Madrid is a hot spot for the housing market in Spain. It always is, because the demand, which can shift more towards housing or rent, is present in the capital of Spain in bad times and in good times, as the great national destination that attracts labor mobility from other autonomous communities . Now, in the buoyant moment in which housing is found, Madrid has not been left behind and is one of the most dynamic areas of the country. But the fact that the market, both in the purchase and rental modalities, is having a great movement in the capital does not imply that it is the best moment for profitability, although there are opportunities if you know where to look.
In the second quarter of this year, gross profitability in Madrid reached 5%, which is 1.6 percentage points below the national average, according to data from urbanData Analytics (uDA), which uses data from 40 different sources to calculate this profitability through a methodology that collects historical data and closing prices, among other variables. Madrid capital may be far from the excellent profitability data of Murcia (8.7%) or Lleida (8.6%), but it has something that these cities do not have, and it is the aforementioned sustained demand over time, which makes the capital in one of the most stable places for the housing market. Thus, this stability in Madrid implies a lower risk when buying to rent, at the cost of obtaining lower returns. And even this still offers better returns than many other types of investment.
In Madrid, profitability is achieved in the south, outside the central almond. The neighborhoods of Puente de Vallecas (7.9%), Villaverde (7.8%) and Usera (7.2%) are the most profitable. And that in the southern part of Madrid is where the cheapest rents are found: Villaverde is the second most affordable district in Madrid, only behind Vicálvaro. They are the only neighborhoods that exceed a gross return of 7%. In the southwest are the districts that follow them in terms of profitability, Carabanchel (6.8%) but especially Latina (6.7%). “Through a micro-localized analysis we observe dynamic areas with yields above the city average, and this is the case of Latina in Madrid,” says Manuel Cacho, Managing Director of Solutions at uDA.
In addition, if we take a look at the neighborhoods of four large Spanish cities (Madrid, Barcelona, Valencia and Seville), we see that seven of the ten with the least profitability belong to the capital of Spain. They are Salamanca (3.3% gross return), Chamartín (3.6%), Retiro (3.8%), Chamberí (3.9%), Hortaleza (3.9%), Fuencarral-El Pardo (4 .2%) and Arganzuela (4.4%). Most of these neighborhoods are in the Madrid area within the M-30. The other two districts in this area, Centro and Tetuán, show returns of 4.6 and 5.1%, respectively. Despite the fact that all these neighborhoods have a rental price of more than 14 euros per square meter, the rise in housing prices prevents them from being particularly profitable.