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Engel & Völkers Licence Partner Valencia > Blog > The average profit in buy to let now exceeds 7 per cent

The average profit in buy to let now exceeds 7 per cent

Brick and mortar has always been and continues to be the preferred option for investors when it comes to earning high returns and making immediate profits from their property investment. In fact, recent figures show up to 7 per cent per year, especially in the case of commercial premises.

This profitability figure is, for example, three times higher than that offered by 10-year government bonds, the other safest investment option for investors. This is being translated into the fact that more and more people are buying a house for the purpose of renting it out later.

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During the last twelve months, the number of investors who have opted for buy to let has grown by 7.3 per cent compared to the previous year. This is also due to the growing demand for rental properties.

According to a study carried out by an idealist in which he tries to compare sale and rental prices of each type of real estate asset with the purpose of accurately calculating his gross profit, investing in property remains the most popular, but not the most profitable. Business premise rentals with 8.2 per cent annually are above the rest. The same happens with regard to office leasing, which has reached 7.5 per cent. On the other hand, garages, although they are still a good option, have remained stable at 4.6 per cent.

However, taking into account the geographic situation of Spain, the suitability of going a step further and addressing the real estate differences of each region is evident. As a result, it is possible to reach the conclusion that Gran Canaria, with an 8 per cent gross annual return, is the most suitable area to invest in a property, while Córdoba and Zaragoza, with 9.1 per cent, are best for commercial premise lettings and Malaga, with 8.2 per cent, good for office rentals.

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On the opposite side is San Sebastián as its high property prices have led to a gross rental profit of 3.9 per cent. Similarly, the less attractive commercial premises for this purpose are those located in Palencia, which only offer 5.1 per cent. As for the offices, La Coruña stands at 4.7 per cent.

Finally, it is important to mention the fact that the highest gross profit through rentals in terms of investment in parking spaces is also obtained by Gran Canaria, with 8.4 per cent per annum. Salamanca stands on the opposite side of the coin, with only 2.3 per cent.

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