Rental prices will increase by 2% on average in Spain in the second half of the year
- The average gross profitability for a rental in Spain is 5.5%, although this number is higher in Catalonia, the Community of Madrid and the Balearic Islands.
- The number of rental homes in Spain has fallen by almost 15% compared with last year, due to the decrease in the time it takes to rent a home and the shortage of available properties.
- The average rental price is higher in the Balearic Islands, the Community of Madrid and the Basque Country than in all other autonomous communities.
Barcelona, 20 October 2017.- Servihabitat Trends, the Servihabitat market research and analysis platform, has published its third report on the “Residential rental market in Spain”. The report, which was prepared using official sources, its own data on the rental property portfolio managed by the servicer, and the leading real estate portals, shows that the market is clearly optimistic, although the data shows varying behaviours depending on the different micro-markets.
The Spanish population that lives in a rental home has grown over the past decade
Increased geographic mobility, entrenchment of the rental culture among the younger generation and the impact of tourism continue to be some of the factors that are driving the rental market in Spain. According to data from Eurostat, in 2016, 22.2% of the Spanish population lived in a rental home, a figure that has grown significantly over the past decade, just as with other European countries such as Sweden, the United Kingdom, Denmark and Germany.
In terms of data by autonomous community, Madrid has experienced the greatest growth with regard to the number of households that live in a rental home since 2004, standing at 28.9% in 2016 and ranked third in the list, only after the two archipelagos.
Decrease in the time it takes to rent a home in Spain, with the youth as the driving force behind this segment
According to the Servihabitat Network of partner agents (APIs), almost 70% of the renters in the regions where they operate are between the ages of 26 and 35 years, and if this group were to include up to 45 years, the total percentage would surpass 90%. In addition, 9% of the Network carries out transactions primarily with foreign clients.
In terms of the rental home profile, 51.4% are located in buildings with ten or more homes, 66.1% have 46–90 sqm of floor space and 56.4% were built over 35 years ago.
It is worth noting that the time that passes from the moment that a home is placed on the market until it is rented has decreased from a national average of just over two months to 1.7 months in only half a year. This period is a month and a half at most in Catalonia and the Community of Madrid. Besides in some extremely active markets like Madrid and Barcelona, these time periods can be a matter of days.
More than five rental homes for every 1,000 households in Spain
The number of rental homes available in Spain is 97,900, which is 14.5% less than a year ago. This is equal to 2.5 available homes for every 1,000 inhabitants and 5.3 for every 1,000 households.
This gradual reduction over the past few months is due to the decrease in the average time that it takes to rent a home, as well as the shortage of residential homes for rent.
In provinces such as Salamanca, Alicante, Ciudad Real, Segovia, Burgos and Cantabria, the supply is more abundant, bearing in mind both the population and number of households.
Andalusia, the Community of Valencia and Catalonia stand out, with a supply of more than 13,000 homes, although Cantabria, Castilla y León and Castilla-La Mancha also have a supply of rental homes per inhabitant and household that is higher than the national average.
The Balearic Islands, the Community of Madrid and the Basque Country, where rental prices are highest
The average price for a rental home with 80–90 sqm of floor space in Spain is €620, 3.3% more than six months ago.
By province, Málaga, Seville, Zaragoza and Vizcaya are experiencing an upward trend in prices, as well as the autonomous communities of Madrid, Catalonia, the Community of Valencia and the Canary Islands.
The Balearic Islands, the Community of Madrid and the Basque Country top the list with regard to rental prices for rental homes with 80–90 sqm of floor space, followed by Catalonia in the peninsula.
Average rental prices are expected to increase by 2% compared with the past six months in the second half of the year. At the beginning of 2018, the trend will also continue to be positive, despite growth coming to a standstill in some provinces.
Catalonia, the Community of Madrid, the Balearic Islands and the Canary Islands with higher-than-average profitability
The average gross profitability for a rental property in Spain is 5.5%, although certain autonomous communities such as Catalonia (6.1%), the Community of Madrid (5.8%), the Balearic Islands (5.8%) and the Canary Islands (5.7%) have average annual gross rates of return that are higher than the national average. The Canary Islands is also the autonomous community that has increased its profitability compared with the previous six-month period, growing from 5.4% to 5.7%, while all other autonomous communities have maintained similar levels. By province, Barcelona, Las Palmas, Valencia, Madrid, Huelva and the Balearic Islands have a profitability that is above the national average, while Ciudad Real, Cuenca, Lleida and Zaragoza have the same level.
Taking all indicators into account, the rental market in Spain is evolving favourably, although it shows different behaviours depending on the region analysed.
For example, Madrid and Barcelona are much more active than all other locations, with the sharpest increments in prices and a marked decrease in the time required to rent a property.
The proposals intended to increase government-owned residential home for rent will contribute towards achieving a greater balance between housing transactions and rentals as a residential option in Spain.
In terms of investment, interest in this market continues to grow and the yield expected at present for large transactions that take place in cities such as Madrid and Barcelona is below 4.5%. For Juan Carlos Álvarez, General Director of Real Estate Business at Servihabitat: “The rental market is interesting for the entry of new rental property owners in our country, but the future trend will require regulations that protect renters as well as owners; regulations that, at the same time, should go hand in hand with a firm commitment to the rental market by the institutions, through strong institutional investment in the rental market”.
To view the report, please visit the following link: Residential rental market in Spain About
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