Average residential rental yields in Las Palmas city were the highest in Spain in the first quarter of 2018: Good news if you are considering a Las Palmas rental investment.
According to leading Spanish property portal Idealista, average gross residential rental yields in Las Palmas were 8.1% in Q1, 2018. This higher than Madrid (5.4%), Barcelona (5.4%), Valencia (6%) and Santa Cruz de Tenerife (7.4%).
Residential rents across Spain are have risen for the last three years and are close to pre-crisis levels in several cities (after inflation adjustment prices are still 30% cheaper than in 2007).
Why are Las Palmas rents so high?
The high yield is due to a number of factors.
- Las Palmas is the economic heart of Gran Canaria thanks to its infrastructure and port.
- The Canarian economy is buoyant after several years of record tourist numbers.
- A dearth of new build property in Las Palmas has led to a squeeze on rental supply in high-demand areas of the city such as Las Canteras, El Puerto and Vegueta/Triana).
- The spike in holiday-let properties in Las Palmas has squeezed supply, especially close to the beaches and the old town.
- The lack of central property has pushed people into other areas and driven up rental prices across the city.
Will Las Palmas rents continue to rise?
In the short-term I think rental rates will continue to increase. However, they are likely to come back down in the long-term.
A University of Barcelona study expects residential rentals to remain high until at least 2020. It expects high rents to push many tenants into ownership in the long-term.
Another significant factor in Las Palmas is that the holiday let boom is maturing. Yields on smaller holiday lets are falling and occupancy levels will drop when tourist numbers fall from their record 2017 levels.
As short-term yields drop and residential rent rises, I expect to see many local owners to put their marginal holiday lets back into the residential market.
Also, anyone who has visited Las Palmas city recently will have noticed a large number of demolished old buildings and new builds. The construction crisis is over and the new properties now in construction are starting to hit the market.
New tourist let laws (due to come into effect sometime in 2019) will likely ban short-term rental of new build property. This should further reduce pressure on residential rentals in the long-term.
Las Palmas rental investment: A good idea?
Right now, property prices in Las Palmas are still 30% below their 2007/8 peak and rising (up 6.4% in Las Palmas province in Q2, 2018). Even if rents do drop in the medium-term, yields on residential property are likely to remain above the Spanish national average for several years.
While purchase costs in Gran Canaria add up to 10% of the purchase price (purchase tax, notary and registry fees), buy-to-let in Las Palmas is an excellent long-term property investment at present.
Ongoing property costs in Gran Canaria are relatively low compared to most cities and this has a significant long-term impact on your yield).
The key is to pick properties in areas of the city that are outside the most expensive zones but still close to the centre. They are cheaper but can still be rented out for good rates to professionals.
Buying Las Palmas property for rental
Buying a Las Palmas rental investment requires detailed local knowledge of the city. Prices and rental yields vary considerably over small areas. If you plan to buy a property in Las Palmas or the surrounding areas, please get in touch for a chat.
I’m Laura and I’m one of Las Palmas’ top-selling estate agents (the second highest RE/MAX seller in Spain in the first six months of 2018).
My professional services as an estate agent and property finder are free to buyers and I specialise in helping foreign buyers in Gran Canaria.
Call me anytime or send me an email…