São Paulo compact apartments lead rental profitability

Compact apartments measuring between 20 and 30 square meters are leading rental profitability in São Paulo. According to a study by Flow Imóveis, which analyzed 1,058 buildings in the capital, these units registered a median gross annual return of 8.15%.

The research indicates an inverse relationship between property size and rental yield. As square footage increases, profitability tends to decrease. Returns for units between 30 and 40 square meters were 7.70%, while larger properties between 180 and 400 square meters saw returns drop to 6.14%. The median return across all analyzed buildings was 6.91%.

The study suggests this trend is driven by the relationship between acquisition costs and market rental rates. While compact apartments do not cost proportionally less than larger homes, rental prices do not decrease at the same rate. Factors such as location, mobility, and accessibility play a significant role in the pricing of smaller units. Conversely, larger properties often include features like views, high-end finishes, and social areas that increase purchase prices without providing a proportional increase in rental income.