Authored by the expert who managed and guided the team behind the Spain Property Pack
Yes, the analysis of Madrid's property market is included in our pack
If you're wondering what returns you can actually expect from a rental property in Madrid, you're in the right place.
We break down gross yields, net yields, neighborhood differences, and the costs that eat into your profits.
This article is updated regularly to reflect the latest market data from early 2026.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Madrid.
What are the rental yields in Madrid as of 2026?
What's the average gross rental yield in Madrid as of 2026?
As of early 2026, the average gross rental yield for residential property in Madrid is approximately 4.8%, meaning landlords can expect to collect annual rent equivalent to about 4.8% of the property's purchase price before any expenses.
Most typical residential properties in Madrid fall within a gross yield range of 4.5% to 5.2%, depending on factors like location, unit size, and building condition.
This puts Madrid in line with other major European capitals where high demand and rising prices have compressed yields below the 5% to 6% range you might find in secondary cities or emerging markets.
The single most important factor influencing gross rental yields in Madrid right now is the sharp rise in property prices, which has outpaced rent growth and squeezed the ratio between what you pay and what you collect.
What's the average net rental yield in Madrid as of 2026?
As of early 2026, the average net rental yield in Madrid is approximately 3.5%, which is what remains after subtracting recurring ownership costs from your gross rental income.
The gap between gross and net yields in Madrid typically runs between 1.0 and 1.5 percentage points, reflecting the various expenses landlords must cover throughout the year.
The expense category that most significantly reduces gross yield in Madrid is the combination of community fees (often 50 to 150 euros per month) and the IBI property tax, which together can consume a meaningful share of rental income even before maintenance and vacancy are factored in.
Most standard investment properties in Madrid deliver net yields in the 3.0% to 4.0% range, with the variation depending on whether you self-manage, how new the building is, and how much vacancy you experience between tenants.
By the way, you will find much more detailed rent ranges in our property pack covering the real estate market in Madrid.
We made this infographic to show you how property prices in Spain compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
What yield is considered "good" in Madrid in 2026?
In Madrid's rental market, a gross yield of 5.5% or higher is generally considered "good" by local investors, as it meaningfully exceeds the citywide average and provides a better cushion against costs and vacancies.
The threshold that separates average-performing properties from high-performing ones in Madrid sits around 6.0% to 6.5% gross, though reaching these levels usually means accepting trade-offs like less central locations, older buildings, or smaller unit sizes with higher tenant turnover.
How much do yields vary by neighborhood in Madrid as of 2026?
As of early 2026, gross rental yields in Madrid vary dramatically by neighborhood, with a spread of roughly 3.3% in the most expensive districts to over 7.0% in more affordable outer areas.
The highest rental yields in Madrid typically appear in working-class districts with lower purchase prices, such as Puente de Vallecas (around 7.1%), Villaverde (around 7.0%), and Usera (around 6.7%), where rent levels remain solid relative to what you pay to buy.
The lowest rental yields show up in Madrid's most prestigious neighborhoods, including Salamanca (around 3.3%), Chamartín (around 3.5%), and Chamberí (around 3.6%), where high property prices compress the rent-to-price ratio.
The main reason yields vary so much across Madrid's neighborhoods is simply the difference in property prices: premium areas command prices that rents cannot justify from a pure yield perspective, while affordable areas offer better ratios because entry costs are lower.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Madrid.
How much do yields vary by property type in Madrid as of 2026?
As of early 2026, gross rental yields in Madrid range from roughly 3.5% for premium penthouses and large family apartments to 6.0% or more for studios and compact one-bedroom units in well-located buildings.
Studios and small one-bedroom apartments currently deliver the highest average gross rental yield in Madrid because they command higher rent per square meter and attract a broader pool of tenants willing to pay for central locations.
Large family apartments and trophy units like penthouses tend to deliver the lowest gross yields in Madrid, as their high purchase prices are not matched by proportionally higher rents.
The key reason yields differ between property types in Madrid is that rent per square meter decreases as unit size increases, but sale prices per square meter often stay relatively stable in desirable buildings, which compresses the yield on larger units.
By the way, you might want to read the following:
What's the typical vacancy rate in Madrid as of 2026?
As of early 2026, the typical vacancy rate for long-term residential rentals in Madrid is approximately 3%, reflecting a tight market where tenant demand consistently outpaces available supply.
Vacancy rates across Madrid's neighborhoods range from around 2% in high-demand central areas like Centro and Chamberí to closer to 5% in some outer districts where tenant pools are smaller.
The main factor driving vacancy rates in Madrid is the persistent imbalance between strong rental demand, fueled by job growth and limited homeownership among younger residents, and a housing supply that has not kept pace.
Madrid's vacancy rate is notably lower than the Spanish national average, which includes many secondary cities and rural areas with weaker demand, making the capital one of the tightest rental markets in the country.
Finally please note that you will have all the indicators you need in our property pack covering the real estate market in Madrid.
What's the rent-to-price ratio in Madrid as of 2026?
As of early 2026, the average rent-to-price ratio in Madrid is approximately 0.39% monthly, which translates to a gross rental yield of around 4.7% when annualized.
A rent-to-price ratio above 0.45% monthly (or roughly 5.4% annualized) is generally considered favorable for buy-to-let investors in Madrid, as it provides a better margin after costs; this ratio is simply another way of expressing the rental yield.
Madrid's rent-to-price ratio is comparable to other major European capitals like Barcelona, Paris, and Milan, where strong demand and high property prices have compressed returns below what you would find in smaller cities or emerging markets.
We have made this infographic to give you a quick and clear snapshot of the property market in Spain. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
Which neighborhoods and micro-areas in Madrid give the best yields as of 2026?
Where are the highest-yield areas in Madrid as of 2026?
As of early 2026, the top three highest-yield neighborhoods in Madrid are Puente de Vallecas (with micro-areas like Numancia and Portazgo), Villaverde (including Villaverde Alto and Los Rosales), and Usera (particularly Almendrales and Moscardó).
These high-yield areas in Madrid typically deliver gross rental yields in the 6.5% to 7.1% range, significantly above the citywide average of around 4.8%.
The main characteristic these high-yield neighborhoods share is their relatively low property prices combined with solid rental demand from working-class tenants and immigrants, which keeps the rent-to-price ratio favorable for investors.
You'll find a much more detailed analysis of the areas with high profitability potential in our property pack covering the real estate market in Madrid.
Where are the lowest-yield areas in Madrid as of 2026?
As of early 2026, the top three lowest-yield neighborhoods in Madrid are Salamanca (including Recoletos, Goya, and Lista), Chamberí (particularly Almagro, Trafalgar, and Ríos Rosas), and Chamartín (especially El Viso and Nueva España).
These prestigious areas typically deliver gross rental yields in the 3.3% to 3.6% range, well below the Madrid average.
Yields are compressed in these neighborhoods because property prices are exceptionally high due to prestige, quality of life, and strong demand from wealthy buyers, but rents cannot proportionally match those elevated purchase costs.
Buying a property in a low-yield area is one of the mistakes we cover in our list of risks and pitfalls people face when buying property in Madrid.
Which areas have the lowest vacancy in Madrid as of 2026?
As of early 2026, the neighborhoods with the lowest residential vacancy rates in Madrid include Centro (especially Malasaña and Lavapiés), Chamberí (particularly Trafalgar), and Arganzuela (including Delicias and Legazpi).
Vacancy rates in these low-vacancy areas are estimated to run between 1% and 2%, meaning properties rarely sit empty for more than a few weeks between tenants.
The main demand driver keeping vacancy low in these Madrid neighborhoods is their combination of excellent public transport connections, walkable amenities, and appeal to young professionals who prioritize lifestyle and commute times.
The trade-off investors face when targeting these low-vacancy areas is that property prices are higher and gross yields are lower, so you gain stability and liquidity but sacrifice some upfront return.
Which areas have the most renter demand in Madrid right now?
The three neighborhoods currently experiencing the strongest renter demand in Madrid are Centro (including Malasaña, Chueca, and Lavapiés), Chamberí (especially Trafalgar and Arapiles), and Tetuán (particularly Cuatro Caminos and Valdeacederas).
The renter profile driving most of the demand in these areas consists of young professionals, often aged 25 to 40, who work in central Madrid and prioritize walkability, nightlife, and easy metro access over space.
Rental listings in these high-demand Madrid neighborhoods typically get filled within one to two weeks of going live, and well-priced units in good condition often receive multiple applications within days.
If you want to optimize your cashflow, you can read our complete guide on how to buy and rent out in Madrid.
Which upcoming projects could boost rents and rental yields in Madrid as of 2026?
As of early 2026, the top three infrastructure projects expected to boost rents in Madrid are Madrid Nuevo Norte (a major mixed-use development in the north), Operación Campamento (a large regeneration project in Latina), and the Metro Line 11 expansion connecting Plaza Elíptica to Conde de Casal.
The neighborhoods most likely to benefit from these projects include Chamartín and Fuencarral (near Madrid Nuevo Norte), Latina and the Campamento area (near Operación Campamento), and districts along the new Metro Line 11 corridor like Arganzuela and Retiro.
Once these projects are completed, investors might realistically expect rent increases of 5% to 15% in directly affected micro-areas, though the timeline spans several years and gains will be gradual rather than immediate.
You'll find our latest property market analysis about Madrid here.
Get fresh and reliable information about the market in Madrid
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What property type should I buy for renting in Madrid as of 2026?
Between studios and larger units in Madrid, which performs best in 2026?
As of early 2026, studios and small one-bedroom apartments in Madrid outperform larger units in terms of both rental yield and occupancy, making them the better-performing choice for most investors focused on returns.
Studios in Madrid typically deliver gross yields of 5.5% to 6.5% (roughly 275 to 325 euros monthly rent per 50,000 euros invested, or about 300 to 350 USD and 280 to 330 EUR), while larger two to three bedroom units often yield 4.0% to 5.0%.
The main factor explaining this difference is that rent per square meter is significantly higher for smaller units, while the purchase price per square meter does not drop proportionally for larger apartments.
However, larger family apartments can be the better investment if you are targeting stable, long-term tenants like families with children, who tend to stay for years and cause less turnover-related vacancy and wear.
What property types are in most demand in Madrid as of 2026?
As of early 2026, the most in-demand property type in Madrid is the one to two bedroom apartment located near Metro or Cercanías stations, which represents the default rental product for the city's large population of young professionals and couples.
The top three property types ranked by current tenant demand in Madrid are: first, one to two bedroom apartments in inner-ring neighborhoods; second, studios in central and well-connected areas; and third, two to three bedroom apartments in family-friendly districts with good schools.
The primary demographic trend driving this demand pattern is Madrid's growing population of young professionals who delay homeownership, combined with a significant expat and international worker community that prefers renting over buying.
One property type currently underperforming in demand is the large detached house or townhouse in outer districts, which appeals to a smaller buyer pool and often sits vacant longer due to higher rents that fewer tenants can afford.
What unit size has the best yield per m² in Madrid as of 2026?
As of early 2026, the unit size range that delivers the best gross rental yield per square meter in Madrid is 30 to 50 square meters, which corresponds to studios and compact one-bedroom apartments.
For this optimal unit size in Madrid, the typical gross rental yield runs around 5.5% to 6.5%, translating to roughly 13 to 16 euros in monthly rent per square meter (about 14 to 17 USD and 13 to 16 EUR).
Smaller micro-studios under 25 square meters can have regulatory and lender challenges, while larger units above 70 square meters see rent per square meter drop faster than their price per square meter, compressing yield at both extremes.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in Madrid.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Spain 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.
What costs cut my net yield in Madrid as of 2026?
What are typical property taxes and recurring local fees in Madrid as of 2026?
As of early 2026, the annual IBI property tax for a typical rental apartment in Madrid ranges from about 300 to 1,000 euros (roughly 320 to 1,080 USD), depending on the cadastral value of the property, with the 2026 rate set at 0.414% of cadastral value.
Other recurring local fees landlords must budget for in Madrid include the waste collection fee (tasa de basuras), which varies by household but typically adds 50 to 150 euros per year (about 55 to 165 USD), and community fees if not passed to tenants.
Combined, these taxes and fees typically represent 3% to 6% of gross rental income in Madrid, depending on the property's cadastral value and how community expenses are structured in the lease.
By the way, we cover all the hidden fees and taxes in our property pack covering the real estate market in Madrid.
What insurance, maintenance, and annual repair costs should landlords budget in Madrid right now?
Annual landlord insurance for a typical rental property in Madrid costs approximately 200 to 400 euros (about 215 to 430 USD), with higher premiums if you add rent default coverage or content protection.
The recommended annual maintenance and repair budget in Madrid is 0.5% to 1.0% of the property's market value, or roughly 800 to 2,000 euros per year (about 860 to 2,150 USD) for a typical apartment, depending on the building's age and condition.
The type of repair expense that most commonly catches Madrid landlords off guard is plumbing and water damage, particularly in older buildings where pipes and fixtures have not been updated for decades.
In total, landlords should realistically budget 1,000 to 2,500 euros per year (about 1,080 to 2,700 USD) for the combined cost of insurance, routine maintenance, and unexpected repairs.
Which utilities do landlords typically pay, and what do they cost in Madrid right now?
For standard long-term rentals in Madrid, tenants typically pay electricity, gas, water, and internet, while landlords cover community fees, IBI, and building insurance, though some landlords also pay the waste fee depending on the lease terms.
If you offer an all-inclusive rental (more common for furnished short-term lets), landlord-paid utilities in Madrid typically run 100 to 250 euros per month (about 110 to 270 USD), depending on the season, unit size, and energy efficiency of the building.
What does full-service property management cost, including leasing, in Madrid as of 2026?
As of early 2026, full-service property management in Madrid typically costs 5% to 10% of monthly rent plus VAT (21%), which translates to roughly 50 to 150 euros per month (about 55 to 165 USD) for a standard apartment renting at 1,000 to 1,500 euros.
On top of ongoing management, the typical leasing or tenant-placement fee in Madrid is half to one full month of rent, charged each time a new tenant is found, which can add 500 to 1,500 euros (about 540 to 1,620 USD) per turnover.
What's a realistic vacancy buffer in Madrid as of 2026?
As of early 2026, landlords in Madrid should set aside approximately 5% of annual rental income as a vacancy buffer for easy-to-let units, rising to 8% to 10% for premium or niche properties that attract a smaller tenant pool.
In practice, this translates to roughly two to three weeks of vacancy per year for well-located apartments in high-demand neighborhoods, though turnover periods can stretch longer for larger or higher-priced units.
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An increasing number of foreign investors are showing interest. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about Madrid, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| Banco de España - Documento Ocasional 2432 | Spain's central bank publishes rigorous, methodology-forward research on housing and rental markets. | We used it as our anchor for gross rental profitability definitions and to understand Madrid's district-level yield distribution. We also relied on its framework for interpreting rent-versus-price indicators. |
| idealista - Madrid Sale Price Index | idealista is Spain's largest housing portal and publishes transparent, repeatable market indexes used across the industry. | We used it to obtain December 2025 asking prices per square meter at city and district level. We combined this with rent data to compute rent-to-price ratios by neighborhood. |
| idealista - Madrid Rent Price Index | The same established publisher with consistent methodology, giving us comparable rent data alongside sale prices. | We used it to pull December 2025 asking rents per square meter for Madrid and its districts. We annualized these figures and divided by sale prices to estimate gross yields. |
| Ayuntamiento de Madrid - IBI Rate 2026 | This is the city's official communication about municipal property tax policy. | We used it to establish the 2026 IBI rate of 0.414% as a key recurring landlord cost. We translated this into an annual drag on net yield, noting it applies to cadastral value rather than market value. |
| Ayuntamiento de Madrid - IBI Ordinance | This is the legal source behind the tax rate, not just a press headline. | We used it to verify the IBI rate and confirm that it is structurally stable and recurring. We also referenced it to explain how cadastral values work differently from market values. |
| Comunidad de Madrid - ITP Explainer | This is the regional government's official taxpayer guidance on property transfer tax. | We used it to frame transaction costs that affect investor returns even though they are not part of annual net yield. We kept the explanation simple: what it is, when it applies, and why it matters. |
| Ayuntamiento de Madrid - Operación Campamento | This is the city's official communication about a major urban regeneration project. | We used it to identify where new supply and infrastructure could change rents over time in the Latina district. We also mapped specific neighborhoods tied to the project. |
| Ayuntamiento de Madrid - Madrid Nuevo Norte | This is the city's official portal page for one of Europe's largest urban development projects. | We used it to ground future demand narratives in an official reference. We also used it to map the project to real sub-areas like Chamartín and north Madrid. |
| Metro Madrid - Line 11 Expansion | The metro operator's official press release is the most direct source for transit infrastructure works. | We used it to identify locations where connectivity upgrades can support rent growth along the Plaza Elíptica to Conde de Casal corridor. We kept project catalysts factual rather than speculative. |
| Delegación del Gobierno - Barajas Modernization | This is an official government release about major airport investment. | We used it to support demand strength in airport-linked districts like Barajas and parts of Hortaleza. We treated it as a supporting factor for medium-term demand rather than a yield guarantee. |
| INE - Censo de Población y Viviendas 2021 | INE is Spain's national statistics agency, the authoritative source for census data. | We used it for structural context on housing stock and non-primary dwellings. We explained why census empty homes data does not equal rental vacancy and must be interpreted carefully. |
| Ayuntamiento de Madrid - District Indicators | This is the city's own statistical product with granular district and neighborhood data. | We used it to sanity-check neighborhood narratives about who lives where and household profiles. We kept demand explanations tied to real district characteristics rather than stereotypes. |
| Buy to Let Spain - Property Management Costs | This is a widely referenced industry guide for landlord costs in Spain. | We used it to establish realistic property management fee ranges for Madrid. We stress-tested net yield under both 5% and 10% management cost scenarios. |
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