When investing in Spanish real estate, choosing the right location is critical—not only for long-term appreciation, but also for maximizing rental yields. Rental yield is a key metric that helps investors understand how profitable a property is relative to its purchase price.
In this article, we’ll break down what rental yield is, how to calculate it, and where in Spain you can expect the best returns on your buy-to-let investment.
1. What Is Rental Yield?
Rental yield is the annual rental income generated by a property expressed as a percentage of its purchase price. It is a key indicator of investment profitability.
There are two types of rental yield:
- ✅ Gross Rental Yield = (Annual Rental Income / Property Purchase Price) x 100
- ✅ Net Rental Yield = (Annual Rental Income – Expenses) / Property Purchase Price x 100
While gross yield provides a basic overview, net yield is a more accurate reflection of your true return, as it factors in costs such as property management, taxes, maintenance, and insurance.
2. Why Rental Yield Matters for Investors
Rental yield gives investors insight into:
- How quickly they can recover their investment
- How profitable a property is month-to-month
- Whether a location is undervalued or overpriced
- What strategy—long-term, mid-term, or vacation rental—might be more suitable
High rental yields are generally found in cities with strong rental demand, lower property prices, and limited housing supply.
3. Average Rental Yields in Major Spanish Cities (2024)
Let’s examine average gross rental yields in key investment cities across Spain, based on current market data:
| City | Avg. Gross Rental Yield | Typical Property Price per m² | Rental Demand |
|---|---|---|---|
| Valencia | 6.0% – 7.0% | €2,200 – €2,800 | High (local + expats) |
| Murcia | 6.5% – 7.5% | €1,200 – €1,800 | High (students, local workers) |
| Alicante | 5.5% – 6.5% | €2,000 – €2,500 | Strong (tourism + retirees) |
| Madrid | 3.8% – 5.0% | €4,200 – €6,000 | Very High (urban demand) |
| Barcelona | 3.5% – 4.8% | €4,000 – €5,500 | Very High (international appeal) |
| Malaga | 4.5% – 5.5% | €2,500 – €3,500 | High (tourism + remote workers) |
| Seville | 5.0% – 6.0% | €1,800 – €2,400 | Strong (local economy) |
| Bilbao | 4.0% – 5.0% | €2,800 – €3,500 | Stable |
These figures can vary depending on the district, type of property, and rental model (short vs. long-term), but they offer a useful starting point for comparing ROI potential.
4. High-Yield Areas Beyond the Big Cities
Many smaller towns and secondary cities offer excellent rental yields due to low property prices and steady demand.
Examples:
- Granada (student housing): ~6.5% gross yield
- Castellón (local workforce): ~6.0% – 7.0%
- Almería (tourist & long-term mix): ~6.5%
These markets can be less competitive than Madrid or Barcelona and often provide better returns, especially for long-term rentals.
5. How Rental Models Impact Yield
Your rental strategy has a significant effect on yield:
- 🟢 Long-Term Rentals: More stable income, lower management costs, lower yields (3%–5%)
- 🟠 Mid-Term Rentals (3–11 months): Higher flexibility, moderate returns (5%–6%)
- 🔴 Short-Term Rentals (tourism): High yields (7%–10%), but with seasonal fluctuations, stricter regulations, and higher management costs
Cities like Valencia, Málaga, and Alicante are particularly attractive for short or mid-term rentals due to their tourism appeal and increasing demand from digital nomads.
6. Factors That Influence Rental Yield
When evaluating a city or neighborhood, consider these key factors:
a) Property Price Trends
Look for locations with reasonable prices and potential for appreciation.
b) Rental Demand
High demand ensures low vacancy rates and pricing power.
c) Regulatory Environment
Cities like Barcelona and Palma have strict regulations on tourist rentals that can limit potential.
d) Local Economy
Cities with strong universities, tech hubs, or tourism appeal are more resilient.
e) Infrastructure
Access to public transport, schools, hospitals, and commercial zones increases rental appeal.
7. Tips to Maximize ROI in Spain
- Buy in areas with demand-supply imbalance
- Invest in 1–2 bedroom apartments (higher tenant pool)
- Choose locations with high mid-term rental demand
- Minimize costs with efficient property management
- Take advantage of tax-deductible expenses
8. Which City Is Best for You?
- Looking for high ROI with lower entry price? → Murcia, Seville, or Granada
- Prefer capital city demand and appreciation? → Madrid (lower yield, higher asset value)
- Want holiday rental income? → Valencia, Alicante, Malaga
- Prefer legal certainty and long-term tenants? → Bilbao or Zaragoza
Your ideal location will depend on your personal investment goals, risk appetite, and preferred rental strategy.
Next Step: Build a Profitable Investment Plan
Understanding rental yields is only one part of your investment journey. To make smart decisions, you need a tailored strategy that considers your goals, tax implications, legal structure, and market conditions.
That’s exactly what our Investment Strategy Session is for.
🧭 In just one hour, you’ll get:
- A breakdown of the best yield opportunities based on your goals
- A comparison of cities and rental models
- Guidance on tax-optimized ownership
- Referrals to legal and property management professionals
💶 Price: €500
📅 Limited availability – book in advance
👉 Reserve your Buy-to-Let Investment Strategy Session today and invest with clarity and confidence.