Gross rental yields in Spain have returned to normal

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Gross rental yields - the return earned on the purchase price of a rental property, before taxation, vacancy costs, and other costs - range from 2.99% to 6.91% with an average of 4.96% in Madrid. Similar yields, or maybe slightly higher, can also be had in Barcelona with the yields ranging from 3.33% to 10.03% and a city average of 5.99%. Not great, though not untypical for cities like Madrid and Barcelona. Yields on the very smallest apartments now offer reasonable returns. But then smaller apartments tend to need more maintenance, so a higher yield is justified.

Rents are similar in the two cities, maybe slightly lower in Madrid so a two-bedroom apartment will cost around EUR 800 to EUR 2,000 per month, while a four-bedroom apartment will cost around EUR 1,100 to EUR 4,000 a month. In Barcelona, a two-bedroom apartment costs about EUR 950 to EUR 2,275 a month, and a four-bedroom apartment rents for about EUR 1,500 to EUR 4,099 a month.

In other cities the rental yields are also moderate to good. Valencia´s rental yields range between 2.77% and 8.16%, Córdoba produces yields between 4.00% to 7.32%, In Alicante you can expect rental yields between 4.57% to 6.79%, Seville has rental yields of 3.08% to 9.47%, Palma de Mallorca earns yields between 3.85% to 6.96%, and Murcia produces rental yields between 3.16% and 8.67%.

When buying property, take into consideration that round-trip transaction costs are moderate to high in Spain. See our Property transaction costs analysis in Spain and Residential property transaction costs in Spain, compared to the rest of Europe.