Quick answer: Torrevieja and Orihuela Costa (La Zenia, Playa Flamenca, Punta Prima) offer the highest tourist demand and strongest rental yields — up to 8.4% gross in top Torrevieja neighbourhoods. Guardamar del Segura offers slightly lower yields but a higher-quality, longer-stay rental guest profile and lower entry prices. All three areas see summer occupancy above 85% in well-located properties. The key variable in 2026 is the tourist licence framework — understanding it before you buy is no longer optional.

Why Costa Blanca South Works for Rental Investment

The southern Costa Blanca is not a speculative market. It is driven by a structural combination of things that don't change overnight: reliable climate, improving infrastructure, strong flight connections from Northern Europe, and a buyer and tourist pool from the UK, Netherlands, Belgium, Germany, and Scandinavia that has been growing steadily for two decades.

In Torrevieja, apartment prices in 2025 averaged approximately €2,500–2,600/m², with annual growth close to 10%. The region remains comparatively affordable versus Costa del Sol, Jávea and Mallorca, which continues to attract value-focused buyers.

In top destinations like Torrevieja, Guardamar and Orihuela Costa, summer occupancy rates often exceed 85%. Depending on the location and amenities, short-term rentals can generate annual gross returns of 5% to 8%, sometimes even higher in premium areas.

The Three Main Areas Compared

Torrevieja

Torrevieja is the largest city on Costa Blanca South — population around 100,000 — and the most liquid rental market in the area. It attracts a diverse tourist pool year-round: British retirees and holiday-makers, Scandinavian families, Eastern European visitors, and increasingly digital nomads drawn by the salt lake microclimate.

Torrevieja offers yields of up to 8.40% for an average apartment, making it a strong investment choice. Property yields ranged from approximately 4.62% in the lowest-yielding neighbourhoods to 8.4% in the highest-yielding neighbourhoods as of December 2025.

The best-yielding micro-locations within Torrevieja are La Mata (beachfront strip), Punta Prima (border with Orihuela Costa), Playa del Cura, and El Acequión. Properties here combine beach proximity with good transport links.

Average entry price: from ~€120,000–€160,000 for a two-bedroom apartment near the beach. Typical annual gross rental income: €8,000–€15,000.

Orihuela Costa (La Zenia, Playa Flamenca, Punta Prima, Cabo Roig)

Orihuela Costa is a collection of urbanisations rather than a single town. It has the highest concentration of purpose-built holiday properties on Costa Blanca South and arguably the most active short-term rental market. La Zenia and Playa Flamenca are particular hotspots — well-served by the La Zenia Boulevard shopping centre, Blue Flag beaches, and consistent Northern European demand.

In 2025, new residential complexes in the Orihuela Costa and Guardamar areas increased in price by 8–10%, and the trend continues.

The trade-off is a less authentic Spanish environment and higher competition for rentals from a large existing stock of investor-owned properties.

Average entry price: from ~€130,000–€180,000 for a two-bedroom apartment near the beach. Typical annual gross rental income: €8,000–€15,000.

Guardamar del Segura

Guardamar attracts a more discerning holiday rental guest — predominantly Dutch, Belgian, German, and Scandinavian families seeking longer stays (typically 1–3 weeks rather than long weekends) in an unspoiled, nature-focused setting.

The average price asked for residential properties for sale in Guardamar del Segura in March 2025 was €2,634 per square metre, with an increase of 5.44% compared to March 2024.

Lower supply of tourist-licensed properties in Guardamar means less competition for quality rentals, but also a smaller overall demand pool. Gross yields of 5–7% are achievable, with the best properties — those close to the beach or overlooking the dune reserve — at the higher end.

Average entry price: from ~€100,000–€150,000 for a two-bedroom apartment near the beach. Typical annual gross rental income: €6,000–€12,000.

Area Comparison Table

The Tourist Licence Rules You Need to Know in 2026

This is the section most investors skip and then regret. The Valencian Community significantly tightened its tourist rental regulations in 2025 — here is what is actually in force now.

Since 3 April 2025, any property in a multi-unit building requires explicit authorisation from the homeowners' association (comunidad de propietarios) by a majority vote of at least 3/5 of all owners and their property quotas before a tourist rental licence can be granted.

This means: you cannot assume you will be able to obtain a licence just because the property meets the technical requirements. If the building community has not voted to authorise tourist rentals, or votes against it, no licence is possible for new applicants.

What is not affected: Properties that were already legally operating as tourist rentals before 3 April 2025 and were registered in the regional tourism registry can continue to operate under the previous regime, though the community of owners can vote to impose a surcharge of up to 20% on common area fees.

Licence renewals: All new licences issued from August 2024 onwards must be renewed every five years, requiring updated municipal urban compatibility certificates and re-approval.

Practical implication for buyers: Before purchasing with rental income as a goal, ask whether the property has an existing, valid tourist licence, whether the building community has approved tourist rentals, and whether the specific municipality has any additional zoning restrictions. The Naranjas Spain team can verify this as part of the buying process.

Mid-term rentals (11 nights or longer) remain outside the tourist rental framework entirely and do not require a tourist licence — a viable alternative strategy for investors who want stable income without the short-term rental management overhead.

What Makes a High-Yielding Property in 2026?

The variables that separate a 5% from an 8% yield are not mysterious:

Location within the area: Within Torrevieja, La Mata beachfront properties outperform inland ones significantly. Within Orihuela Costa, first or second line to the beach in La Zenia or Playa Flamenca outperforms inland complexes. In Guardamar, properties within walking distance of the dune beaches or the marina earn the premium.

Property condition and fit-out: Guests who pay €700–€1,200/week for a Guardamar apartment expect air conditioning, a modern kitchen, comfortable outdoor space, and fast Wi-Fi. Under-fitted properties rent at lower rates and attract fewer repeat bookings.

Community pool and parking: Properties in gated communities with communal pools command a significant premium over standalone apartments. In Orihuela Costa in particular, this is a near-requirement for competitive holiday rental pricing.

Existing tourist licence: In 2026, an existing, valid licence is a genuine price premium asset — not just a bureaucratic checkbox. Factor this into purchase price negotiations.

Net Yield Reality Check

Gross yield numbers look attractive. Net yield requires honesty. For a €150,000 property generating €12,000 gross annual rental income:

For a full breakdown of purchase costs — ITP, notary, registration — see the true cost of buying property in Spain.

Frequently Asked Questions

Which area has the best rental yield on Costa Blanca South? Torrevieja has the highest ceiling — top properties yield up to 8.4% gross. Orihuela Costa and Guardamar both offer 5–7% gross in well-located properties. The best yield in any area comes from beachfront or sea-view properties with existing tourist licences in buildings where the community has approved short-term rentals.

Do I need a tourist licence to rent out my holiday home? Yes, for rentals of 10 consecutive nights or fewer (vivienda de uso turístico, VUT). From April 2025 this requires both a municipal urban compatibility certificate and a homeowners' association approval vote. Rentals of 11+ nights are classified as mid-term rental and fall outside this framework.

Can I buy a property and apply for the tourist licence after purchase? You can try, but success now depends on factors outside your control — specifically whether the building community has authorised tourist rentals or is willing to vote to do so. The safest approach is to buy a property that already has a valid licence, or confirm the building's status before exchange.

Is Guardamar good for rental income? Yes, with realistic expectations. Gross yields of 5–7% are achievable. Guardamar suits investors who prefer a quieter management experience and longer-stay tenants over the higher-turnover, higher-volume model that works better in Torrevieja or La Zenia.

What is the best property type for holiday rental income? Two-bedroom apartments or bungalows in gated communities with communal pool, within walking distance of the beach, with air conditioning and outdoor space. Three-bedroom properties can achieve higher absolute income but the management overhead increases proportionally.

This article is for informational purposes only. Rental income figures are estimates based on available market data and may vary significantly by property, location, and season. Always consult a qualified Spanish lawyer (abogado) and tax adviser before purchasing. Tax obligations for non-resident property owners vary by country of residence.