Madrid, Barcelona, Valencia. The top three. The one that's on every investor's lips. Some of them are still betting on Madrid and Barcelona, two sure-fire assets, but Valencia is on a roll, and Spain's third-largest city is beating the first two to the punch. 

So, Madrid, Barcelona, Valencia: which city should you choose for your real estate investment in Spain in 2025? Terreta Spain's experts have the answers. 

Overview of the Spanish real estate market in 2025 

Purchase prices still on the rise in Spain

Like Spanish growth (+3.2% in 2024), the Spanish real estate market is in great shape.

With property prices forecast to rise by around 4.5% across the board by 2025, and the first increase of 4.2% in the first quarter of this year (the biggest rise in 10 years), now is the time to invest in Spain more than anywhere else in the Eurozone.  

Legend: Property price trends in Europe

Source : Idealista

This growth in purchase prices can be explained by several converging factors: 

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

Although prices have been rising steadily since summer 2020 (+11% between March 2024 and March 2025), the average price in Spain does not exceed 2,300 euros per metre. A boon for foreign investors.

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

Legend: Sales volume since 2007

Source : Idealista

Spain's rental sector is booming

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

According to the latest studies, average rental profitability in Spain is close to 7%, a European record. The rental market has seen a spectacular rise in rents over the past decade. They have doubled from €7/m² to €14/m² on national average between 2015 and 2025.

Demand is there, but there's a shortage of stock. In other words, the equation is perfect for higher prices and an owner-driven market.

Valencia, Spain's new real estate challenger

Three Spanish cities stand out from the crowd: Madrid, Barcelona and Valencia. Each has its own specific characteristics, which may suit different investor profiles. 

Our experts, on the other hand, are betting everything on Valencia, which has embarked on what they call a decade of catching up with its neighbors. The proof? Prices there have risen by over 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 affordable prices, exceptional profitability and promising growth prospects. The cards have been reshuffled. 

Caption: Madrid, Barcelona and Valencia, the Spanish cities in the sights of investors. 

Source: Google maps - Terreta Spain

Benchmarking: price, profitability and growth

Prices per square metre, Valencia's incomparable affordability 

Focus on Madrid purchase prices

With an average price per square metre of €6,000 in the city center, Madrid remains (along with the Basque Country) the most expensive property market in Spain (+22.7% in one year). The curve has been rising sharply since the end of the Covid parenthesis, and very high acquisition prices are now penalizing rental yields. 

Legend: Price trends in Madrid since 2004

Source : Idealista 

In the capital, the price range is vast, but the Salamanca district, located in the heart of the city, fetches over €9,300/m². This market reality reflects the city's status as an economic capital, and limits access for investors seeking high returns. The exceptions are outlying areas such as Puente de Vallecas (€2,650/m²), Usera (€2,880/m²) and Villaverde (€2,300/m²).

Legend: Madrid's least expensive outlying areas

Source : Google

Focus on Barcelona purchase prices

Just 600 kilometers from the capital, Barcelona, the country's second-largest city and the one that has always overshadowed it, boasts a slightly lower average cost than Madrid, at €4,800 per square meter. Here again, prices vary according to neighborhood: count €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 neighborhoods of expatriates.

Although Barcelona's geographic location and international influence are attractive, the political uncertainties surrounding its independence are holding back some cautious investors.

Caption: The neighborhoods of Sarria-Sant Gervasi, Barcelona's most expensive, and Nou Barris, Barcelona's least expensive. 

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 Spain's two biggest metropolises for the first time in its history. 

With a median price per square metre of just €2,900 (+21.6% over the last 12 months), the capital of the Valencian Community is above the national average, but offers an entry to the Spanish property market half the price of Madrid or Barcelona. 

This accessibility is ideal for first-time investors, those looking to maximize their return and those planning to make a handsome capital gain in the medium term. Visit the city's neighborhoods with us by clicking here (insert neighborhood guide valencia link). 

To immerse yourself in real estate in Valencia, discover the testimony of Théo, a young investor who bought locally with our team. (Put the video directly on the article page).

Rental yields: Valencia is unbeatable

Renting in Valencia

Rental profitability is the key criterion for any real estate investor. Here, too, Valencia leads the way on the Spanish real estate scene. In the city, the average rental yield is between 5% and 7%, but can exceed 8% in certain neighborhoods, compared with a national average of 7%. 

In 2025, the Valencia region still tops the profitability rankings (along with Murcia). Geoffroy Reiser and Antoine Évêque tell you more in this interview with Petit Journal.com. This figure can be explained by moderate purchase prices, steadily 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 tension.

• In March 2025, the rent for a 100 m² apartment in Valencia will be €15.3/m² (+13.2% in one year), or €1,530. 

Legend: Valencia's rental growth curve since 2008. Source : Idealista

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

Valencia's most profitable neighborhoods

• Rascanya : €2,000/m² (+ 19% in one year). Rents have also risen by 19% to over €14/m². 
• Profitability > 8% ✅
• L'Olivereta : €2,000/m² (+20% in one year), rents have risen by 25.4% in parallel, reaching €14/m² in March 2025. 
• Profitability = 8.4% ✅
• Jesus: €2,100/m² (+22% in one year), rents have risen by 16% over the past year to €13/m². 
• Profitability ≈ 7.4% ✅

⚠️Le expert advice from Terreta Spain 

Aim for the historic center and the Cabanyal, the beach district, if you're planning to rent as a tourist. 

Renting in Barcelona and Madrid

In both Barcelona and Madrid, average profitability does 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), i.e. €2,350 per month for 100 m².
• 21.2 €/m² in Madrid (+ 12.2% in one year), i.e. 2,120 euros per month for 100 m².

However,some more accessible neighborhoods still offer good rental potential:

In Madrid, outlying districts such as Villaverde and Usera offer yields of around 5.5-6%, but at the cost of distance from the center.

In Barcelona, Nou Barris or Sant Andreu can achieve up to 6%, thanks in particular to rents that continue to rise in these less saturated areas.

• Investors in Madrid's real estate market are betting more on long-term value than immediate returns. 
• Those who set their sights on Barcelona often aim for its tourism and university potential. 

Nevertheless, Madrid's profitability is excellent for a capital with a robust market. By way of comparison, in London or Paris, yields average no more than 3%. 

Valencia, the potential of renovation

Another strong point ofValencia real estate is its high renovation potential. An additional dimension to increase the value of the property, both for purchase and rental, in the face of increasingly demanding tenants. There are still plenty of opportunities for renovation projects in the historic center. Terreta Spain is also your trusted partner for renovation work in Spain. Contact us to find the property you need AND to manage your renovation project. 

To find out more about renovation work in Spain, see our special report: "Everything you need to know about property renovation in Spain". 

Growth prospects: Valencia's unique potential 

• Madrid recently stole the show from Paris in the ranking of cities in which to invest in Europe. On a continental scale, the Spanish capital is boosted by macroeconomic factors. The capital accounts for 67% of all foreign investment in Spain.

Caption: 10 European cities to invest in in 2025

Source : PWC

• Barcelona has dropped out of the PricewaterhouseCoopers top 10. Price growth remains sustained by the city's tourist attractions and its popularity with international buyers, but Catalan political tensions are a factor of uncertainty, as are tough regulations on seasonal rentals. 

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

Strategic advice for investors

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

• For investors with limited capital or those looking for immediate returns, Valencia is the right choice. It clearly offers the best value for money on the Spanish market. What's more, the dynamic growth in prices means that we can look forward to attractive capital gains in the medium term. What types of investment should I opt for? Highly lucrative tourist rentals in the city center and along 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 looking for a balance between yield and security may turn to Barcelona. With decent profitability, particularly in emerging districts, and solid valuation prospects throughout the city and its suburbs, the Catalan capital offers an interesting compromise, while benefiting from good market liquidity.

• For investors looking for long-term security and with substantial 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.

Whichever city you choose, here are our final recommendations for 2025:Don't put off buying in the face of rising prices.

• "Location, location, location". This is the determining factor in the future value of your property.
• Find out exactly what the local tax situation is, as it can vary significantly from one autonomous community to another.
• Keep an eye on tourist rental regulations, which change regularly. 
• Consider the opportunities offered by renovation, particularly in Valencia, to optimize the overall return on investment.

To find out more, contact our experts. Terreta Spain is your trusted partner for buying and renovating property 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 Spanish real estate investment in 2025?

Why invest in Valencia in 2025?

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

✅ An unbeatable rental yield of 8% in some areas, well ahead of Madrid (4.9%) and Barcelona (5.2%). 

✅ Excellent quality of life.  

Which neighborhoods are the most profitable? 

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

How does Valencia compare with Madrid and Barcelona?

Valencia offers superior performance at half the purchase price.  

Why invest in Terreta Spain?

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