The city of Malaga has been experiencing a real estate boom in the past few years.
Now, in no small part because of the pandemic and the explosion of remote working, this Andalusian province has become a magnet for digital nomads worldwide.
This, in addition to the fact that it is also a fast-growing destination for both national and international university students, has led to Malaga surpassing Spain’s two major cities, Madrid and Barcelona, in terms of the yields offered by rental properties
According to statistics from Fragua by Atlas Real Estate Analytics, in 2021, the rental yield for Malaga was 7.22% (up from 5.43% the previous year), well above that of Barcelona (5.29%) and Madrid (4.96%).
This is because while purchase and sale prices have remained stable (the average purchase price per square metre rose 2.77%, from 2,274 to 2,337 euros), the opposite has been true for rentals.
Between December 2020 and December 2021, the average rental price per square metre increased from 10 to 14 euros – an increase of 40%, according to data from Fragua by Atlas Real Estate Analytics.
This shift has seen profitability in certain areas of the city centre soar up to 9.66% (the average is 7.04%). This is mostly down to rapid gentrification and an increase in short-break tourism, especially prior to the pandemic.
A new hub for international business
Malaga city hall has made an enormous effort to try to make the city the “Silicon Valley of Europe”.
And this is reaping its rewards with a growing entrepreneurial ecosystem in the city. This has had a direct impact on the rental market because of the arrival en masse of so-called “digital nomads”.
These people, generally working in the technology sector, can now work from almost anywhere in the world and are therefore looking for attractive destinations to live, especially those with a great climate, as well as good transport and health infrastructures.
Digital nomads are, on the whole, uninterested in buying property and at the same time have relatively high salaries and can pay higher rents as a result.
Multinationals are choosing Malaga
Because of the size and availability of the workforce in the Malaga area now, a number of multinationals are choosing the city to set up new bases.
Vodafone, for example, has selected Malaga for its new European R&D&I centre of excellence, which will generate more than 600 highly qualified jobs.
Likewise, Google has announced that it will set up a centre of excellence for cybersecurity in the city, while Globant has also started operating in the area.
Students and young people
Likewise, Fragua by Atlas Real Estate Analytics has also noted a significant increase in rental demand in the Teatinos area. This is because of the increasing national and international student population at the University of Malaga (UMA) which is unable to buy and sell.
Young people on the whole are increasingly unable to get on the property ladder so there is also a huge increase in demand for coliving spaces in the city.
Among the 11 districts which make up Malaga city, Campanillas has one of the highest rental yields (7.8%). This is because of the scarcity of rental properties in this area which is located beside the ever-growing Málaga TechPark (formerly the PTA) which has close links to UMA and employs many recent graduates.
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Maria Luisa Castro
