Return period on the purchase of an investment apartment is increasing in most tourist locations in Europe
Half-yearly update of the ProfitLevel survey on the return on investment in an apartment for the purpose of renting it
Apartments in Spanish resorts remain the best return destination for investment in the first half of this year. Valencia continues to be in first place in the selection of ProfitLevel broker with only 17 years of return on the purchase of an investment apartment, followed by Barcelona with 19 years. In third place is Athens, where the investor receives the purchase price back in the form of a rent in 20 years.
This follows from a European survey of market sales prices and market rents for a one-room apartment (50 m2) in the city centre. ProfitLevel conducts regular half-yearly surveys focusing on urban tourist destinations in the European Mediterranean and Central Europe.
At the same time, Greek destinations are among the places where the prices of investment apartments have risen sharply over the last six months, while market rents have fallen. The result, in the case of Heraklion, Crete, is a record increase in payback period from 23 years to 36, more than 50 percent in the last six months.
The payback period for investment also increased significantly in Bratislava, from 26 to 31 years, as the price of buy-to-let apartments in the city centre increased by 10 per cent.
"The first half of the year in the monitored European destinations, with a few exceptions, brought further growth in the prices of apartments suitable for investment. However, market rents were not enough in most cases and in some cities it even fell. As a result, the payback period for the funds spent by the owner to buy the apartment is still longer," explained Lucia Žárská, Chief Analyst at ProfitLevel.
In terms of return on investment through rent, the purchase of an apartment in Munich (return of 40 years), Dubrovnik (39) and Vienna (39) remains the least attractive The investment has also a long return to the owner of the apartment in Prague (35). The medium payback period is reported by other Central European metropolises - in addition to the aforementioned Bratislava, these include Budapest (30), Krakow (29) and Ljubljana (28).
About the methodology
The data is based on crowd-sourced data from Numbeo.com, which has over 100 datapoints even for small cities over the last 12 months. The data were collected as of June 11, 2022. Captured rents are in the category of one-bedroom apartments in the city centre. The data are cross-referenced with Statista.com or Catella.com ** The rates used are the average rates for 2022 according to the European Central Bank.
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** Numbeo.com: https://www.numbeo.com/cost-of-living/ Statista.com: https://www.statista.com/statistics/1084608/average-rental-cost-apartment-europe-by-city/ Catella.com: https://www.catella.com/en/germany/research/catella-european-residential-market-map-q1-2022
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