SPAIN’S property investment market is delivering bumper returns, but forget everything you thought you knew about buy-to-let homes – the real money is in offices.
While residential landlords have seen their rental yields slip three basis points to 6.9% in the third quarter of 2025, those investing in office space are laughing all the way to the bank with gross returns of 11.5%, according to research from property portal idealista.
Commercial premises also substantially outperform the residential market, offering 9.9% returns, whilst even unloved garage spaces deliver 6.2% – still comfortably ahead of Spanish 10-year government bonds at 3.3%.
READ MORE: Spain hits luxury property giant Engel & Völkers with €16m ‘fake self-employed’ fine
The figures highlight a dramatic split in Spain’s property investment landscape, with commercial real estate proving far more lucrative than the residential sector that typically dominates headlines and captures investor imagination.
Sevilla leads the office investment bonanza with a staggering 11.2% return, followed by Zaragoza at 9.8% and Vitoria at 9.3%.
Even Spain’s major business hubs offer solid returns, with Barcelona delivering 7.6% and Madrid 6.4% on office investments.
For commercial premises, the inland city of Murcia tops the charts with an eye-watering 11.7% return, followed by Zaragoza at 11% and Oviedo at 10.9%. Tarragona, Lleida, Huelva and Girona all offer returns above 10.7%.
READ MORE: Costa del Sol property prices soar 17% as two-bed flat reaches an eyewatering €318,000
The residential picture tells a rather different story. Whilst Murcia again leads with 7.7% returns on buy-to-let homes, popular expat destinations are struggling.
Palma offers just 4.4% residential yields, making it the second-worst performing Spanish capital after San Sebastian’s 3.5%.
Coastal property hotspots generally disappoint, with A Coruna managing 4.5%, Cadiz 4.6% and Pamplona 4.7%. Spain’s major metros also lag behind, with Madrid offering 4.8% and Barcelona 5.8% on residential investments.
The data suggests that whilst everyone’s been focused on soaring house prices in tourist areas and major cities, the smart money has quietly been flowing into Spain’s commercial property sector.
READ MORE: Madrid offers first-time property buyers 100% mortgage deals – but there is a rather harsh catch
Office yields have held remarkably steady, slipping just 0.2 percentage points from 11.7% to 11.5% over the past year, whilst residential returns have dropped 0.3 percentage points.
Commercial premises have actually improved slightly, rising from 9.7% to 9.9%.
However, the office market comes with a caveat – it’s far less uniform than residential property, with idealista unable to obtain reliable data for almost half of Spain’s provincial capitals due to limited transaction volumes.
Garage investments present their own peculiarities, with returns varying wildly by location.
Murcia again dominates with 8.8% yields, followed by Castellon de la Plana at 8.1%.
READ MORE: Spain’s property boom continues to break records with over 64,000 properties sold in July
But in Palma, garage spaces offer a miserable 3.2% return, falling below even Spanish government bonds and making them virtually pointless as an investment vehicle.
The idealista study calculated gross rental yields by dividing average asking sale prices by annual rental asking prices across different property categories during the third quarter of 2025.
These figures don’t account for costs such as taxes, maintenance, management fees or vacancy periods, meaning actual net returns would be lower.
For British and northern European investors eyeing the Spanish market, the message is clear – if you want serious returns, look beyond traditional buy-to-let homes and consider the commercial sector where yields remain robust despite a decade of property price growth.
Property analysts suggest the divergence reflects different market dynamics.
Whilst residential prices in desirable areas have been driven up by international buyers and limited supply, office rents have kept better pace with asset values, particularly in provincial cities with growing business sectors.
The data also hints at a potential cooling in Spain’s residential buy-to-let market, as purchase prices continue rising faster than rents, compressing yields and making traditional property investment less attractive than in previous years.
Click here to read more Property News from The Olive Press.
