Every investor is constantly seeking this figure to calculate their return on investment when contemplating the purchase of a property in Marbella.
This return is obtained by combining the rental income generated by the property and the real estate appreciation in the asset's value. It is widely recognized that the return is influenced by market conditions, fluctuating between periods of positive returns and others where investors may experience capital losses. The graph below illustrates this trend for Spain, revealing negative returns between 2009 and 2013 due to the inability to offset the decline in real estate prices with rental income. However, for a more cautious approach, it is advisable to analyze the numbers over the long term in order to make informed decisions.
Getting into the details for Marbella and taking into account the two factors intervening: the average long-term rental profitability of 3.8% (as depicted in Chart 1) and the 20 years’ average increase in real estate prices, also at 3.8% (shown in Chart 2), the long-term return on a real estate investment in Marbella amounts to a relevant 7.6% per year.
Higher short-term returns can be achieved in periods such as the current one, with higher price increases and a shortage of rental inventory, but it is always advisable to understand the long-term figures to have more control over the investment.
