Housing continues to be at the heart of investors' interest. Despite the economic uncertainty and the new Spanish Housing Law coming into force, buying properties to rent continues to lead the demand from savers ahead of the alternatives like commercial premises, storage rooms or undeveloped land.
A report by the specialist real estate investment platform, Inviertis, reveals that the most wanted type of property at the moment is a three-bedroom flat of approximately 70 m2, located in the outskirts of the major autonomous community capital cities, especially in the metropolitan areas of Madrid, Malaga, Alicante and Zaragoza.
According to the study, investors are interested in these characteristics because "the residential areas bordering these capitals have the greatest potential for real estate growth in the short and medium term and offer very competitive purchase prices, given their high rental demand, guaranteeing they're rented out quickly and ensuring an immediate return".
As a result, the document adds, "investors continue to prefer the stability offered by rental properties over other types of assets," despite them not being the most profitable alternative.
idealista data put the gross return on investment in housing at 7.1% in the second quarter, compared to 7.2% for garages, 9.7% for premises and 12.8% for offices. By capitals of autonomous communities, Lleida and Murcia offer the highest return for rental purposes, reaching 8.1% in both cases, followed by Huelva at 8%. In contrast, San Sebastian has the lowest return (3.7%), followed by Pamplona, A Coruña and Palma (4.6% in all three cities). Madrid's return is 5%, and returns are as high as 5.4% in Barcelona.
However, one of the advantages of investing in housing is that sales prices are forecast to remain stable without ruling out slight slumps and that rental prices will continue to rise, driven by the pressure of high demand on scarce supply.
In this regard, Inviertis states that "adjustments have already been noted in buying prices due to the fall in demand, offering a better return to those who can invest in housing". And they believe this indicator will continue to be very sensitive to buyer interest until the end of the year. "Less demand pressure will lead to price adjustments in those areas where supply has not been absorbed, but prices will remain stable in the more dynamic markets," they add.
On the other hand, the platform predicts a 6% average year-on-year increase in rental prices "if the tightening of mortgage financing conditions does not slow down its escalation and interest in renting homes continues to increase instead of buying them".
Along the same lines, Vicenç Hernández Reche, advisor at Inviertis and CEO of Tecnotramit, highlights that "in times of uncertainty and volatility, small investors always choose to place their investments in tangible assets, which they can see and touch, and whose value and evolution are easily measurable and controllable". That's why "real estate is almost always a safe environment for those seeking a stable return, although, like any other asset, it depends on extrinsic or macroeconomic factors," he concludes.
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