Madrid neighbourhoods to invest in 2026: real yields

Source: idealista, asking prices by district. Gross yield is annual rent divided by sale price, calculated by Lula Select, before taxes, community fees and vacancy periods.

The district average is around €9,800/sqm according to idealista and €10,800/sqm according to Fotocasa, with wide differences inside it: per Fotocasa, six neighbourhoods in the capital exceed €10,000/sqm on resale, and the top three — Recoletos, Castellana and Goya — sit in this district. Low rotation, steady international demand and liquidity on exit make it the benchmark defensive asset. With a gross yield of 3.6%, it is a wealth-preservation play, not a rental-income one.

Almagro and Trafalgar offer the best quality-price ratio within prime. The district average is €8,836/sqm on idealista and €9,361/sqm on Fotocasa, with rents of €26.8/sqm per month giving a gross yield of 3.6%, the same as Salamanca with a lower entry price. Refurbished product rents well to international corporate profiles. It is our investor clients' favourite for 5–10 year horizons.

They have consolidated as the alternative to Salamanca for families with children: close to international schools, modern buildings and more new-build product available. The Chamartín district average is €8,020/sqm on idealista (€8,337/sqm on Fotocasa), with a gross yield of 3.6%.

These are the highest-yielding bets on this list. Arganzuela (Delicias, Atocha) trades at €6,354/sqm with a gross yield of 4.3%, and Tetuán (Cuatro Caminos, Bellas Vistas) at €5,996/sqm with 4.7%, with rents above €22/sqm per month in both. They are well-connected, changing areas with a lower entry point than the prime axis. In return, liquidity and international demand are lower: they suit investors with cycle tolerance.

The yields in the table are based on idealista's average asking rent. Two formulas can raise monthly income, but neither is a baseline yield: they depend on occupancy, the type of flat and rules that are under review.

In Madrid, temporary rentals reach €34.43/sqm versus €25.67/sqm for long-term lets, 34% more, according to an OCU analysis of Idealista listings from March 2026. Part of that gap may come from temporary lets usually being furnished with utilities included. By our calculation, applied to Tetuán that premium would lift gross yield from 4.7% to around 6.3% with the flat always occupied. If it sits empty for more than three months a year, the gap disappears before furnishing, utilities and management costs. A seasonal contract also needs a real, documented temporary reason, such as a work relocation, studies or medical treatment: if the tenant ends up using the home as a permanent residence, the contract can be treated as a standard residential lease.

The average price of a room in Madrid is €550/month according to idealista (second quarter of 2026) and €689/month according to the OCU, using Idealista listings. In a 90 sqm flat in Tetuán, which would rent whole for about €2,100/month, four rooms would add up to between €2,200 and €2,760/month, but with three the income would be equal to or below the whole-flat rent. It only pays off if the flat has many bedrooms for its size and demand is steady, and it means more turnover, more vacancy and more management. These are Lula Select calculations using city-wide averages, not Tetuán figures.

The Government plans to take a housing decree to the Council of Ministers that, according to the known draft, would bring seasonal contracts and room rentals under the Urban Leases Act (LAU), with a 12-month maximum and written justification for seasonal lets. The text may change and needs ratification by Congress. In Catalonia, the total of room rents must already respect the caps of tight-market zones. Before structuring a rental like this, consult a lawyer.

Portals measure asking prices, not deed prices, and each uses its own methodology (idealista updated its own in July 2026), so figures do not match exactly across sources. As a reference for deed prices, the Spanish Land Registrars' College put Madrid city at €5,428/sqm in the first quarter of 2026, the second most expensive provincial capital after San Sebastián. That is why final closing prices usually sit below the advertised ones, and why negotiating with real closing data makes the difference.

As an illustration, a client with €2M can combine a flat in Chamberí as the heritage core with two smaller assets in Arganzuela or Tetuán for rental income. It is an illustrative structure, not personalised advice: the right split depends on each investor's taxation, horizon and risk tolerance.