The average gross profitability for a rental home in Spain stands at 5.4%
 Wednesday, 31/05/2017

  • Catalonia, the Community of Madrid and the Balearic Islands exceed this national average.
  • The price of rental homes will increase between 4% and 5% by the end of the first half of 2017.
  • There is an average of 2.5 available homes for every 1,000 inhabitants, and 5.8 for every 1,000 households.
  • More than 70% of people looking for a rental home are between the ages of 26 and 35 years.

Barcelona, May 31, 2017.- Servihabitat Trends, the research and market analysis platform spearheaded by Servihabitat, has published its second report on the “Residential rental market in Spain”. The study, which has been prepared using official sources, figures from the portfolio of rental properties managed by the servicer and the leading real estate portals, highlights the positive evolution of the rental market in Spain, as shown by the key indicators. According to them, three different regions can be established: Madrid, Barcelona and their metropolitan areas, where rental prices are experiencing an upward trend and demand is sustained; cities with more than 300,000 inhabitants, with a moderate rise in activity; and all other locations, whose growth is virtually inexistent.

72.1% of renters are between the ages of 26 and 35 years
A number of factors confirm that the growth trend of Spain’s rental market may be sustained over time. These factors include: an increased geographic mobility, with greater concentrations in the heart of cities due to the job market; a shortage of new homes in certain regions; limited access to credit for home purchases and the changing mentality that is taking place, primarily between younger population. This set the framework of Spain’s rental market, where 22.5% of primary homes are rentals, giving a total of 4.2 million properties.

Although the Spanish population that rents (21.8%) is still much smaller than the EU28 average (30.5%), it has increased significantly (12.4%) in less than 10 years. Upon analyzing the evolution of the Spanish households that pay a market price for their rental, it is worth highlighting that the national average has increased notably, from 13% in 2005 to 17.3% in 2016, and with population levels similar to those of Italy, Norway, and France for this category.

According to Juan Carlos Álvarez, Real Estate Business Executive Management at Servihabitat, “The Company has made a concerted effort to operate in this market, particularly in recent years, by expanding our rental portfolio to nearly 60,000 properties. In any case, we must remain aligned with the new needs the market demands since the profiles of end users have changed significantly over time. Nowadays, more than 70% of renters in the regions where our APIs operate are between the ages of 26 and 35 years; and due to their employment conditions, that require greater geographic mobility, as well as the consolidation of new family models, rentals are becoming increasingly popular”.

Built over 35 years ago, less than 90 sqm and one-person households: this is the profile of a rental property in Spain
30% of households who live in rental in Spain are single person units, followed by couples with kids (27.6%) and, in third position, couples without children (17.5%). It is worth noting that 27.5% of the Servihabitat Network of partner agents (APIs) that have participated in this report carry out rental transactions primarily with foreigners, more than double the figure for 2016.

In addition, the profile of a rental home in Spain is a property with less than 90 sqm of floor space, located in a building built before 1981 and with 10 or more homes. In respect of the most requested homes, apartments must have two bedrooms, terraced single-family homes must have three bedrooms, and detached single-family houses must have four bedrooms.

It should also be noted that, from the moment a home is placed on the market until it is rented, an average of just over two months must pass, although this period is slightly more than one and a half months in Catalonia and the Community of Madrid. In any case, the average time periods can be a matter of days in extremely active markets like Madrid and Barcelona

Rental homes available in Spain2.5 homes available for every 1,000 residents in Spain
The number of rental homes available in Spain is 106,700. This is equal to 2.5 available homes for every 1,000 inhabitants and 5.8 for every 1,000 households.

In provinces such as Alicante, Salamanca and Segovia, there is more supply in terms of the housing stock, the population and the number of households.

The Community of Valencia and Andalusia have a supply of 20,000 homes or more. The autonomous communities of Castilla y León, Cantabria, and Castilla-La Mancha also surpass the national average of the supply of rental homes per resident and per household.

Average home rental price in SpainThe Balearic Islands, Barcelona and Madrid are the provinces with the fastest rising prices
The average price of a rental home with 80 to 90 sqm in Spain is €600.

By provinces, the Balearic Islands, Barcelona and Madrid show the sharpest increments in rental prices, arising from the evolution of the two major cities.

Rental prices are expected to continue to rise over the coming months and the first half of 2017 should end with an average increment of 4% to 5%.

 

A profitability of 5.4%, with Catalonia, the Community of Madrid and the Balearic Islands at the top of the list
The average gross profitability for a rental home in Spain is 5.4%, with the autonomous communities of Catalonia (5.9%), Community of Madrid (5.6%) and the Balearic Islands (5.6%) with an annual gross rate above the national average. Although, the Basque Country is the region that has increased the most compared to the preceding six month, going from 3.9% to 4.2%.

Average profitability of home rentals in Spain

In summary, the evolution of the rental market has continued to evolve favorably over the past few months, although the growth trend of this segment is not homogeneous across the nation. It is worth highlighting that rental prices are expected to continue to increase between 2.5% and 5% in the next six months, depending on the location; and the yield required by investors in prime locations will be between 4% and 4.5%. The demand, which remains high, and the supply, which is sometimes not flexible enough so as to fill the demand, are two indicators to be analyzed in order to continue tracking the rental market, which is expected to evolve favorably.

To view the report, please visit the following link: Residential rental market in Spain

About Servihabitat
Servihabitat is the go-to servicer for the comprehensive management of mortgage and development loan portfolios as well as of real estate assets. More than 25 years of industry experience and the high number of assets it manages consolidate its position as the industry leader.

A highly qualified professional team and a proprietary technological platform provide Servihabitat with an independent and differentiated operating methodology that is capable of meeting every need in the management cycle of financial and real estate assets.

For additional information: Teresa Batlle / Eva Anaya -  tbatlle@tinkle.es / eanaya@tinkle.es - 662 31 28 79 / 659 72 04 83