The idea of combining property investment with the booming tourism sector has become increasingly popular in Spain, with recent research showing that holiday rentals once again offer higher returns than long-term rentals.
While long-term rentals provide a stable monthly income, investors who rent out their property to tourists receive their income during a specific period of the year. However, the price tag for holiday rentals is usually much higher. As a result, there is often more to be earned from renting to holidaymakers.
The context for holiday rentals is also favourable at the moment. Tourism seems to have fully recovered after the pandemic. Overnight stays in tourist accommodation increased by 23.7% in 2022, according to INE data, tourists spent 71% more, with an average daily expenditure of 148 euros. The gross added value of the sector in Spain amounts to 159 billion euros. This is an increase of 1.4% compared to 2019.
“We are in an excellent context for private investors to decide on holiday investments, especially on the coast, where income from tourist rentals has grown faster than prices,” says Borja Badiola, general manager of Suomma in Inmodiario.com.
Net return of 7 percent
Holiday home rentals yield a net return of 7%. This applies to homes on the Costa del Sol and Costa Blanca. The average investment there is around 200,000 euros in a 128 m2 home with three bedrooms.
According to an algorithm developed by Prop-Tech platform Suomma, the owner can generate a net profit of 15,906 euros per year from holiday rentals. The algorithm analyzed more than 30,000 coastal properties with an average price per square meter of 1,679 euros.
This 5-element investment tool provides accurate asset valuation based on property price, nightly and occupancy rates, seasonal income, cost analysis, financing and income statement, and various investment scenarios.
Real estate profitability up 150 percent
Rental platform GuestReady, for its part, states that tourist rentals increase the profitability of real estate by as much as 150% compared to traditional rentals. Employing technology, attention to detail, making guests feel at home and customer service are some of the various factors that increase the profitability of vacation rentals.
Good idea, buying real estate as an investment
Based on the above, buying real estate as an investment certainly seems like a good idea. By renting it out to other tourists at times when you yourself cannot spend your holiday in your holiday home in Spain, you can still get a return on your assets. Do pay close attention to whether the purchase price of the house you have in mind is also the market-conform price. There are all kinds of tools for this.
Limit the risks
Just like investing in shares, investing in real estate also involves risks. It is therefore important to limit these as much as possible. Also with regard to any future rental income with which you can earn back the costs. The easiest way to avoid problems when buying a house in Spain is to engage a reliable expert party. Therefore, choose an experienced real estate agency with an API registration, the professional association for recognized real estate agents in the Comunidad Valenciana.
As of October 1st, it will no longer be possible for everyone to establish themselves as a real estate agent in this region. This will separate the wheat from the chaff and with such a registration you know that the company of your choice meets specific requirements. Such a company is CasaLasDunas . It is a family business with years of experience in Spain and a large range of properties, both new and existing, on the Costa Blanca, the Costa Cálida and the Costa del Sol.
Rental or management of your holiday home
The company can also rent out your home when you are not there. If you do not want that, but would like to know that everything is okay with your home and have someone on site to solve any problems, the team is also there for you. At CasaLasDunas you can go with peace of mind for all your real estate matters.
New developments in 'box 3' and the second home abroad.
Many Dutch taxpayers found the flat-rate nature of the box 3 levy unfair, because flat-rate results/returns do not correspond with the actual results achieved on savings, among other things. You can read what has changed as of 1 January 2023 in our brochure.
Perhaps we can advise you further on the possibilities of investing in real estate in Spain. Want to know more? Then contact us now and let us inform you without obligation.
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