How long does it take to profit from a property in Spain?
This is a very good question. And like everything in life, it depends. It will depend on many factors, but its location is crucial. If you’re wondering whether it’s still a good time to invest in residential properties, it seems that the answer is affirmative.
According to Fotocasa data, the annual profitability of housing in Spain was 6.4% in 2023, compared to 6.5% in 2022. A minimal decrease, likely driven by the accelerated growth in housing prices, which are increasing at a faster rate than the rental market. The data from the real estate portal also indicates that buying a property to rent it out in December offers the fourth highest profitability since 2006.
Times to profit from an apartment in Spain are decreasing
The latest Fotocasa Real Estate Index report, based on housing prices for sale and rent over the past 15 years, estimates that the time to recoup the investment in a second-hand property in Spain is 16 years.
After this period, the investor could begin to receive a net rental income from the property. And although it may seem like a long time, it has actually been shortened by 5.2 years over the last decade, from 21 to 16 years.
A decade ago in Spain, we paid an average of €138,439 for an 80-square-meter property (€1,730/m²). In 2023, the price has increased by 27%, to €176,248 (€2,203/m²).
Balearic Islands, the region with the longest time to recoup investment
However, it is important to consider the geographical factor when making specific calculations. Fotocasa’s data for the past year indicates that the Balearic Islands are the region where it takes the longest to recoup the investment: 19 years. They are followed by the Community of Madrid with 18.1 years, La Rioja with 17 years, the Basque Country with 16.8 years, Galicia with 16.6 years, and Andalusia with 16.5 years. In the other regions, the period is below 16 years, with the Valencian Community at an average of 12.6 years being the region where investment is recovered most quickly.
The evolution has been significant. In 2013, it took over 20 years to recoup the investment anywhere in Spain, and today no autonomous community exceeds that time. Cantabria, on the other hand, is the region where this margin has been reduced the most in the last decade. In 2013, it was set at 24.4 years and now does not exceed 13.6 years.
From San Sebastián to Tarragona, the two extremes in profitability periods
In provincial capitals, residents of cities like San Sebastián with 25.3 years, Pamplona with 22.1 years, A Coruña with 21.6 years, Madrid with 21.2 years, and Cádiz with 20.7 years spend the most time paying off their investment. Pontevedra, Palma de Mallorca, Granada, Logroño, Ciudad Real, Málaga, and Bilbao follow closely, with over 19 years; while other cities like Santander, Albacete, Vitoria-Gasteiz, Ourense, Badajoz, Salamanca, Palencia, Barcelona, Valladolid, and Zaragoza profit from a property between 18 and 17 years. Finally, in locations like Córdoba (16.9 years), León (16.8), Seville (16.7), Cuenca (16.7), Girona (16.5), Oviedo (16.4), Cáceres (16.3), Jaén (16.3), Lugo (15.8), Las Palmas de Gran Canaria (15.5), Burgos (15.3), Santa Cruz de Tenerife (15.2), and Alicante (15.2) it takes between 15 and 16 years to profit.
Regarding the capitals where investment is recovered in less than 15 years, we find Tarragona with 12.8 years, Huelva with 13.7 years, Toledo with 14.0 years, Lleida with 14.1 years, Segovia with 14.6 years, Almería with 14.7 years, Castellón de la Plana with 14.9 years, Murcia with 14.9 years, and Valencia with 14.9 years. According to experts, housing has appreciated by more than 39% in the last nine years, primarily due to the shortage of properties and increased demand. Another argument in favor that demonstrates that real estate continues to be a very profitable asset and the preferred investment of Spaniards.