Investment in Spain: how to make a profitable investment in a profitable property purchase

According to Savills, in 2014, 7 billion euros was invested in commercial real estate in Spain. Compared with 2013, the volume of investment has tripled. There are several reasons why it is profitable to invest in real estate in Spain:

  • Spain is a trade corridor that connects Europe with North Africa and South America;
  • despite the past crisis, the Spanish economy is the 5th largest in the European Union and 13th in the world (in 2013, GDP was almost 1.4 billion euros);
  • there is a stable and carefully designed legislative framework;
  • a well-developed transport and tourism infrastructure;
  • bustling hotel and rental property markets (in 2014, Spain was visited by almost 65 million people);
  • prices for all types of real estate (residential, commercial, hotel) have dropped to their lowest levels in recent years: now you can make a good purchase and wait for prices to start rising. Property prices are already rising in the most liquid markets, including Barcelona and Madrid.

Commercial properties in major cities

In general, the most profitable for investment are major transport hubs: port cities, cities with international airports and settlements located at the intersection of busy highways. Experts from MP Dunne Properties, Mas-Spain Luxury Properties and Spanishabitat agree that Madrid and Barcelona are the best places to buy profitable objects.

Madrid is the main business and financial center of Spain. In 2014, the commercial real estate of this city accounted for 41% of all investments in Spanish objects. The highest demand is for offices: in this segment is invested about 70% of all funds. For the purchase of offices are best suited Paseo de la Castellana and Paseo de Recoletos (business center), La Moraleja, Las Rosas, Avenida Burgos and the neighborhood of Plaza Nacional. The yield of offices is 4.5 – 5.0% (Savills, I quarter 2015), the average rent in the center is 25 euros/m² per month. Shopping facilities are worth buying on the “Golden Mile” (Serrano and Jose Ortega y Gasseta Streets), as well as on Gran Via and Preciados Streets in the center, where there are many foreign tourists. The main industrial area is Coslada. It is located in the east of Madrid, near the international airport.

The best places to buy offices in Barcelona are Avenida Diagonal, Plaza de Europa, [email protected] and Passeig de Gracia. They are located in the center. The office yield is 5.5% (Savills, 1st quarter 2015), the average rent in the center is 216 euros/m² per year. Passeig de Gràcia is also the main shopping street in the city. Barcelona’s suburbs of Viladecans, Gava, Castelbisbal and Ruby are the best places to buy industrial property. The best university cities are Barcelona, Madrid, Seville, Salamanca, Santiago de Compostella, Valladolid, Valencia and Granada. This is where you should buy student properties for rent. Rooms in private dormitories are rented for an average of €950 per month (Savills). 

Resort real estate for rent is most profitable to buy in the most visited cities of Spain. In addition to Madrid and Barcelona, they include Cordoba, Valencia, Palma de Mallorca, Marbella, Seville, Granada, Segovia and Bilbao. You can look at the current options here “Apartments in luxury complexes near the sea and the cultural and residential infrastructure of Marbella and Puerto Banús are a good option. It is also advantageous to buy villas with swimming pool and garden, which are in great demand and are sold at high prices, especially in summer,” – says Mary Dunne, Managing Director of MP Dunne Properties.

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