Where to buy property in Barcelona?
For buy to rent property investments in Barcelona, look into the 12 neighbourhoods where the average rent and property price are the lowest.
Looking for a property where to live in for a long time is, more often than not, a rather emotional, and subjective affair. A different case is when the primary intention behind a real estate purchase is to rent the property and recover the initial investment in the shortest possible time. This is commonly referred to as a buy-to-rent investment. In such cases, profitability projections should lead decision-making.
Whichever the case, it is always wise to consider the eventuality of having to resell the property one day. The investment side of the transaction should therefore always be taken into account.
For those interested in Barcelona, a good starting question would be:
Which are the most profitable neighbourhoods in Barcelona for buy-to-rent investments?
This analysis partially answers that question by comparing Barcelona neighbourhoods in relation to their average rent per month, average sale price for second hand properties, gross rental yields and gross rent multipliers.
The gross rental yield and the gross rent multiplier are two of the most commonly used estimations to evaluate buy-to rent investments:
Gross Rental Yield: Gross Annual Rent / Property Buying Price
This is an approximate estimation of the annual profitability for an investment in private rental properties. A Gross Rental yield of 5% or above is generally considered a good investment opportunity.
Gross Rent Multiplier: Property Buying Price / Gross Annual Rent
This is an approximate estimation of the number of years that would be required to recoup the initial investment. A Gross Rent Multiplier of 20 or less is generally considered a good investment opportunity.
KEY TAKEAWAYS:
- only 12 out of 73 neighbourhoods in Barcelona show a Gross Rental Yield equal or above 5%
- only 12 out of 73 neighbourhoods in Barcelona show a Gross Rent Multiplicator equal or below 20
Such results appear to indicate the presence of demand pressure in the sale market of second hand properties.
METHODS and SOURCES:
The Data Cleaning page contains in-depth details on the methods and sources used in this analysis.
Extraction, transformation and loading tools: Jupyter Lab, Python (webscraping, api), Google BigQuery (SQL)
Source: official statistics from the Ajuntament de Barcelona’s open data service
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