Property Prices across Spain are rising at an incredible rate, and in 2021 the country experienced its biggest property price rise across the real estate sector since 2008. Whilst sales rose considerable across the whole country, this was particularly true in Andalucia and the Costa del Sol where not only did prices increase by 8.1%, the number of sales also increased by 43.1%. These phenomenal figures have been forecast to continue throughout 2022, which is great news if you’re preparing to sell your Spanish property. But what does it mean if you are hoping to invest in a property in the Costa del Sol? Here’s everything you need to know:
Are Buy-to-Let Investments a Good Choice?
Buy-to-let properties are considered a haven for capital, allowing you to immediately make a tangible return on your investment. But is now the right time for these kinds of investment in Andalucia? Here are the facts:
- Research conducted by both Euroval and pisos.com found that return on investment (ROI) in Andalusia was slightly lower than the national average of 6.38%, but that investors could still expect to make a return of 6.12% gross.
- These are median figures with the exact sum varying across the region. The highest returns were found in Huelva at 7.66% whilst the lowest of 4.63% were found in Cadiz.
- The property type chosen for the investment also affected the returns seen, with new builds achieving slightly lowers ROI than resale properties. This makes resale properties a much more attractive proposition to investors.
- These figures can be used when making your decision, but it’s important to remember that the property market changes quickly, so you should always conduct your own research.
Letting in Andalucia in Numbers
- 19.5% of all rental properties in Spain are located in Andalucia, making it a market that is ripe for investment.
- The most popular area of Andalucia for investment property in Malaga, which attracts 8.3% of these rental properties. Seville is the second most popular location, with 3.7% of the rental properties in the country based here. This demonstrates that location is key when planning potential returns.
- The highest rentals in Spain are found in Andalucia. In fact, the top three locations where rentals were highest were all in Andalucia. These were as follows: Benahavis (the average asking rental was €2,709 a month), followed by Marbella (€2,130 a month) and Sotogrande (€2,119 a month). If you are interested in investing at the highest end of the market, therefore, these are the locations to choose.
- It's important to note that whilst rental prices are high in these areas, these are mirrored by sales prices. Benahavis is the most expensive place to buy property in Spain.
Do the Sums
There can be no denying that, when the property cycle is in the upward part of its trajectory, investing in property can be challenging. But it is not impossible, provided you pick the right property in the right area. You can still make decent returns on property in Andalucia right now: the key is to find a property that suits the current demands of the rental market. Here are some top tips when looking for property in the region in the current economy:
- Do your research. Understand what the local rental market looks like, and what returns you can expect to receive from different rental types. This research is easy to conduct using online portals and websites, and whilst prices will vary depending on the finish of a property and its location, you can ascertain a rough market average for the properties you are looking at. This should then become your target rent, and you can use this figure to calculate whether you can afford to invest in certain properties or not.
- Be prepared to put the work in! If you’re happy to undergo a renovation project then the returns available can be considerable. Buying properties in need of renovation at the lower end of the market and then upgrading the features that it offers to suit the higher end of the rental market is one of the very best ways of increasing your ROI.
- Be strict when conducing your property search – don't look at properties that are over the budget you have calculated you can afford. This will only reduce your potential ROI and lower the ultimate value of your investment.
If you’re thinking of investing in property in Spain, particularly in Andalusia, then there’s no time like the present. If you’re ready to turn your dream of Spanish home ownership into a reality then why not get in touch with our local property experts, who are perfectly placed to help you find the Spanish home of your dreams.