Valencia and Elche are ranking at the top of the property business profitabilityLaurence Lemoine
As part of the 20 cities that are the most populated in Spain, Elche and Valencia are in pole position with profitability of respectively 5.78% and 5.57%, according to the study published this week by the platform Fotocasa specialized in property business announcements.
These data are based on the price of the properties available for sale and or rental. By the way, these figures are similar in most of the cities of the “provincia Valenciana” which, therefore, becomes the most interesting independent region in terms of property business profitability. Buying a house destined for rental is now 2% more profitable than in 2008 back when profitability was at 4.2%.
This can be explained by several simultaneous factors: rental prices have considerably increased these last few years pushed by market supply and demand (with a real outburst in Valencia, as they have been increasing by 10% per year) and in the meantime, prices in property sale have remained reasonable, (especially when compared with those of Madrid and Barcelona); in Valencia, buying a property remains 40% cheaper than the prices implemented at the highest point of the real estate bubble.
Big and small investors in Madrid, Barcelona but also Paris, London or Berlin have made a bet on the third city of Spain, attracted by the solid performances obtained whereas, deposit remunerations or the profitability of the Spanish bond have significantly dropped: deposit interests rates mostly do not exceed 1.25% over one year and the Spanish bond has collapsed from 1.41% to 0.27% this year.
After Elche and Valencia, other cities with strong profitability are Cordoba (5.6%), Zaragoza (5.5%) and l’Hospitalet de Llobregat (5.5%). Madrid’s is 4.8%, Malaga’s is 4.6% and Barcelona’s is 4.3%. If the data produced by the real estate agencies or different property platforms are interesting and informational, those published by lawyers do represent the real indicators being the most official transactions.
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