Investing in “Buy to let” properties is becoming a popular alternative for the individual investor who wishes to diversify their investment portfolio, or for those who just want to make a solid investment in real estate.
Good rental income on the one hand and the constant increase in value of property on the other, makes the “buy to let” properties a profitable business and a smart investment.
In recent years most of our clients have chosen the “buy to let” option as their preferred investment plan, obtaining excellent economical results.
Real estate ROI (return over investment) in Barcelona residential and commercial market
The expected return over a real estate investment in Catalonia from rental income is quite similar to the rest of Spain and represents around 5% over the net value of the property. Investments in commercial properties, especially in prime locations, can generate higher returns, but those become more and more difficult to find (and they are also very expensive). However, in the last 15 years the average increase in value of residential and commercial properties was around 7% annually, and during the last 7 years has been over 15% annually. Our experience from the last ten years shows that after removing the speculation factor, a smart investment could generate a ROI of more than 7% annually, calculated over a minimum timeperiod of 5 years. We also believe that for commercial properties in the centre of the city the future prospects are very positive and even higher returns can be obtained, over a timeperiod of 7 years.
The rental market in Barcelona
The real estate rental market for residential and commercial properties in Barcelona is very strong and characterized by its large and steady demand. In residential properties the reason for that is mainly the fact that most locals prefer purchasing their residence over renting them. Based on general publications more than 90% of local residencies in Catalonia are full ownership residencies while the offer of apartments for rent is very limited. In fact in recent years Barcelona has become famous among European residents visiting the city for its rented accommodation facilities and sometimes the price of a single bedroom for rent in the city centre can reach up to 600 Euros per month.
Barcelona’s real-estate boom of the last decade has created another phenomenon which is the short term rentals” market, directly related with the shortage of available accommodation for rent in the city. Many companies offer furnished apartments for a short-term stay as an alternative to traditional hotel accommodation. Hotels in the city centre have become very expensive and on many occasions they are completely booked out. Income from short-term rental apartments in Barcelona has been spectacularly gone up until 2008. Since 2009 it has become more moderate due to very strong competition in this sector. However, it is still a very attractive form of income for many investors, especially non-Spanish buyers investing in residential properties in Barcelona.
Five reasons why Barcelona has become an ideal city for “buying to let” properties:
High demand for renting residential and commercial properties
Barcelona is a thriving European business hub, with a large international workforce and a busy tourism industry, with good quality rental accommodation always in demand
Convenient legislation for owners.
Tenants are responsible for all maintenance costs
In Spain, your tenants are responsible for all maintenance costs, as well as community charges and other monthly costs.
Great offer of reliable property management companies
Relatively low real estate taxes or other fixed costs.
For our clients who love to visit Barcelona and choose to invest in residential property we normally recommend to invest in an apartment that could later on be exploited as a holiday apartment or rented by days, for tourists visiting Barcelona (“short term rentals”). The short term rentals in Barcelona have become very popular during the last years and we have created a management company (www.apartime.com) that rent holiday apartments by day to our clients. This way they can generate a good income and can enjoy their apartment whenever they choose to visit Barcelona. All the management and maintenance tasks of the apartments are being taking care of by our special management team.