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Zetios Properties LLC: Spanish real estate market is booming

·3 mins

At the end of 2023, office real estate was the most profitable sector in all of Spain. Gross yields for offices averaged 11.3%, while residential rentals averaged just 7.1% per annum. Growth in the office sector will continue in 2024, experts at Zetios Properties LLC say.

The profitability of other sectors of commercial real estate also increased. For example, the indicator for commercial premises rose to 9.5%; for garages - up to 6% on average across the country. Gross yield differs from region to region, so it is better for investors to focus on local indicators.

Profitability of commercial and residential real estate in Spain by region:

Offices.
In Seville, the average annual return rate in the office sector reaches 12.6%. This is followed by Huelva (10.1%), Almeria (10%), Toledo (9.8%) and Vitoria (9%).
Yet you should not hope for very high income in the largest cities. In Barcelona, the profitability of offices is 6.9%, in Madrid - only 6.5%. In the northern and northwestern parts, the rates are also low: in Bilbao, the yield from offices is 6.4%, in A Coruña - 5.9%, in Ourense - 6.6%.

Commercial premises.
Ávila has the most profitable retail properties, with an average return of 10.8% per year. Next - Zaragoza and Murcia with a yield of 10.5%. They are followed by Bilbao and Lleida (10.4% each), Santa Cruz de Tenerife (10.1%) and Huelva (10%).

In Barcelona and Madrid, the yield is lower than the national average - 8.6% and 8% respectively. Jaen, Salamanca and Pontevedra complete the bottom of the table (7.4% each in all three cities). A Coruña and Albacete are the capitals of regions in which the profitability of premises is even lower - 7.2%.

Garages.
The highest returns in this sector were obtained in Castellón de la Plana (8.6%), Murcia (8.3%), Barcelona (6.4%), Ávila (6.4%), Toledo, Lleida and Pamplona (6% in all three cases).

Madrid is in the middle in terms of yields in the garage real estate sector - 5.1%. It is followed by Ourense (3%), Santander (3.4%), Palencia and Granada (with a yield of 3.5%). The regional capital with the lowest return is Salamanca with 2.9%.

Housing.
Among the Spanish provinces, Murcia is the most profitable, the yield on residential real estate reaches 8.8%. It is followed by the city of Lleida with 8.3%; Huelva (7.7%); Cuenca (7.4%), Santa Cruz de Tenerife (7.3%) and Almeria (7.1%).

In Barcelona, the average rental yield is 5.2%. At the bottom of the ranking are also Cadiz, Pontevedra and Madrid (4.9% each of the three cities). This is followed by Pamplona (4.6%), Palma (4.4%) and A Coruña (4.4%). San Sebastian is the city with the lowest income with a score of 3.7%.

As seen from the data, residential real estate in smaller cities provides higher profit percentages, and considering Spain has always been famous for its resorts, the trends seem to be rather stable throughout the past decades.

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