The Costa del Sol remains one of Europe’s most attractive real estate markets, drawing both lifestyle buyers and investors. But when it comes to choosing between a 1-bedroom, 2-bedroom, or 3+ bedroom property, which offers the best return on investment? Let’s break it down with market trends and data.
1-Bedroom Apartments: High Rental Demand, Lower Entry Cost
Pros:
- Affordability: Entry-level prices for 1-bedroom apartments in Marbella and surrounding areas start at around €200,000-€300,000, making them accessible to more investors.
- Strong Rental Yields: In high-demand areas, 1-bedroom units generate gross rental yields of 5-7%, particularly in prime coastal locations like Puerto Banús, Marbella Centre, and La Cala de Mijas (AirDNA).
- Short-Term Rental Popularity: Tourists and digital nomads prefer smaller apartments, driving consistent occupancy rates. According to AirDNA, the average daily rate (ADR) for 1-bed properties in Marbella is €100-€150 per night in peak season (AirDNA).
Cons:
- Limited Capital Appreciation: Smaller apartments tend to appreciate less over time compared to larger properties.
- Higher Turnover of Tenants: Frequent guest turnover means increased management and maintenance costs.
2-Bedroom Apartments: The Balanced Investment
Pros:
- Best of Both Worlds: A 2-bed apartment caters to both short-term holiday lets and long-term tenants, including expats and professionals relocating to the Costa del Sol.
- Better Resale Value: Historically, 2-bed units in Marbella and Estepona appreciate at rates of 3-6% per year, as reported in Spain Property Market Report.
- Higher Rental Income: These units often generate €120-€200 per night in short-term rentals and €1,200-€1,800 per month for long-term leases (Idealista).
Cons:
- Slightly Higher Purchase Price: In prime areas, 2-bed properties start from €300,000-€500,000, requiring a larger initial investment.
- Competition: Many investors target 2-bedroom units, leading to more competition in key locations.
3+ Bedroom Properties: Luxury & Capital Growth Potential
Pros:
- High Capital Appreciation: Larger homes, particularly villas, have appreciated 5-10% annually in sought-after locations such as Sierra Blanca, La Zagaleta, and Nueva Andalucía.
- Luxury Market Resilience: According to Savills, luxury real estate in Marbella saw price increases of 8% in 2023, outpacing smaller apartments.
- Attracts Affluent Tenants: Demand for spacious homes with sea views or golf access remains strong, with long-term rentals exceeding €3,000 per month.
Cons:
- Higher Maintenance Costs: More space means higher upkeep expenses, property taxes, and management fees.
- Less Flexibility: Villas and large apartments require more time to sell or rent compared to smaller units.
The Verdict: Which Property Type Is Best for You?
- If you seek high rental yields: 1-bed apartments in prime tourist areas offer the best ROI with lower entry costs.
- If you want a balanced investment: 2-bed apartments offer both strong capital appreciation and rental demand.
- If you’re targeting long-term capital growth: 3+ bedroom properties, especially luxury villas, provide the best appreciation potential.
Final Thoughts
Ultimately, the best investment depends on your budget, risk tolerance, and investment strategy. The Costa del Sol market remains robust, with increasing property demand from both local and international buyers. Whether you invest in a 1-bed holiday rental or a luxury villa, the key is choosing the right location and property type to maximize returns.
Need help finding the right investment? Contact us today to explore exclusive opportunities in the Costa del Sol real estate market!
