Rental Profitability in Spain Has Increased

What is the annual percentage yield of rental real estate on the Costa Blanca? Rental investment in Spanish coastal property has become increasingly attractive to international buyers over the past decade. According to data from the Idealista portal, the payback of investments in housing has increased by almost two points over the past five years — with coastal areas leading the growth.

At Granfield Estate, we help property owners maximise their rental returns on the Costa Blanca. As a licensed real estate agency (RAICV1663) and member of Asivega, we combine property sales expertise with hands-on rental management experience.

Rental Yields in Spain: Key Figures

The average rental yield for residential real estate in Spain stands at over 7% per year across the country — nearly 2 percentage points higher than five years ago. Coastal areas in particular show the strongest performance:

• Costa Blanca and coastal zones: 7.3% per annum (up from 4.9% in 2017)
• Madrid: approximately 6.1% (limited by record property price growth outpacing rents)
• Barcelona: approximately 6.0% (same dynamic as Madrid)

The contrast between coastal and capital-city markets is significant: while metropolitan prices have risen sharply, coastal demand for both short-term and long-term rental has expanded the rental base, keeping yields strong.

What Drives Rental Demand on the Costa Blanca?

The Costa Blanca benefits from a unique combination of factors that sustain rental demand throughout the year:

• Year-round tourism: the mild climate (300+ sunny days per year) attracts visitors outside the summer peak, unlike many other coastal destinations.
• Permanent relocation trend: post-pandemic, more people choose to live by the sea full-time, not just vacation there. This has created sustained long-term rental demand in towns like Torrevieja, La Mata, and Orihuela Costa.
• Digital nomad and remote worker inflow: Spain's Digital Nomad Visa (2023) has brought a new category of renters seeking quality accommodation with modern infrastructure.
• Retiree community: Northern European and Russian-speaking retirees represent a stable, reliable tenant base preferring annual leases.

Short-Term vs Long-Term Rental: Which Is More Profitable?

Both models are viable on the Costa Blanca, but they come with different risk profiles and management requirements:

• Short-term tourist rental (tourist licence required) can generate higher gross income in peak months (June–September), but requires active management, cleaning services, and platform fees (Airbnb, Booking.com). Gross yields of 8–12% are achievable in prime locations with a tourist licence.
• Long-term rental (11+ months) offers lower but predictable income, minimal management overhead, and no requirement for a tourist licence. Stable monthly income from 400 € to 700 € for a typical 2-bedroom apartment in Torrevieja or La Mata is realistic.

Many investors combine both: renting short-term in summer and long-term in winter months, maximising occupancy while maintaining flexibility.

How Is Rental Yield Calculated?

Rental yield is calculated by dividing the annual rental income by the purchase price of the property, then expressing the result as a percentage:

Gross yield = (annual rent / purchase price) × 100

For example, a property purchased for €120,000 generating €700/month in rent produces a gross yield of 7%.
Net yield is lower, accounting for: community fees, IBI property tax (0.4–1.1% of cadastral value annually), insurance, maintenance, and property management fees (typically 10–15% of rent). A gross yield of 7% typically converts to a net yield of 4.5–5.5%.

Key Risks to Consider Before Investing

Rental profitability should not be the only factor in your decision. Consider also:

• Tourist licence availability: some urban areas restrict new tourist licences; check before purchasing if short-term rental is your plan.
• Community restrictions: some residential complexes prohibit tourist rentals entirely.
• Occupancy rate: a 7% gross yield assumes high occupancy. Realistic long-term occupancy for annual rental is 85–95%; for tourist rental it depends heavily on location and management quality.
• Purchase objective: is this purely an income asset, or also a future residence or legacy asset? This affects which property type and location makes most sense.

Specialists from Granfield Estate — a licensed real estate agency (RAICV1663) and member of Asivega — registered in the Register of Tourism of the Valencian Community as a management company for tourist real estate (registration number EGVT-1348-A), can help you calculate the yield in advance, select an object with maximum profitability, and check all the nuances to maximise the return on your investment. Contact us for a free consultation.

Granfield Estate
Av. Bélgica 1, C.C. Parquemar, La Mata, 03188 Torrevieja (Alicante)
Tel: +34 865 44 33 33

Frequently Asked Questions

What is the rental yield of real estate on the Costa Blanca?

According to Idealista, the average rental yield in coastal areas of the Costa Blanca is around 7.3% per year — one of the best figures in Spain. This is the gross yield before deducting management costs, taxes, and utilities. The net yield typically ranges from 4–5.5% with proper property management.

Short-term or long-term rental — which is more profitable in Spain?

Short-term tourist rentals with a license provide higher yields — 6–9% per year in popular tourist areas — but require active management and marketing. Long-term rentals (from 6 months) are easier to manage and provide stable income of 3–5%, but do not allow the owner to use the property during peak season. The optimal solution for many is a flexible format: winter for long-term, summer for tourists.

Is a license required to rent an apartment to tourists in Spain?

Yes. Short-term tourist rentals (through Airbnb, Booking, and similar platforms) require obtaining a tourist license (licencia turística) from the Valencia Community authorities. Renting out property to tourists without a license is illegal and can result in fines of up to €600,000. Some residential complexes and municipalities impose additional restrictions — it is important to check this before purchasing.

How quickly does investment property pay off in Spain?

With a yield of 7%, the payback period is about 14 years. However, the reality is more complex: the property simultaneously appreciates in value (8–12% per year on the Costa Blanca in recent years), which significantly improves the overall investment result. Some buyers not only recoup their investments through rental income in 5–7 years but also realize capital gains upon resale.