Buying an apartment and then renting it gives up to twice the profitability depending on which district of Madrid or Barcelona it is done in. Thus, opting for Villaverde or Salamanca in the capital and Nou Barris or Sarrià in the Catalan city makes the difference, according to a study by Fotocasa.
The figure reaches 7.9% in Madrid and 6.5% in Barcelona, with the lowest data at 3.5% and 4% respectively. In general, the highest returns are moving to the outskirts or neighborhoods further from the center, explains María Matos, director of studies at Fotocasa.
In the case of Barcelona, the districts that show the highest profitability are Nou Barris (6.5%, like last year), Sants-Montjuïc (6.3%), Sant Martí (6.2%) and Horta-Guinardó ( 6%). On the opposite side, the neighborhoods where housing is at higher levels, such as Sarrià-Sant Gervasi (4%), Les Corts (4.1%) and Eixample (4.4%).
At an average level are Sant Andreu (5.7%), Ciutat Vella (5.6%) and Gràcia (5.3%). There are cases such as Les Corts or Gràcia, where although the apartments remain at the same price, profitability increases due to the increase in rents. Between 2021 and 2022, the first improves its profitability by four tenths, in the second there are nine.
If the focus is on the capital, the situation is similar: moving away from the center pays off. The best figures are given in Villaverde, which repeats as the most profitable with 7.9%. Usera is also above 7% (with 7.4%), while Puente de Vallecas completes the podium (6.6%).
Those with the least profitability are the Salamanca neighborhood (3.5%), Chamartín (3.7%), Chamberí (3.9%), Retiro (4.1%) and Moncloa-Aravaca (4.1%) , according to data from the real estate portal. "The areas furthest away from the M-30 have a profitability that was not achieved in previous years," says Matos. Also those crossed by the M-40. "Not everyone can live in the center and rents in the outskirts are beginning to become tense," they point out in Fotocasa. As the rent rises and the sale price remains stable, profitability improves.
Based on the data at the end of 2022, the trend is for the better. Except for Puente de Vallecas and Carabanchel, profitability increases in the districts of both cities.
In all cases, these are gross returns, which are obtained by looking at how much the annual rent charged represents with respect to the purchase price paid. This yields a percentage that indicates what part of the investment is recovered each year. For example, a house purchased for 150,000 euros and rented for 800 euros per month -9,600 per year- has a gross return of 6.4% per year.
Expenses such as the notary, registration, agency commission and property transfer tax (ITP) of the purchase must be subtracted from this gross. Also IBI, community and insurance expenses. And the supplies if they are included in the rent. As there are differences between autonomies in the tax area, the net profitability is not a fixed calculation, it will depend on the charges that there are in each one.
What will happen this year? As the rise in the Euribor is causing mortgages to skyrocket and makes it difficult to buy a home due to the increase in the cost of credit, a transfer of demand to rentals is expected. "The forecast is for more demand with very little supply," says Matos. "It is going to increase more with the rise in rates," he explains.
Regarding sales prices, the two capitals go at different rates. "In Barcelona we are slowing down and January is already showing declines, but we cannot say that it is a trend. Demand is beginning to moderate," he warns. In the case of Madrid, "well into the first quarter or in the second we can begin to see moderation and stabilization at the end of the year, without falls."
If both factors are combined, more demand for the rental and moderation of purchase prices, profitability should increase. Always on paper...
Despite the good returns offered by the real estate market, it is difficult to enter as an investor. The average profile is of a 48-year-old man with high or medium-high income, according to data from Fotocasa. At present it is seen as a good option "to take refuge from what may come if inflation is not mitigated," Matos argues.
