Property prices in Barcelona have been recovering significantly since October in 2021.
In 2022, Barcelona looks set for record-breaking property investments and another year ahead of Madrid. Barcelona has not beaten the capital in property investments since 2013 – and now it has higher housing prices and higher rental prices.
As a growing international hub specialising in digital services, with international sporting events on the horizon, and with Spain’s most visited tourist attractions (think Sagrada Familia) there can only be one conclusion: there’s not been a better time in nearly a decade to invest in Barcelona property.
Below we’ll explore five reasons to invest in Barcelona property in 2022.
1. Yields on property investments in Spain have recovered dramatically
Housing prices across Spain are on the rebound after the COVID-19 pandemic.
The average price of Spanish property in April 2022 was €1,853 per m2. This is a 3.3% increase compared to April, 2021, and a clear signal of recovery after the property market slumped to €1,650 during the first months of the COVID-19 pandemic – figures from Idealista show.
If you’re looking to invest in Barcelona property, figures on property investment yields are particularly promising.
The Bank of Spain (Banco de España) publishes quarterly reports on the average nationwide yields on property investments. The rentabilidad anual de la vivienda calculates both average returns from renting as well as the profit an investor would make if selling their property in the current housing market.
In 2021, the average yield on property investments was 7.4% annually before dropping sharply to 5.2% in 2020. The average yield on property investments in Spain has recovered dramatically to 10% in 2021.
The figures suggest that Spain’s property market is recovering strongly after the COVID-19 pandemic.
2. Catalunya property investments offer the highest rental yield in Spain
The Banco de España also publishes the average yields on rental property investments only. This is called the rentablidad bruta alquiler.
Rental property investments are not currently offering as high yields as properties intended for sale – in 2021 annual yields were at 3.7%. This is down from 3.8% in 2019 and is equal to the 3.7% yields in 2020.
Historically the rentabilidad bruta alquiler across Spain hit a maximum of 6.5% in March 2020. You can see a list of both rental yields and property investment yields at the bottom of this blog from Finect.
Bearing these figures in mind – the autonomous community of Cataluña is the best place in Spain to invest in rental property.
Average rental property yields in Cataluña were at 6.6% according to a recent market study from Fotocasa. This was better than the Canary Islands, Madrid and Murcia in the southeast. With Barcelona as its capital this makes it profitable to invest in Cataluña real estate.
If you’re looking to invest in Barcelona property, you can calculate the annual rental yield so long as you know the following figures:
- Total property investment: including purchase price, notary or legal costs, renovations, taxes and real estate agency commissions.
- Annual costs: including community costs, insurance, property tax, any other administration costs, and maintenance.
- Annual rental income: monthly rental income x 12.
To figure out your annual rental yield you need to subtract annual costs & maintenance from your annual rental income, divide this by total property investment and multiply the result by 100.
Here’s an example from Fotocasa.
Your property investment in Barcelona is receiving €1,000 monthly rent, therefore your annual rental income is €12,000. Annual costs and maintenance are €1,500 a year and your total property investment was €250,000.
€12,000 – €1,500 / €250,000 × 100 = 4.2% annual rental yield on your investment property in Barcelona.
3. The Barcelona housing market outcompetes Madrid
In our recent report on housing prices in Barcelona in 2022 we noted how the Barcelona housing market outcompetes the Spanish capital, Madrid.
Throughout 2021 Barcelona became the top destination for real estate investment in Spain, receiving €3 billion compared to Madrid’s €2 billion. This was the first time Barcelona had outcompeted Madrid since 2013.
In terms of housing prices, the average property price in Barcelona in April 2022 was €3,999 compared to €3,804 in Madrid.
In terms of rental prices, Barcelona is still on top with €16.5 per m2 compared to €15.2 per m2 in Madrid.
The growth of rental prices in Barcelona in particular is fast outpacing Madrid – compared with April last year Barcelona’s rental prices have grown 13.5% whereas Madrid’s rental prices have grown just 4.7%.
Prior to the COVID-19 pandemic the situation was not much different. Barcelona rental prices reached a peak of €17.6 per m2 in 2019 compared to €16.8 per m2 in the Spanish capital according to Idealista.
4. Barcelona rental prices are some of the best in Europe
In the Deloitte Property Index for 2021, it emerged that Barcelona has the 9th most expensive rental prices among European cities.
Barcelona was named in Deloitte’s Overview of European Residential Markets as noteworthy for being one of the top cities that outcompeted its nation’s capital, as could be seen with Munich placed just one above Barcelona in the rental ranking. Barcelona rental prices were more expensive than Frankfurt, Hamburg, Tel Aviv, Brussels, Rotterdam and more.
In terms of property prices, Barcelona yet again outcompeted Madrid with average prices a whopping 232.49% above the national average. Madrid meanwhile was 192.03% above Spain’s average property prices.
Deloitte researchers also identified in a 2022 study how yields on Barcelona rental investments ranged between 2-6.5% depending on location. They found that prime real estate areas (e.g. Pedralbes, Les Tres Torres, Les Corts) in the city tended to net a lower annual yield compared to regions towards the outskirts (e.g. La Trinitat, Poblenou, Besòs). This was because prime areas were lower risk, and hence investors were comfortable with a lower, more secure rental yield.
If you are looking to invest in Barcelona property specifically for renting out, Fotocasa has a useful guide to help to find the perfect rental price for your property.
The guide shows how average monthly rental prices are currently €1,394 in Barcelona. For a one-bedroom studio this drops to €1,043 per month while for houses with more than three bedrooms monthly rent is €1,552.
Rental property investments over 100m² in size go for upwards of €2,026, meanwhile a parking space included fetches a price of €1,753 and a terrace can fetch prices from €1,639.
When it comes to the best neighbourhoods to invest in Barcelona property, our report on housing prices in Barcelona has detailed information on which districts are seeing the most accelerated growth right now.
(Spoiler alert: the best neighbourhoods to invest in Barcelona were Eixample, Gràcia, Horta Guinardó, Sant Andreu and Sarrià-Sant Gervasi.)
You can also read our guide on the top four Barcelona neighbourhoods to live in.
5. Barcelona is expected to see continued housing demand
A recent article in La Vanguardia explained how Barcelona is set to break records in property investments in 2022.
Behind the massive €3.6 billion investments in just Q1 of 2022 were large foreign investors buying up office space as Barcelona returns to regular office life after the COVID-19 pandemic.
Indeed, Barcelona has emerged in recent years as the 3rd most attractive European city to establish a startup today after London and Berlin – according to Catalonia.com.
In 2020, more than 18% of professionals who created a startup did so in Barcelona. And with more than 65% of foreigners in Barcelona working in startups, this makes Barcelona the fourth most international business hub in Europe. A massive 32% of startups were also created by programming and coding experts, making now a great time to invest in Barcelona property for both office space and to house highly skilled workers.
Barcelona is also home to seven international ‘unicorn’ companies (businesses worth over $1 billion) such as N26, Glovo and Letgo.
Aside from business, Barcelona was recently named as the host for the 2024 America’s Cup. Property analysts have suggested this will increase demand for short and mid-term rental apartments over the next few years.
For further reading take a look at a deeper overview on housing prices in Barcelona in 2022 and you can also read our Q&A can foreigners buy a property in Barcelona? which covers all you need to know about buying a house in Barcelona as a foreigner.
Lasose Properties & Investments is a leading real estate agency offering exclusive listings of houses for sale in Barcelona. We are experts in individual and corporate Barcelona relocations and offer tailored advice if you’re looking to invest in Barcelona property.
