The performance of beachfront apartments now stands at 8.8% per year. The Balearic Islands and Andalusia concentrate the “hot spots” of the market.
Antonio bought, a year ago, a house next to the beach of Ayamonte (Huelva), for 150,000 euros. By renting it out, you have entered 7,500 euros in twelve months. Its gross profitability is therefore 5%. This is a positive rate, much higher than the one he would have obtained if he had invested his savings in deposits (0.1%) or in public debt (1.6%), but nothing exorbitant. . However, if that same house sold it now, 12 months later, the total return would be 30%. In addition to the rent, this would generate a revaluation of the property of almost 40,000 euros – the average area has been 25% per year -.
Antonio’s is a prime example of the real estate boom in coastal housing, especially in some localities, which, either due to its great tourist interest or due to its urban consolidation after years of crisis, are experiencing a significant increase. The rental of apartments located on the first and second lines of the coast has increased by 8.95% in the last twelve months and provides an average return of 5.67%, according to a report by urbanData Analytics (uDA). The value of sales increased by 3.1%, so that the total profitability (rent plus sale) amounts to 8.78%, a rate still lower than the reference yields of the cities of Barcelona and Madrid (16.96 %). and 11.71% respectively).
The highest yields on the Spanish coast are found in the provinces of the Balearic Islands, Barcelona, Las Palmas, Huelva and Almería, where the rental yield is above 5.5%, which exceeds 10% if capital gains are added. Highlights the high combined profitability obtained on the coast of Malaga (17.87%).
Behind are the coasts of Las Palmas, Lugo and the Balearic Islands, with capital gains of between 12% and 14%. “It is surprising to see the good behavior of the first and second coastal lines of Lucense in the last twelve months,” said Carlos Olmos, director of the UDA.
Las Salinas, in Mallorca, is the most profitable among all the important coastal municipalities, with 37.6%, thanks to the strong increase in the number of floors and the boom in rents in the Balearic Islands, which recorded a growth of more than 20%. Unsurprisingly, the three most profitable municipalities on the Spanish coast belong to this autonomous community. The other two are Ibiza (33.1%) and Santa Eulalia del Río (32%).
José Antonio Pérez, director of the real estate chair of the Institute of Business Practice (IPE), explains the reason for this rise in profitability in the most consolidated regions of the Balearic Islands: “Santa Eulalia, Ibiza and Las Salinas have a problem that there is not enough market available; it is very difficult to buy there, because they are saturated markets.”
Thus, the cost of leases and the purchase price increased sharply, which made it possible to gather the facts in a very high profitability deadlock.
In the Balearic Islands (as in Barcelona), average rental yields exceed 7%. In addition, the annual rental price growth is also over 20%. And the purchase price is also very high, so that the total profitability of this autonomous community amounts to 12.5%.
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“There has been extensive discussion about the warming of prices in the rental market of the cities of Barcelona and Palma de Mallorca, but today we can see that this phenomenon is also moving along the coasts of its provinces”, said Carlos Olmos. in your report. This highlights the high profitability of the capital gains obtained on the coast of Malaga (12.83%). Next come the coasts of Las Palmas, Alicante, Vizcaya and Lugo, with unrealized capital gains varying between 7% and 8%.
Ayamonte (Huelva) ranks fourth among the most profitable towns on the coast, which, thanks to the recovery of its urbanizations, offers an average return of 30.5% (5.1% for rent and 25.4% ). % return per rental). “This growth is influenced by high-level promotions and cheap apartments, which generate very high profitability in summer”, underlines José Antonio Pérez. “But be careful, if the price of new work increases, the rental return will decrease,” he warns.
Fuengirola and Estepona occupy other privileged places in the ranking of the best real estate investments on the coast, with an overall return of 25%. “Fuengirola is 95% full of urban planning, so prices will continue to rise,” says Pérez. “And Estepona is taking advantage of Marbella’s paralysis.” So is it the right time to invest in this town on the Costa del Sol? “Yes. You would already have to buy the plane in Estepona Este, 10 minutes from Marbella, with a highway and 10 minutes from the fishing village,” he added.
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