regional capital of Lleida, where returns have reached 7.6 per cent. There, a two-bedroom apartment with balcony can be picked up for €207,800.

Rising yields will be fuelled, in part, by rising rental values: according to Fotocasa, Spanish rents climbed 2.8 per cent to €6.96 per square metre per month in Q1 2015 – their first rise in seven years.

Spain, Property Investment, Detroit property

Source:: The Movechannel

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