Where to invest in an apartment? Study across Europe reveals the most attractive destinations for retail investors in real estates
The longest return on investment for an apartment purchased for rent is in Dubrovnik, Croatia – over 42 years. On the contrary, the fastest return on the purchase price is for the buyer to rent an apartment in Athens, Greece or Valencia, Spain - in 17 years. In general, apartments in Central Europe are among the less profitable investments, while the Mediterranean is more attractive for investment. In its apartment investment return comparator, broker ProfitLevel compared market prices and rents in 17 attractive European capitals, focusing on the Mediterranean and Central Europe, the areas where ProfitLevel operates.
The high growth in residential property prices during the pandemic was influenced by the change in the supply and demand structure. One of the key factors was the demand for apartments as an investment. Not all attractive European cities and coastal locations, however, have experienced similar developments.
"The results confirm that it may be more profitable for Central Europeans to buy a flat for rent in Southern Europe than at home," comments Lucia Zarska, Chief Analyst at ProfitLevel, adding: "However, when buying abroad, investors should also thoroughly check local tax obligations, tax fees, and possibly interest and other conditions of a mortgage abroad."
Payback period in years**
Valencia
17.06
Athens
17.66
Marseille
21.78
Barcelona
22.51
Gran Canaria (Las Palmas)
23.00
Crete (Iraklio)
23.37
Krakow
25.19
Ljubljana
25.62
Bratislava
26.11
Milan
27.42
Budapest
29.67
Nice
29.71
Warsaw
30.76
Prague
35.46
Vienna
37.16
Munich
38.00
Dubrovnik
42.38
*ratio of the market price of an apartment to the annual rent, for data used see
Source: ProfitLevel
Methodology and resources
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 was collected during the week of 10-17 January 2022. The rents captured are in the category of one-bedroom apartments (50m2) in the city centre per square metre.
The data has been cross-referenced with other sources, such as Statista.com or Deloitte analysis.* However, these other sources report an average price for the entire city, so ProfitLevel's numbers are consistently higher.
The rates used are the average rates for 2021 according to the European Central Bank.
*Reference: Numbeo.com: https://www.numbeo.com/cost-of-living/ Statista.com: https://www.statista.com/statistics/1052000/cost-of-apartments-in-europe-by-city/ Deloitte: https://www2.deloitte.com/content/dam/Deloitte/at/Documents/real-estate/at-property-index-2021.pdf
*Savings period per apartment (years)
The content of this material constitutes marketing communication and should not be considered as any type of investment advice and/or investment research and/or a solicitation for any transactions. This material was prepared for informational/educational purposes only and does not imply an obligation to perform investment transactions nor does it guarantee or predict future performance. BCM Begin Capital Markets Cy Ltd and its relevant persons including affiliates, agents, directors, or employees do not guarantee the accuracy, validity, timeliness, or completeness of any information/data provided by third parties and assume no liability for any loss arising from any investment made based on the said information/data. Past performance is no guarantee of future results.
