06 Nov Parking space rental: is it a profitable business?
When we think about investing, we don’t usually think about parking space rental. The first thing that usually comes to mind is investing in housing, offices, commercial premises … But today we are going to explain why the option of investing in parking spaces is a safe investment.
What is surely not taken into account is that the purchase of garage parking offers a gross annual return of around 5.6% in Spain. And, as is logical, in large cities, such as Madrid or Barcelona, the figure is even higher, and can reach up to 8%.
What areas are best in Spain to invest in parking space rental?
If we talk about specific areas within Madrid or Barcelona, there are also some that provide greater performance.
In Madrid, for example, from the M-30 inland, there is a large deficit of places, which translates into a very large demand. Both commercial, tourist and office. The most profitable area for this type of investment is the Centro district, whose profitability is around 8%. Other districts, such as Chamartín, Chamberí and Salamanca, move in a range of between 6% and 8%. And, finally, another area to consider is the financial district, Azca. In this area, the demand is very wide and we can obtain returns of between 5% and 6%.
The same thing happens in Barcelona as in the capital. There are many inhabitants who drive to work in the city from the suburbs and seek garage rental. There is a great shortage of places, especially in the Centro and El Ensanche districts.
According to Expansión, in the Centro district of Madrid, we can find parking spaces for a price of 27,000 euros, and later, we can rent it for 180 euros, being able to achieve a profitability of 8%. But we can also find parking spaces with a lower price by investing in other districts. For less than 18,000 euros it is possible to find options, and then rent them for 80 euros per month.
In Barcelona, the purchase price is somewhat higher, about 18,700 euros on average. But that also translates into greater profitability, since places can be rented for about 104 euros per month.
What is the ideal environment to invest in the rental of garage spaces?
Apart from the areas, we have to take into account the environment. It is not the same to buy a garage space to rent on the outskirts of Madrid, where parking on the street is free, than to buy a garage space in the center of the capital.
Therefore, it will always be better to invest in environments with little surface parking and with a high influx of businesses. This way we will ensure that we can rent the garage space in a more secure way, apart from achieving a higher yield.
Why is it a good investment option?
The first reason would logically be that this type of investment is simpler and is one of the few real estate assets accessible to almost anyone. It is not the same to invest in a home, which can cost us for example 200,000 euros, than to invest in a garage space, which can cost us in a good area, between 25,000 and 30,000 euros.
In addition, it does not require financing, it involves few expenses, maintenance is low and very important, the risk of non-payment is much lower when compared to other types of assets.
All these reasons are what attract people who have small savings and want to invest them to make a profit.