Real estate profitability: analysis of different geographic zones

Real estate profitability is one of the most decisive factors for investors when choosing where to place their capital. In this article, we analyze the profitability of the real estate market in different key regions: Spain, Latin America, the United States, and the Dominican Republic — highlighting the most attractive opportunities and the factors that influence the return on investment.

Real estate profitability in Spain: stability and opportunities

Spain has consolidated itself as a mature market with attractive real estate returns, especially in residential rentals. The average return stands at 6.1%, far exceeding conservative financial products such as bank deposits.

Cities with the highest profitability in Spain

• Madrid: 5.5% average return, with peripheral areas like Villaverde reaching up to 10.3%.
• Barcelona: 6.7% average return, with room-by-room rental standing out, reaching up to 9.3%.

Despite the market's maturity, there are strategic opportunities in developing districts and in properties destined for tourist and room-by-room rental.

Investment in Latin America: diversity in real estate profitability

The real estate market in Latin America presents great investment opportunities — although with important variability depending on the country. Some cities stand out for their high gross rental returns:

• Bogotá (Colombia): 8.2%
• Santiago de Chile: 8%
• Panama City: 6.48%, with an investment recovery time of 15.4 years.
• Buenos Aires and Lima: lower returns, between 3.69% and 4.66%, affected by macroeconomic factors and devaluations.

The Latin American market continues to attract investors due to its accessible prices and its growth potential — especially in cities with high rental demand.

How to increase profitability

Before investing in real estate, it's essential to analyze certain factors that directly impact real estate profitability:

1. Expected return: calculate ROI and the investment recovery time.
2. Market demand: evaluate the supply and projected appreciation in each region.
3. Economic and political risks: consider the country's stability and its real estate regulation.
4. Tax benefits: identify incentives for investors in each market.

Globally, real estate profitability from rent oscillates between 6% and 8%, depending on the area and type of property.

Real Estate in the United States: liquidity and real estate profitability

The U.S. real estate market is characterized by its high liquidity and attractive return rates. Florida, Illinois, and California stand out as the most profitable states for investors:

• Florida: average ROI of 262%, driven by a dynamic market and tax benefits.
• Illinois: 96% return, although with high tax costs.
• California: 92% return, being a market of great volume and liquidity.

Cities like Miami stand out for their combination of high real estate profitability and demographic growth — becoming an attractive destination for international investors.

The Dominican Republic: a booming destination with high real estate profitability

In recent years, the Dominican Republic has emerged as a high-profitability real estate market, capturing the attention of investors looking for new opportunities in the Caribbean.

Factors driving profitability in the Dominican Republic

1. Growing tourism: destinations like Punta Cana and Santo Domingo maintain constant rental demand.
2. Tax advantages: exemption from foreign income tax and competitive ownership costs.
3. Political and economic stability: a secure environment for international investors.

Larimar City & Resort is a clear example of the market's boom in the Caribbean. This real estate project offers double-digit returns, combining luxury, privileged location, and guaranteed rental demand.

Real estate profitability varies depending on the market, but opportunities exist at every level. Spain remains a safe destination, Latin America offers high returns in emerging markets, the United States stands out for its liquidity, and the Dominican Republic consolidates itself as a growing option.

Investing in real estate continues to be one of the most effective ways to protect and grow wealth — as long as profitability, demand, and market stability are evaluated.

By Macarena Perona

Deputy Director

Larimar City & Resort