If you want to invest in property and are thinking about investing in Spain, the best places, from our understanding, are the cities of Valencia and Madrid.
In this article, we’ll focus on Valencia, which is our main market.
First of all, it is important to understand that rental yields in Spain are much more moderate than other overseas markets which are good to invest in. Spaniards consider that 4% or 5% net yield is great. We have worked with investors who are quite happy with these rates and the options that their investment ventures give them in terms of lifestyle. Nevertheless, other investors have preferred to invest in other markets, the USA being such a destination.
How much should you currently invest in the Valencia property market? It depends, but generally speaking, from an investment point of view, we would not consider paying any sum above €1,400 psm for a ready to move in apartment in Valencia. The reason is because it will be very hard to make the numbers work out. There are properties as cheap as €800 psm or €900 psm that need renovating but can perform very well.
We must mention at this stage that the Valencia market, generally speaking, may face a plateau of stable prices for a few years before prices get really stable and ready to pick up.
GOALS & STRATEGY
To succeed as a property investor in Valencia, you have to keep your goal clear in mind. Some investors are looking for a property to enjoy their holidays plus renting it out during the rest of the year. In that case, location matters to you.
If you’re just looking for a property investment to generate rental income, we have to consider your target market and the rental strategy. Aiming for an apartment in a touristy area and aiming for an apartment to be rented to locals is simply not the same thing. Also, it is important to consider whether to let or multi-let. Maybe even a flexible option? Ask us how!
Let’s be honest. The location will help enjoy capital appreciation faster. However, location comes at a cost. Areas such as El Carmen, Ruzafa or around Canovas are rather expensive areas, and could be good examples of consolidated micro-markets.
But there are other alternative areas which are ideal to invest in and enjoy more rental yield. These may not be a favourite of many foreigners, but they do perform very well as a vacation rental.
Investors must find new areas and districts in the city. Valencia is a very handy city with lots of hot-spots. Commuting from one place to the other side of the city is quick… it is a relatively small city.
BUY TO REFURBISH
This is a great option for low budget investors looking for a property to be quickly ready to be rented out. There are buyers who do not want to get involved with renovations and prefer to pay for a ready to move in apartment. If you want to invest, especially in Spain, we advise to be open to opportunities which need renovating. The project will be properly handled and delivered at a very reasonable price.
Renting to tourists is a formula that can deliver great returns in Valencia as long as this is going well and the vacancy period is not long.
Whereas in Barcelona the restrictions from the local government are many (it is very difficult), in Valencia there is a rising pressure in order to ban rentals to tourists, due to resident associations complaints.
Therefore, your rental strategy should be well thought out according to your apartment specifications. Vacation rentals seems to be a good business according to the figures below, but it should be very well done and managed.
Here are some figures about tourists’ overnight stays in Valencia in 2015:
- January: 191,256
- February: 273,397
- March: 329,011
- April: 342,577
- May: 385,504
- June: 393,494
- July: 424,237
You do not need to focus on expensive areas, where 90% of the overseas investors tend to focus, to aim for price appreciation. There are micro-markets that can perform well in Valencia. Find a reliable adviser to search for those.
To invest in Valencia or Madrid, you need appropriate and dedicated support. Conventional local agents aim to sell, and it is very unlikely they will give lasting support… because they are sales professionals rather than investors.
CONTACT US FOR MORE INFORMATION ABOUT INVESTMENTS IN VALENCIA AND INVESTMENT STRATEGIES