Profitability of investment in rental housing and relationship with real estate risk of volatility on a submunicipal scale in Seville

Abstract

The profitability of real estate investment projects can be considered in different ways. One of them is the revaluation of real estate prices, and another is that obtained by the rental exploitation of these properties. Although Spain is one of the European countries in which most are interested in purchasing a home, the option of renting has increased in recent years. This work analyses the relationship between the profitability of residential rentals, expressed as an annual variation rate, and the real estate risk of rent volatility. The results obtained are compared with those obtained in a previous study, where real estate profitability was considered as the revaluation of the sale price of homes. This research is carried out at the sub-municipal level, which makes it possible to obtain interesting data on local markets. Many owners of rental properties lack information to help them understand the risks that can affect their real estate investments. This work provides information in this sense, contributing to having indicators that warn and help to understand the growing vulnerabilities that affect the stability of the real estate sector. © 2024 by the authors.