What is the average rental yield in Granada?

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THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Granada (Nicaragua). If you'd like to learn more about us, you can check our presentation page.

What are the different neighborhoods in Granada and how do their rental yields compare?

Granada's neighborhoods offer dramatically different rental yields ranging from 2.66% to 11.66% depending on location and property type.

Centro (City Centre) delivers yields between 3.5%-4.5% with the highest property prices but strongest demand from professionals, students, and tourists. Properties here command premium rents but require significant upfront investment.

Albaicín and Sacromonte achieve 4%-5.5% yields, with short-term rentals performing better due to high tourist interest. These historic areas feature character-rich properties but often lack modern amenities and parking.

Realejo offers 4%-5.1% yields with a balanced mix of old and modern properties. This historic yet accessible neighborhood attracts steady student and expat rental demand.

Cartuja, Zaidín, and PTS (Parque Tecnológico de la Salud) deliver the highest yields at 4%-6%, benefiting from affordable property prices, modern buildings, and growing demand from university students and young professionals.

How do yields differ between property types such as apartments, houses, and studios?

Studios consistently deliver the highest rental yields in Granada at 5.06% average, driven by strong demand from university students and young professionals.

One-bedroom apartments generate 4.31% yields with average purchase prices around 195,000€ and monthly rents of 700€. These properties appeal to young professionals and couples seeking city center living.

Two-bedroom apartments achieve 4.56% yields, slightly outperforming one-bedrooms due to their versatility for families and shared living arrangements among students.

Three-bedroom apartments deliver lower yields at 3.69% as higher purchase prices around 309,000€ aren't fully offset by rental premiums. Four-bedroom and larger properties perform similarly at 3.95% yields.

Smaller units consistently outperform larger properties because Granada's rental market is dominated by students, young professionals, and tourists who prefer affordable, well-located accommodations over spacious living.

What is the typical yield by property size or surface area?

Property yields in Granada decrease as size increases, with sub-50m² studios delivering the strongest returns.

Studios (30-45m²) achieve 5.06% yields with rents averaging 13-15€ per square meter monthly. Their compact size attracts students willing to pay premium rates for prime locations.

One-bedroom apartments (45-65m²) generate 4.31% yields with rents around 11-12€ per square meter. These properties balance affordability with basic living comfort.

Two-bedroom units (65-85m²) deliver 4.56% yields at approximately 10-11€ per square meter in rent. They perform well due to shared living arrangements and small family demand.

Larger properties above 85m² typically yield below 4% as rental rates per square meter drop to 8-10€ while purchase prices increase disproportionately.

The rental market strongly favors compact, efficiently designed properties that maximize income per square meter invested.

What is the average purchase price including fees and taxes for each property type?

Granada property buyers face total costs 10-13% above listed prices when including all fees and taxes.

Property Type	Base Price (2025)	Fees & Taxes	Total Investment
Studio	140,000€	14,000-18,200€	154,000-158,200€
1-bedroom	195,000€	19,500-25,350€	214,500-220,350€
2-bedroom	223,450€	22,345-29,048€	245,795-252,498€
3-bedroom	309,000€	30,900-40,170€	339,900-349,170€
4+ bedroom	365,000€	36,500-47,450€	401,500-412,450€

Additional costs include transfer tax (6-10%), notary fees (0.1-0.5%), property registration (0.1-0.3%), legal fees (1-2%), and property survey costs (300-800€).

What are the main running costs, taxes, and maintenance expenses for rental properties in Granada?

Granada rental property owners face annual operating costs typically ranging from 2,000€ to 5,000€ depending on property size and location.

IBI property tax costs 0.4%-1.1% of cadastral value annually, typically 300-800€ per year for city center apartments. This tax varies significantly between neighborhoods.

Community fees for apartment buildings average 40-120€ monthly (480-1,440€ annually) covering maintenance, cleaning, lifts, and shared area upkeep.

Property insurance costs 150-500€ annually including civil liability coverage required for rental properties.

Rental income tax applies at 19% for EU/EEA residents and 24% for non-residents on net rental income after deducting mortgage interest, insurance, repairs, taxes, community fees, and 3% annual building depreciation.

It's something we develop in our Nicaragua property pack.

How does mortgage financing affect overall profitability and net yield?

Mortgage financing can enhance returns through leverage but reduces cash flow and increases risk exposure.

Non-residents access up to 70% loan-to-value ratios while residents qualify for 80% financing. Current fixed mortgage rates range from 3-4% with variable rates at Euribor plus 1.2-2.5%.

A 200,000€ property with 70% financing (140,000€ loan) at 3.5% interest costs approximately 630€ monthly in mortgage payments. With 850€ monthly rent, net cash flow reaches 220€ before other expenses.

Mortgage interest is fully deductible against rental income, reducing effective borrowing costs for taxpaying investors.

Leveraged investments amplify both gains and losses - a 5% property appreciation on 200,000€ generates 25% return on 40,000€ down payment, but vacancy or repair costs impact cash flow more severely with debt service obligations.

How do short-term rental yields compare to long-term rental yields?

Short-term rentals typically generate 5-8% gross yields compared to 4-6% for long-term rentals, but require significantly more management effort and face regulatory restrictions.

Successful Airbnb properties in Centro, Albaicín, and Realejo achieve 60-70% annual occupancy rates with average daily rates of 80-100€, generating higher gross revenues than annual leases.

Long-term rentals offer stable income with lower vacancy risk, minimal management requirements, and predictable cash flows. Student rentals particularly provide 9-10 month guaranteed occupancy aligned with academic calendars.

Short-term rental operating costs include platform commissions (3-5%), professional cleaning (15-25€ per turnover), higher utility bills, and potential property management fees (15-25% of revenues).

Regulatory compliance requires tourism licenses in many Granada neighborhoods, with some building communities prohibiting short-term rentals entirely. Long-term rentals face fewer restrictions but new rent control legislation may limit future rent increases.

What are some example properties and their actual rental yields?

Real Granada rental properties demonstrate yield variations across neighborhoods and property types.

A 35m² studio in Centro purchased for 140,000€ generates 650€ monthly rent, delivering 5.57% gross yield. This property benefits from prime location near cathedral and university.

A 75m² two-bedroom apartment in Zaidín bought for 185,000€ rents for 850€ monthly long-term or achieves 1,200€ monthly through short-term rentals during peak season, generating 5.51% long-term or 7.78% short-term gross yields.

A three-bedroom house in Realejo purchased for 280,000€ commands 1,100€ monthly rent from expat families, delivering 4.71% gross yield with lower vacancy risk due to longer tenant commitments.

A modern one-bedroom in PTS area costing 180,000€ rents for 700€ monthly to young professionals, generating 4.67% yield while benefiting from newer construction and lower maintenance costs.

These examples exclude operating expenses, which typically reduce net yields by 1-2 percentage points depending on financing and management costs.

Who are the main renter profiles in Granada and how do they influence rental demand?

Granada's rental market serves four primary tenant categories, each driving demand in specific neighborhoods and property types.

1. **University students** represent the largest rental segment with 60,000+ enrolled students creating massive demand for affordable shared accommodations near campus and tram lines2. **Young professionals and remote workers** seek modern amenities, reliable internet, and central locations, driving demand for one and two-bedroom apartments in Centro and Realejo3. **Retirees and expats** prefer quiet neighborhoods like Realejo and Cartuja with easy parking, good healthcare access, and community amenities4. **Tourists** concentrate in historic areas (Centro, Albaicín, Sacromonte) seeking authentic experiences, walking distance to attractions, and short-term rental properties5. **International researchers and academics** on temporary assignments demand furnished properties with flexible lease terms near university facilities

Student demand peaks during academic year (September-June) creating seasonal rental patterns, while tourist demand concentrates in spring and summer months, making diversified tenant strategies most profitable.

What are the current vacancy rates and how do they vary by area and property type?

Granada maintains relatively low vacancy rates due to strong university-driven demand, though rates vary significantly by location and rental strategy.

Long-term rentals near university areas experience minimal vacancy, typically under 5% annually due to consistent student and young professional demand.

Short-term rentals achieve median occupancy rates of 66-68% annually across Granada, with prime tourist locations in Centro and Albaicín reaching 70-75% occupancy during peak seasons.

Peripheral neighborhoods like Genil show higher vacancy rates (8-12%) for long-term rentals due to limited transport connections and fewer amenities attractive to primary renter demographics.

Studio and one-bedroom apartments maintain the lowest vacancy rates regardless of location, while larger three and four-bedroom properties face longer vacancy periods between tenants due to limited target market.

It's something we develop in our Nicaragua property pack.

How have rents and yields changed compared to 5 years ago and 1 year ago, and what is the forecast for 1, 5, and 10 years?

Granada's rental market has experienced accelerating growth with rental prices per square meter increasing 7.91% in the past year to reach 10.64€/m² as of September 2025.

Purchase prices have risen 14.3% compared to 2024, reaching 2,455€/m² in 2025, while the five-year trend shows consistent 3-7% annual appreciation since 2020.

Rental yields have improved slightly over the past year as rent increases outpaced purchase price growth, particularly benefiting investors who bought properties in 2022-2023.

The 1-year forecast predicts continued rent growth of 5-8% annually driven by ongoing housing supply constraints and sustained student/tourist demand, while purchase prices may moderate to 8-12% annual increases.

Five-year projections suggest Granada rents will increase 6-9% annually through 2030 as the city develops its technology sector and university enrollment grows, potentially pushing yields higher for well-positioned properties.

Ten-year outlook indicates Granada's rental market will mature with 4-6% annual rent growth as new supply increases and regulatory changes potentially cap short-term rental expansion, favoring long-term rental strategies.

How does Granada's rental yield compare to other similar-sized cities in Spain or Europe, and what are the smartest investment choices right now?

Granada delivers competitive rental yields of 4.1-5.1% average, with exceptional properties reaching 11.6%, positioning favorably against comparable Spanish and European cities.

Similar Spanish cities like Málaga and Valencia offer 4-5.5% yields, while major markets Madrid and Barcelona deliver lower 3.5-5% returns due to higher entry costs.

European comparison shows Granada competitive with Western European cities but below Eastern markets like Bucharest and Budapest offering 6-8% yields with higher risk profiles.

The smartest Granada investments in 2025 focus on studios and small apartments under 200,000€ near university or city center, providing optimal yield-to-risk ratios.

Properties with existing short-term rental licenses in Centro, Albaicín, and Realejo offer immediate high-yield opportunities before regulatory restrictions tighten further.

New builds in Zaidín and PTS areas provide the best balance between purchase price, rental demand growth, and modern amenities attracting quality tenants with lower maintenance costs.

It's something we develop in our Nicaragua property pack.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Nicaragua versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Best Yield Finder - Granada
2. Spain Easy - Property Buying Guide
3. Tejada Solicitors - Property Costs
4. Spain Homes - Rental Income Taxation
5. Spain Easy - Tourist Rental License Guide
6. The Latinvestor - Granada Price Forecasts
7. Airbtics - Granada Airbnb Revenue
8. The Latinvestor - Granada Real Estate Forecasts