Rental Yield in Madrid 2026: Is It Worth It or Better to Sell?
Analysis of Rental Yield in Madrid in 2026
The real estate market in Madrid remains one of the most attractive investment options in Spain. In 2026, the average property price in Madrid stands at 5,104 €/m² (Source: Idealista), while the average rental price reaches 20.6 €/m². These figures have sparked a debate on the best investment strategy: keeping the property for rent or selling it at a time of high prices.
Rental Yield in Madrid
Rental yield is calculated by comparing the income generated from rent with the costs of purchasing and maintaining the property. It is expressed as a percentage and is a key indicator for assessing the viability of a real estate investment.
Let's take as a reference an average flat of 80 m² in Madrid:
- Purchase price: 408,320 €
- Annual rental income: 19,776 €
- Annual expenses (IBI, community fees, insurance, maintenance, vacancy, property management, and taxes): 13,100 €
- Net annual profit: 6,675 €
- Net annual yield: 1.63%
For a more detailed analysis, let's evaluate the rental yield over a 5-year horizon considering the progressive increase in rent and the impact of inflation. The minimum rental term in Madrid is 5 years.
5-Year Rental Yield Projection
Assuming the rental price increases by 2% annually, the accumulated income would be:
- Year 1: 19,776 €
- Year 2: 20,171 €
- Year 3: 20,574 €
- Year 4: 20,986 €
- Year 5: 21,406 €
Total accumulated over 5 years: 103,939 €
Similarly, the expenses associated with renting will grow with the estimated inflation of 3% annually:
- Year 1: 13,100 €
- Year 2: 13,493 €
- Year 3: 13,898 €
- Year 4: 14,315 €
- Year 5: 14,744 €
Total accumulated over 5 years: 69,558 €
Net Profit Over 5 Years
By subtracting the total expenses from the accumulated income:
103,939 € - 69,558 € = 34,380 €
Therefore, the accumulated yield over 5 years is:
(34,380 € / 408,320 €) × 100 = 8.42%
Estimated Sale Price in 5 Years
To evaluate the selling alternative, we analyse three possible scenarios for the property's price evolution over a 5-year horizon:
- Bullish scenario (+15%): The property's value is expected to increase by 15% due to high demand and housing scarcity in key areas. Estimated price: 469,568 €. (Gain of 61,248€ - I.P.C. 5 years)
- Neutral scenario (0%): The property's price remains stable, with no significant variations. Estimated price: (Gain of 0€ - I.P.C. 5 years).
- Bearish scenario (-15%): A 15% decrease is anticipated due to a possible slowdown in the real estate market. Estimated price: 347,072 €. (Loss of 61,248€ - I.P.C. 5 years)
In these scenarios, the property's appreciation could represent an interesting selling opportunity, especially in a bullish context where the generated capital gain could surpass the accumulated rental yield.
Comparison: Rent vs Sell
Renting offers a constant yield over time, with a monthly income flow and the possibility of benefiting from a progressive increase in rents. However, it also involves recurring expenses, risk of non-payment, and a high management burden.
On the other hand, selling the property allows for immediate liquidity and avoids the responsibilities derived from rental management. With a real estate market that has shown growth in recent years, selling at a favourable time could maximise profit and avoid long-term risks.
If you are considering selling your property in Madrid, at Idílico Realty we offer a . calculator for the sale price of your flat in Madrid for a free, no-obligation initial online valuation.
