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Expert hails Spanish rental boost

Jaimie Kanwar

Rapidly increasing demand for rental property is boosting Spain's BTL market, claims one expert.

Coastal resorts are certainly as popular as ever with Spain remaining one of the top holiday hotspots with British and European tourists, but when a situation of over supply hits the holiday property market it certainly makes it harder for investors to make money from properties that they wish to earn a rental income from.

However, the good news is that there are some lesser explored, more profitable pockets of the buy to let investment property market in Spain that previously were the well kept secrets of professional and institutional investors only.

Now that real estate prices on average have adjusted and fallen across most of the Spanish market, it makes it a very positive time to explore these alternative buy to let approaches in Spain.

Mike Hamilton, Sales Director at Casas de Lorca explained: "The main investment approach that has seen larger investors profit substantially on an ongoing basis is buying properties for rent within the larger commercial and university cities in Spain where domestic demand is not abating.

"In fact, the city based buy to let property market in Spain has suffered nothing of the negativities of over supply, with many urban areas actually suffering from a restriction of supply leading to increased demand.

"In the capital Madrid for example we are hearing reports that 62% of apartments which become available are being rented within the first month alone."

"The low supply of good quality rental property is also affecting rental prices. For example, average monthly rents in Lorca have gone up from 400 euro a month to 550 euro over the period of the last 3 months, and as the date for the opening of the new University of Lorca approaches, so demand is expected to further intensify".

In Lorca in the Autonomous Community of Murcia where a new university campus is about to reach completion, demand for city based rental accommodation has already pushed average rental rates up significantly.

The new university is the fourth campus for the already expansive University of Murcia with its 31,500 students, and when it opens in 2009 demand from professors, lecturers, administration staff and of course students is expected to have an overall positive and dramatic effect on the local housing market.

Mr Hamilton added: "Property investors quite possibly have a once in a lifetime opportunity to buy property off plan at below market prices as developers work hard to sell off stock, or to buy resale units in what is very much a buyer's market, and earn rental income year round from the domestic market who are being aided and therefore encouraged to rent.

"What's more, in an area like Lorca where there is a specific and undeniable reason for demand to surge, a buyer making a purchase today has an unprecedented opportunity to profit significantly from rising rental rates, and from potentially appreciating assets whose values will likely be increased as the property market in the city becomes more in demand".