Is Alicante the cheapest city in Spain?

Recently we read in Alicante Plaza that Alicante is the Mediterranean city with the cheapest square meter price, so we prepared our own report in order to see if it is true.

Let’s have a closer look. According to data from the Idealista portal, the price per m² was 1,513 € in December 2019, shortly before the start of the pandemic, reaching its maximum in May 2020 (1.559€), which represented a 3.00%. total increase. During the pandemic, the price per square meter began to drop to the current 1.460 €/m², a drop of 6.70%.

At first glance, the price per m² has fallen, but which is the truth? We first need to answer some questions: Has the price of housing in Alicante really fallen? Or do the macro data have something to do with it? On the other hand, is Alicante a city as cheap as Alicante Plaza claims? Is it like this in all neighborhoods? What are the cheapest neighborhoods in Alicante? And the most expensive? We are going to answer these and other questions below, are you ready?

Has the price of housing fallen in Alicante?

It certainly has, as the data provided by Idealista reveals. We are going to cross the data with TINSA, one of the most important appraisal agencies in Spain.

As you can see, although the price per square meter does not coincide (normal difference between the appraisal agency figures’ and the platform’s prices), they do coincide in a year-on-year increase in 2019 compared to 2018, with a price drop in 2020 compared to 2019. The question remains: did prices rise or fall at the end of 2021? According to Tinsa the price of housing increased, which is true, although Idealista collects a decrease. What happens is that the price of housing continues to grow, and that is reflected in the sale contracts and appraisals, something that is not always mirrored in the portals, which saw prices very high at the end of 2020 and adjusted throughout 2021.

The price per square meter in Alicante in relation to the coastal provincial capitals.

Is Alicante a good option to invest?

Yes, it is. And let’s see why.

Of the 11 provincial capitals analyzed (plus the city of Elche, the second city in the province of Alicante), Alicante is the fourth cheapest , being the fifth most populated. Comparatively speaking, the price per square meter in Alicante is cheaper than in Valencia, Malaga or Tarragona. But its population competes with Valencia, Murcia or Malaga (to mention just a few cities not too far away from Alicante with similar contitions).

Considering the population, the square meter price and the power of the tourist sector, Alicante is a very interesting city for real estate investment with assures very high yields.

Alicante: evolution of the price per square meter by neighborhood

We have seen that the average value per square meter in Alicante is between 1.400-1.460 €/ m². The most expensive areas are San Juan Playa, El Cabo de Huertas and PAU II, areas of new construction, as well as downtown (Ensanche-Diputación, center), while the cheapest neighborhoods are Virgen del Remedio, Juan XXIII and the northern area of Alicante. In the middle are the neighborhoods closest to center city and the most populated, such as Campoamor, Altozano, Carolinas Bajas, Carolinas Altas and Benalúa. Areas that due to their characteristics (proximity to the center, public transportion and value per square meter) are very attractive for investment: long stay, temporary, per rooms or vacation.

So, where is the best area to invest in Alicante? Since we will find different answers depending on the type of investment, let’s see what we might be able to do in each area:

• High-value rentals: if we seek to obtain rentals of €800 to €1.200 per month, our focus should be on the most exclusive areas of the city, which are the Center of Alicante and Cabo de las Huertas.
• Medium profitability rental: between 8-15% gross annual return, in areas such as Campoamor, Carolinas or Altozano, where we will find very profitable housing from 65.000€.
• Holyday rentals: vacation rentals in Alicante work all year round, although its peak period is from April to the end of September. The most interesting areas for this type of rental are the historic center of the city and San Juan Playa. First floors and commercial premises converted into housing around the center are the most popular investment opportunities.

Conclusion

So, according to the article quoted above:

• Is Alicante the cheapest city along the coast? No, but it is one of those that offers the highest yields between price per square meter and demographic density.
• Are Juan XXIII and Segundo Sector interesting for investment? It would not be our first choice, but it is true that you can get homes from €12,000 and rents are around €280 per month (annual gross yield of 28%), the higher the return, the higher the risk.
• Has the real estate market withstood the impact of the pandemic? Yes. Although there were difficult times, sales have returned to better levels than in 2019, house prices remain stable and financing at low interest rates continues to boost the dynamism of the sector.
• Is it, therefore, a good time to invest? It is seldom not a good time to invest, prices are growing gradually but steadily, the demand for rents is still high, in all its forms. So if you are looking for your investment opportunity but do not know how to start, you can contact us and we will advise you.