2017 Rental Yield in Madrid


After the recent housing boom and crash few people would expect to find a good investment in the battered Spanish real estate market. Properties have dropped on average 40% since their high in 2010 with decreases every year up to 2016.

Spain’s Real Estate Market Recovery

The end of 2016 and first half of 2017, however, have brought the first increases in Spain’s real estate market in 6 years. In the second quarter of 2016 average house prices in Madrid rose by 5.37% to 1.766 € per square meter. This is on pace with the recovering Spanish economy. It was one of the hardest hit during the economic downturn in Europe but since 2014 it has been experiencing the strongest growth of the entire continent.

Madrid is the third largest city in Europe yet it offers a relatively low cost of living. Since many Spaniards own their own home it leaves less homes for everyone else.  18-20% of total property is available for rent compared to 35-40% in other large european cities.

In areas like Chamartín, Chamberí, Retiro and Salamanca (the heart of Madrid) prices per square meer range from around 4,300€ to 5,400€, or around 220,000€ to 250,000€.  In the nicer suburbs of Madrid such as Pozuelo, Las Rozas and Majadahonda, apartments are cheaper, ranging from 2,800 to 3,800 euros.

Investment yield in Madrid

Based on multiple references the average investment yield in Madrid is considered to be between 3.5-5% with some of the most profitable areas reaching 7%. According to the Spanish property portal, Idealista, the average Spanish rental yield in Q1 was up by 13 percent, compared to 4.7 percent the same time last year.

In one study taken last year Madrid shared the highest gross rental yield with New York of major capital cities.

The advantage Madrid has over New York is it’s lower cost of living and lower purchase price, making investment opportunities accesible to more investors. Yields on the smallest properties are offering the best returns, nevertheless these type of properties tend to require more maintenance.

In a second study Madrid was ranked fourth after The Hague, Lisbon and Copenhagen.

Due to the number of international businesses large and small, as well as popular educational institutions for foreign students, the Spanish capital will always be flush with eager renters.

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