Real Estate assets with higher returns for investment

Real Estate assets with higher returns for investment

Real Estate assets with higher returns for investment

Investing in the real estate business is always a safe bet, a traditional safe haven asset. However, when it comes to real estate investment, not all assets are equally profitable. Globally, according to data from Idealista, offices take the lead as the most profitable product (12.8%), followed by commercial premises (9.8%), parking spaces (7.7%), and residential properties (7.1%).

Offices, leading in profitability

The analysis conducted by the real estate portal on the gross rental yield of property purchases during the third quarter of 2023 places offices as the most attractive real estate investment, with a close to 12.8% yield, compared to 11.3% twelve months ago.

Profitability also varies from one city to another. Zaragoza, with an 11.7% gross yield, tops the list of the most profitable cities. It is followed by Almería (11%), Vitoria (9.2%), and Murcia (9%). All of these surpass major capitals such as Barcelona and Madrid, with 7.8% and 7.4%, respectively.

Currently, due to the excess supply of available offices, it is common to see these assets taking on other uses and converting into residential properties or even hotels. At Urbanitae, we have observed this trend through the financing of several operations focused on office conversion, such as the García Lorca and Doce de Octubre projects, which received great interest from our investors.

What about commercial premises?

Commercial premises rank second in terms of profitability after offices. While it depends on the type of commercial space, the city, the activity, or the location, the average rental yield is usually quite attractive.

By provincial capitals, the highest returns are achieved in Ávila (12.5%), Murcia (11.4%), Girona (10.7%), Zaragoza (10.7%), Santa Cruz de Tenerife (10.7%), and Cáceres (10.6%). Huelva (10.5%), Oviedo (10.4%), Lleida (10.3%), and Ciudad Real (10.2%) surpass yields of 10%, while in Barcelona and Madrid, the yields stand at 8.4% and 8.2%, respectively.

Alternative assets: parking spaces and storage rooms

Investing in parking spaces can be a very interesting asset for smaller-scale investments, requiring lower capital. Although parking spaces have experienced a boom in our country in recent years, they are the least profitable product for investors in many capitals, according to the Idealista report. The highest yields are found in Murcia (11%), Castellón (8.3%), Toledo (7.6%), Oviedo (7.6%), and Ávila (7.5%). In major capitals, the return rate reaches 6.7% in Barcelona and 5.1% in Madrid.

Storage rooms, on the other hand, have also become a very attractive segment for investors due to high demand, especially in large cities due to space constraints and their easily appreciable nature. For a long time, investor appetite for storage rooms at Urbanitae has been very evident. Thanks to the trust of developers like Grupanxon, with whom we have financed 13 projects, we have supported this type of asset financing on our platform, which can offer returns to our investors exceeding 18%.

Profitability of residential properties. Which cities are more attractive?

Finally, let’s conclude with the residential segment, which, despite yielding lower percentages of profitability, always serves as excellent protection for our savings against inflation and is an interesting option to consider for investment.

In this regard, it is noteworthy that, in the third quarter, the gross yield of purchasing a residential property for the rental market has remained stable at 7.1%, compared to the same period in 2022. The obtained yield is higher than the rates offered, for example, by 10-year government bonds (4%). Meanwhile, Murcia and Lleida are the Spanish capitals offering the highest yield, with 8.3% and 8%, respectively, followed by Huelva (7.6%). With yields exceeding 7%, we find Jaén (7.3%) and Castellón (7%). In Madrid, the yield reaches 5.2%, and in Barcelona, it stands at 5.8%.

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