The popularity of buying to let is on the up. Low interest rates and the reduced costs of formalising mortgages that must now be met by the new owners are encouraging people to invest in this form of business.
But how much profit can be gained from holiday lets on the Costa Blanca? What sort of property is most popular with tourists, and how often must they be occupied to be cost-effective? In this article, we’ll look at the figures for holiday lets on the Costa Blanca to see whether it’s really as profitable a business as it seems.
According to Brickstarter, a company responsible for managing the holiday apartments launched on their real estate crowdfunding platform, the number of registered properties is growing continuously.
As can be seen in the following graph, in 2017 there were 4,720 holiday rental properties registered across the country. The second quarter of the year was the most popular time for investors and private owners to register their properties with the platform.
Number of holiday let properties registered | Source Brickstarter
In a similar manner, according to Spain-Holiday, a platform with a portfolio of more than 18,000 holiday properties with an annual turnover of 2.2 million on the Costa Blanca, the average price of a holiday property has increased by 9% over the last summer.
We’re looking at a price of around 790 euros per week for a property with room for four people. If we focus on the month of August, this figure could go up to as much as 970 euros.
An owner with a penthouse or frontline beach villa in Teulada-Moraira can pocket up to 5,000 euros per month according to the HomeAway platform. Behind this area on the list, the most expensive Costa Blanca towns in terms of holiday rentals are: Xàbia, El Campello, Calp, Dénia, Benidorm, Alicante and Torrevieja.
According to data from Casaktua portal, a holiday property starts being cost-effective once occupation levels reach 50% or 60% of the month.
In order to reach occupation levels that allow the owners to make a profit, the properties must be attractive for tourists.
We must remember that the main attraction of the Costa Blanca (and indeed our entire country) is the excellent weather. To this respect, tourists prefer properties that are near the coast, with green areas and stunning views.
Modern House’s properties meet all these requirements, making them perfect candidates for holiday lets. Here is a catalogue of the latest villas we have sold to give you an idea of what we can offer.
Despite the high revenues that holiday lets can generate, to calculate their earning power we must bear the fixed expenses in mind.
It’s currently a good time to buy property on the Costa Blanca to use for holiday lets (due to low interest rates and lower mortgage formalisation costs). However, it’s important to carry out a conscientious cost-benefit analysis to determine whether the final outcome will be in our interests.
Some of the fixed expenses to keep in mind are:
* When it comes to selling a villa on the Costa Blanca, real estate agents have to be aware of the potential of this type of property, not just for personal use but also as a way of obtaining profits through holiday lets.