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Rental yields in Madrid and Barcelona are greater than in Rome

If there is a golden rule for buy-to-let investors in Spain, it is to always invest in markets where the rental demand is strong and constant: if tenants leave, you can potentially get other tenants within a short period of time. That is why cities are great… and if the population in the city keeps growing, the scenario looks perfect, since the higher demand should push rental prices up.
 
The main Spanish cities are experiencing not only a fall in property prices but also a moderate increase in rental yields on average despite the fact that also rental prices have dropped. Occasionally, we have deals with yields of up to 7% in the cities, but any yield above 4.6% can be considered an excellent starting point in Spain given the current climate. We must say that given the current economic crisis, rental prices have a cap in order to make the market affordable to tenants, except in prime property areas in Madrid and Barcelona where markets behave differently.
 
 
Buying a home to rent out in Madrid or in Barcelona welcomes profitability and some investment recovery installments are more attractive than in the Italian capital. According to the facts obtained from idealista.com, the lead housing site in Spain, the gross profit of a home for rent in Madrid and Barcelona (4.2% and 4.1% respectively) is higher than what you get in Rome (3.9%) but less than what is registered in Milan (4.4%).
 
Some of the main world cities have profits higher than those in Spain, as is the case in Sydney (4.9%), Tokyo (4.5%), or New York (4.5%). On the lower side we find Moscow (3.6%), Hong Kong (3.1%) and Monaco (1.6%).
 
Profitability of Spanish cities

Among the Spanish cities, Lleida is the most profitable, with a 6.1% profitability. It’s followed by Huesca, Las Palmas of Gran Canaria, and Alicante, with 4.7% profitability in all 3 cases. Behind them we find Cuenca with 4.6% and Cordoba with 4.5%. However, the lowest profitability rates in Spain are those that the owners of homes for rent get in A Coruña (3%), Ourense and San Sebastian (3.2% in both cases), and continuing on we find Santander (3.3%) and Salamanca (3.5%).
 
According to Fernando Encinar, head of studies at idealista.com, “during the upcoming months the price of the home for sale is going to keep falling, not only in official information but also in private negotiations in which discounts are the order of the day. In parallel, the government looks into measures of the best protection for renters and rental prices are trending toward the low end, which is making gross profit grow. In this sense, investing in a home destined to be rented out is becoming an option that is more and more valued by small and medium-sized investors.”
 
For the completion of this study, idealista.com has divided the average price of sale by the price of rent in the different markets referring to the annual index of 2012. The result is the gross profit percentage that an owner gets who is renting out his or her home. This information facilitates the analysis of the current state of the market and is a basic starting point for all investors who want to buy properties with the goal of earning money.
 
 

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