Madrid, Barcelona, Valencia. The leading trio. The one on every investor's lips. Some continue to focus on Madrid and Barcelona, two safe bets, but Valencia is taking off and Spain's third-largest city is overtaking the first two. 

So, Madrid, Barcelona, or Valencia: which city to choose for your real estate investment in Spain in 2025? Terreta Spain's experts answer you. 

Overview of the Spanish real estate market in 2025 

Purchase prices still rising in Spain

Reflecting Spanish growth (+3.2% in 2024), the Spanish real estate market is in very good shape.

With a general increase in real estate prices expected to be around 4.5% for 2025 and an initial increase of 4.2% in the first quarter of the year (the highest increase in 10 years), now is the time to invest in Spain more than anywhere else in the Eurozone.  

Legend: Evolution of real estate prices in Europe

Source: Idealista

This increase in purchase prices is due to several converging factors: 

• Strong demand, particularly from international investors.
• Relatively favorable financing conditions.
• A very limited supply in the face of this growing demand.

Although constantly rising since the summer of 2020 (+11% between March 2024 and March 2025), the average price in Spain does not exceed 2300 euros per meter. A boon for foreign investors.

With more than 640,000 acquisitions in 2024 (+10% compared to 2023), Spain is now "The place to buy". 

Legend: Evolution of sales volume since 2007

Source: Idealista

The Spanish rental sector is booming

On this front too, things are looking good for those who can invest. 

According to the latest studies, the average rental yield in Spain reaches almost 7%, a record figure in Europe. The rental market has experienced a spectacular increase in rents over the last decade. They have doubled, from €7/m² to €14/m² on the national average between 2015 and 2025.

Demand is there, but there is a stock shortage. In other words, the equation is perfect for a price increase and a market in which the owner has the upper hand.

Valencia, the new challenger in Spanish real estate

In this context, which favors international investors whose purchasing power is greater than that of national buyers, three Spanish cities stand out: Madrid, Barcelona and Valencia. Each has specific characteristics that may correspond to different investor profiles. 

Our experts, however, are focusing on Valencia, which is embarking on what they call a decade of catching up with its neighbors. The proof? Prices have increased by more than 50% since 2021 (source: Idealista). Many investors are turning away from Madrid and Barcelona to look further south. Valencia is changing the rules of the game thanks to its accessible prices, exceptional profitability and promising growth prospects. The cards are being reshuffled. 

Legend: Madrid, Barcelona and Valencia, the Spanish cities in investors' sights. 

Source: Google maps – Terreta Spain

Comparative analysis: price, profitability and growth

Price per square meter, Valencia's incomparable accessibility 

Focus on Madrid's purchase prices

With an average price per square meter of 6 000 € in the city center, Madrid remains (with the Basque Country) the most expensive real estate market in Spain (+ 22.7% in one year). The curve has been clearly upward since the end of the Covid parenthesis and the now very high acquisition prices penalize rental yields. 

Legend: Price evolution in Madrid since 2004

Source: Idealista 

In the capital, the price range is vast, but the Salamanca district, located in the very center, shows more than 9,300 €/m². This market reality reflects the city's status as an economic capital and limits access for investors looking for high returns. Exceptions are made for peripheral areas, such as Puente de Vallecas (2,650 €/m²), Usera (2,880 €/m²) or Villaverde (2,300 €/m²), for example.

Caption: The least expensive peripheral areas of Madrid to buy in

Source: Google

Focus on Barcelona purchase prices

600 kilometers from the capital, the country's second-largest city, which has always been in its shadow, Barcelona, has an average cost slightly lower than that of Madrid, 4,800 € per square meter. Again, prices vary by district: expect 2,600 €/m² in Nou Barris, for example, and up to 6,200 €/m² in the heart of Sarria-Sant Gervasi, one of the favorite districts for expatriates.

Although its geographic location and international reach are attractive, Barcelona suffers from political uncertainties regarding its independence, which deters some cautious investors.

Caption: The Sarria-Sant Gervasi districts, the most expensive in Barcelona, and Nou Barris, the least expensive in Barcelona. 

Source: Google

Focus on Valencia purchase prices

Further south, a 4-hour drive along the Mediterranean coast, Valencia, the country's third-largest city, is challenging the two largest Spanish metropolises for the first time in its history. 

With a median price per square meter of only 2,900 € (+ 21.6% over the last 12 months), the capital of the Valencian Community is above the national average, but it offers an entry into the Spanish real estate market twice as cheap as Madrid or Barcelona. 

This accessibility is ideal for first-time investors, those looking to maximize their returns, and those planning to make a good capital gain in the medium term. Visit the city's neighborhoods with us by clicking here.

For an immersion in real estate in Valencia, discover the testimony of Théo, a young investor who bought on site with our team.

Rental yields: Valencia is unbeatable

Rental properties in Valencia

Rental profitability is the key criterion for any real estate investor. On this point too, Valencia largely dominates the Spanish real estate landscape. Within the city, the average rental yield is between 5 and 7%, but it can exceed 8% in certain districts, compared to a national average of 7%. 

In 2025, the Valencia region is still at the top of the profitability rankings (along with Murcia). Geoffroy Reiser and Antoine Évêque tell you more in this interview with le Petit Journal.com. This figure is explained by moderate purchase prices, constantly rising rents in the capital and throughout the Community since the end of 2021 (more than 65% increase in the city of Valencia) and very high rental demand.

• In March 2025, expect to pay €15.3/m² (+13.2% in one year), i.e. 1,530 euros in rent for a 100 m² apartment in Valencia. 

Legend: the curve of rising rents in Valencia since 2008. Source: Idealista

With a rental yield that sometimes reaches up to +50% compared to Madrid or Barcelona (with yields around 5%), the country's third-largest city guarantees rapid and significant returns on investment. 

The most profitable districts of Valencia

• Rascanya: 2,000 €/m² (+ 19% in one year). Rents have also increased by 19% and exceed €14/m². 
• Profitability > 8%
• L’Olivereta: 2,000 €/m² (+ 20% in one year), rents have increased by 25.4% in parallel and reach €14/m² in March 2025. 
• Profitability = 8.4%
• Jesus: 2,100 €/m² (+ 22% in one year), rents have increased by 16% this last year and now reach €13/m². 
• Profitability ≈ 7.4%

The advice of Terreta Spain's experts 

Focus on the historic center and Cabanyal, the beach district, if you are considering tourist rentals. 

Rental properties in Barcelona and Madrid

In Barcelona as in Madrid, average returns do not exceed 5%. 

In both cases, they are supported by high rental demand (tourism, students, young international professionals) but penalized by prohibitive rents: 

• €23.5/m² in Barcelona (+13.2% in one year), which is €2,350 per month for a 100 m² property.
• €21.2/m² in Madrid (+12.2% in one year), which is €2,120 per month for a 100 m² property.

However, some more accessible neighborhoods retain good rental potential:

In Madrid, peripheral districts such as Villaverde or Usera show returns of around 5.5 to 6%, but at the cost of being far from the center.

In Barcelona, Nou Barris or Sant Andreu allow you to reach up to 6%, especially thanks to rents that continue to increase in these less saturated areas.

• Investors entering the Madrid real estate market are focusing more on long-term appreciation than on immediate returns. 
• Those entering the Barcelona market often target its tourist and university potential. 

Note that Madrid's profitability is still excellent for a capital with a robust market. For comparison, in London or Paris, returns do not exceed 3% on average. 

Valencia, the potential of renovation

Another strong point is that real estate in Valencia has very high renovation potential. An additional dimension to increase the value of the property both at the time of purchase and for rental, in the face of increasingly demanding tenants. There are still many opportunities in its historic center for renovation projects. And that's good, because Terreta Spain is also your trusted partner for your construction work in Spain. Contact us to find the property you need AND to manage your renovation project. 

To learn more about construction work in Spain, see our file: "All about real estate renovation in Spain" 

Growth prospects: Valencia, a unique potential 

• Madrid has recently stolen the spotlight from Paris in the ranking of cities where to invest in Europe. The Spanish capital is boosted, on a continental scale, by macroeconomic factors. 67% of foreign investments made in Spain are indeed in the capital.

Legend: The 10 European cities where to invest in 2025

Source: PWC

• Barcelona, on the other hand, has left the top 10 of PricewaterhouseCoopers' ranking. Price growth there remains supported by its tourist attractions and its popularity with international buyers, but the Catalan political tensions are a factor of uncertainty, as is the very strict regulation on seasonal rentals. 

• Valencia, with an impressive increase of nearly 60% in prices over five years, demonstrates the dynamism of the local market. This potential is reinforced by an exceptional quality of life, a diversified economy, and still flexible legislation on tourist rentals.

Strategic advice for investors

Faced with these three markets with distinct characteristics, the optimal strategy will depend on your investor profile and your objectives.

• For investors with limited capital or prioritizing immediate profitability, Valencia stands out as the most relevant choice. It clearly offers the best value for money on the Spanish market. In addition, the price growth dynamic suggests an interesting capital gain in the medium term. What types of investments should be favored? Tourist rentals, very lucrative in the city center and by the beach. Renovation projects to optimize returns by increasing the value of the property (+25-30%). Student rentals with stable demand around universities (Benimaclet, Blasco Ibáñez).  

• Investors with greater financial capacity and seeking a balance between return and security may turn to Barcelona. With a decent return, especially in emerging neighborhoods, and solid valuation prospects throughout the city and its periphery, the Catalan capital offers an attractive compromise, while benefiting from good market liquidity.

• Investors prioritizing long-term security and with significant capital, Madrid represents the most conservative option. The Spanish capital offers the best guarantees in terms of long-term valuation and market liquidity, thanks to its status as the country's main economic center.

Whatever city you choose, here are our latest recommendations for 2025: Do not delay your purchase decision in the face of the upward trend in prices.

• "Location, location, location". The determining factor in the future valuation of your property is location.
• Get accurate information on local tax specificities, which can vary significantly from one autonomous community to another.
• Monitor regulations on tourist rentals which change regularly. 
• Consider the opportunities offered by renovation, particularly in Valencia, to optimize the overall return on investment.

To go further, contact our experts. Terreta Spain is your trusted partner for the purchase and renovation of real estate in Spain. 

Conclusion

In conclusion, Valencia clearly stands out as the most promising choice for those seeking immediate profitability as well as exceptional growth potential. With affordable prices, high rental yields and a remarkable quality of life, Valencia is establishing itself as the new star of the Spanish real estate market. Don't wait any longer, go for it. 

Sources: Idealista, Fotocasa, Tinsa

FAQ: Madrid, Barcelona, Valencia: which city to choose for your investment in Spanish real estate in 2025?

Why invest in Valencia in 2025?

Affordable purchase prices (2,900 €/m² on average) and rising (+21.6% in one year).

Rental profitability defying all competition at 8% in some districts, well above Madrid (4.9%) and Barcelona (5.2%). 

An excellent quality of life.  

Which are the most profitable neighborhoods? 

Rascanya, Jesus, l’Olivereta (between 7 and 8% gross rental yields). 

How does Valencia compare to Madrid and Barcelona?

Valencia offers a higher return while being half as expensive to purchase.  

Why choose Terreta Spain for investing?

Terreta Spain offers comprehensive support: property search, rental management, and renovation to maximize your return. Contact us to discover the best opportunities in Valencia!