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The profitability of investing in real estate

We are living in times of uncertainty, especially when it comes to buying real estate. This is a reality that we face every day, however, the latest data on real estate profits for 2016 shows a profitability value of 13.3%, which puts Spain in the second place with regards to capital appreciation. This data has taken all the EU countries into account, putting Sweden in first position with average profits 13.9%.

The data has been provided from the latest report by the prestigious consultancy firm, Morgan Stanley Capital International (MSCI), which shows an unequivocal consolidation of the real estate recovery. One reason behind this recovery is due the current low interest rate situation, which has enabled investors to search for new destinations for their capital and has made the real estate sector one of the chosen ones to increase profitability.

In order to carry out this study, MSCI has taken into account a total of 511 assets in our country, valued at a total of 20.5 billion euros, concluding that investing in large shopping malls was more profitable, reaching as much as 18%. If we look at the industrial-type of properties, this profitability stands at 13%, while the smaller shopping centres has reached 12.9%. The profitability potential of buying a house in Madrid is a reality and the city in which offices have also stood out during the past year, reaching 12.9%.

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In addition, experts consider the possibility of a new and threatening bubble in the sector, since these growths in investment and real estate returns are absolutely normal and it is more than foreseeable that during this year, the capital market comes from pension funds, both private and public.

On the other hand, if this 13.3% is disaggregated, it can be seen that the rental market has presented an increase of 5.1%, leaving the remaining 7.8% to the revaluation of the assets as such. This behaviour of the rental market has experienced a significant upward pull in the last five years, with rents experiencing a rise of 30%. In addition, it is a trend that has all the possibilities of being maintained in the same way by the existence of office buildings that, even if they are in a very close position, present large income differences.

If you want to take advantage of this profitability trend, this may be the time to buy a house in Madrid. This is why there is nothing better than visiting a real estate company like the prestigious Engel & Völkers, a world leader in residential and commercial property sales and rental services, with offices in 32 countries.

Engel & Völkers

Génova, 27 - 5th floor
28004 Madrid
+34 91 277 45 00

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