Why Costa Blanca in 2026 is better than Warsaw — profitability, law, taxes, mortgage rates

A Polish investor today faces a strategic dilemma: buy another apartment in Warsaw at 16,000–18,000 PLN per square metre, or direct capital to the Costa Blanca, where for a comparable amount one can acquire an apartment with twice the rental yield and significantly lower financing costs? Market data from the turn of 2025 and 2026 suggest the answer is clear — and it favours the Spanish coast.

In this analysis, we compare both markets across five key dimensions: rental yield, mortgage costs, property value growth prospects, tax environment, and macroeconomic stability. Each of these parameters is based on data from official bank reports, price indices, and forecasts by analytical institutions.

1. Rental yield: 6–10% on the Costa Blanca vs 4–4.5% in Warsaw

Rental yield is the first and most important parameter analysed by any rational investor. On the Costa Blanca, short-term (tourist) rentals generate 6–10% gross annually, depending on location and season. Benidorm, often called the “Manhattan of the Mediterranean”, offers occupancy rates of 80% year-round, translating into a yield of 7–8%. Denia, Calpe, and Torrevieja achieve 6–7.5%.

Warsaw presents considerably more modest results. The average gross yield from long-term rental is 4–4.5%, and after accounting for operating costs, vacancies, and the flat-rate tax, the real net return drops to 2.5–3.5%. Short-term rental in Warsaw can reach 7–9%, but it comes with strong seasonality, higher management costs, and growing regulatory risk — from March 2026, EU regulations on short-term rental registration (EU Regulation 2024/1028) come into force, which may reduce the number of active listings.

The key advantage of the Costa Blanca lies in its demand structure: the region attracts nearly 3 million tourists annually, and demand is distributed far more evenly than in Warsaw, where the tourist rental season effectively runs from May to September. On the Costa Blanca, the so-called “winter rental” (for retirees from Northern Europe) provides income outside the peak season as well — at rates of 600–1,000 EUR per month.

2. Financing costs: a mortgage in Spain up to half the price of one in Poland

The cost of money is a parameter that in 2026 separates the two markets by a chasm. The mechanism is analogous — a reference rate plus the bank’s margin — but the base rates differ dramatically.

In Spain, the basis for interest rates is the EURIBOR. In January 2026, the 12-month EURIBOR published by the Bank of Spain stood at 2.245%, and market forecasts for the end of 2026 point to levels below 1.5%. The average interest rate on new mortgage loans in Spain at the beginning of 2026 ranges between 2.55%–3.55%, depending on the bank, the type of interest rate, and promotional conditions met (so-called bonificaciones). Banco Santander offers a fixed-rate mortgage from 2.55% with a full bonification package. For variable-rate loans, margins range from 1.0% to 1.5% above EURIBOR, resulting in effective interest rates in the range of 3.2%–3.8%.

In Poland, the equivalent of EURIBOR is WIBOR, which depends on decisions by the Monetary Policy Council. At the end of February 2026, the 3-month WIBOR stands at 3.81% — still nearly double the EURIBOR. Despite six interest rate cuts made by the MPC in 2025 (a total of 1.75 percentage points, from 5.75% to 4.00%), the gap to the eurozone remains significant. The typical variable interest rate on a new mortgage in Poland in February 2026 is 5.7%–5.9% in the best promotional offers, and reaches 5.8%–6.9% in standard offers. The Annual Percentage Rate of Charge (APRC), which includes all costs, stands at 6.2%–6.5%.

What does this mean in practice? For a loan of 300,000 EUR over 20 years, the difference in interest between Spain and Poland amounts to over 118,000 EUR in favour of the Spanish market. Monthly, that is a difference of around 490 EUR (approx. 2,100 PLN), which over 20 years has enormous significance.

An additional advantage is the stability of fixed rates in Spain. Over 70% of Spanish mortgages carry a fixed interest rate for the entire loan term, which eliminates the risk of instalment fluctuations. In Poland, fixed rates typically apply for 5–7 years, after which they switch to variable — and the experience of 2022–2023 showed how painful such changes can be. Analysts predict that even under an optimistic scenario of further cuts in Poland, Polish mortgage rates in 2026 will likely not fall below 5%. Meanwhile, in Spain, variable-rate mortgages may drop to around 3%–3.5%.

3. Property value growth: Costa Blanca +5–8% vs Warsaw ~0–4%

The Costa Blanca is experiencing one of the strongest growth periods in its history. The average price per square metre in the province of Alicante rose by 16.4% year-on-year in mid-2025, reaching a level of 2,435 EUR/m². In Benidorm, prices exceed 3,300 EUR/m², and in prestigious coastal locations — 4,200–4,500 EUR/m².

Forecasts for 2026 remain optimistic. Analysts at BBVA and the Observatorio Inmobiliario predict price growth on the Spanish coast of 5–8% per year, with premium locations (Altea Hills, Moraira, Benissa) potentially growing by 7–9%. The main growth drivers are limited supply of buildable land, record interest from foreign buyers (over 40% of transactions on the Costa Blanca), and continued tourism growth — Spain welcomed a record 85 million visitors in 2024.

In Warsaw, the dynamics are diametrically different. After years of sharp increases, the market has entered a stabilisation phase. Transaction prices on the secondary market fell by 0.1–2.7% year-on-year in 2025, depending on the segment. On the primary market, increases amounted to just 1–4% nominally. Credit Agricole forecasts that in 2026 the average annual price growth in Poland will be around 3.8% — which, after accounting for projected inflation (2.3–2.9%), means virtually zero real value growth.

It is also worth noting: prices on the Costa Blanca remain 40% below their historical peaks from 2007, meaning that growth potential has not yet been exhausted. In Warsaw, prices have reached or exceeded historical highs, which naturally limits the room for further appreciation.

4. Comparison table: Costa Blanca vs Warsaw

The following summary presents the key investment parameters of both markets based on data from the turn of 2025/2026:

* Prices in Warsaw converted at an exchange rate of approx. 4.30 PLN/EUR. Short-term rental in Warsaw involves higher management costs and seasonality.

5. Taxes and transaction costs — what you need to know

The tax system is an area where Poland has an advantage at the purchase stage — lower PCC (2%) vs Spanish ITP (10%) — but this difference quickly neutralises when we look at the full investment equation. In Spain, higher entry costs are more than compensated by higher rental yields and faster property value growth.

When purchasing a new-build property in Spain, the quoted price is net. To the quoted price, one should add a total of approximately 13% of the property value, comprising: IVA (Spanish VAT) — 10% of the property value, the local tax AJD — from 1.2% to 2% depending on the region (e.g. 1.5% in Valencia, 2% in Murcia, 1.2% in Andalusia), and approximately 1.5% for additional costs — notary fees, land registry entry, and property register entry.

Key information for Polish investors: as an EU tax resident, rental income from property in Spain is taxed at a rate of 19% (for EU non-residents), with the possibility of deducting operating costs. In Poland, the flat-rate tax on private rental is 8.5% (up to 100,000 PLN in revenue) or 12.5% above this threshold. At first glance, Poland wins; however, a lower tax on lower income still means less money in one’s pocket than a higher tax on significantly higher income.

Note: this summary is for illustrative purposes. Each investor’s tax situation is individual — before making a decision, it is advisable to consult a tax adviser specialising in international law.

6. Investment simulation: 250,000 EUR — Costa Blanca vs Warsaw

To give the analysis a practical dimension, we run a simulation of a property purchase for 250,000 EUR in both markets, using a mortgage for 70% of the value. Assumptions: 30% down payment (75,000 EUR), loan term 25 years, equal instalments.

Key takeaway: an investment on the Costa Blanca generates positive cash flow from the first year (rental income exceeds the mortgage instalment by approximately 3,500 EUR per year), whereas an analogous investment in Warsaw produces an annual operating loss of approximately 4,760 EUR — which the investor must cover from their own funds.

If we add the projected property value growth, the total return on investment in the first year on the Costa Blanca amounts to 18,500–23,500 EUR, while in Warsaw it ranges between a loss and a marginal gain. Over a 25-year loan term, the difference in interest alone is nearly 95,000 EUR — money that in Spain stays in the investor’s pocket.

7. When can you expect a profit?

This is a question every investor asks. On the Costa Blanca, assuming a property purchase with a 70% LTV mortgage and short-term rental, positive cash flow appears from the very first month. This means that rental income covers the mortgage instalment and maintenance costs, generating a surplus.

The breakeven point for the total equity invested (75,000 EUR down payment + transaction costs of approx. 32,500 EUR, i.e. ~13% of the property value) is reached under an optimistic scenario within 5–7 years — combining net rental income and property value growth. Under a conservative scenario (5% yield, 4% annual value growth), this extends to approximately 8–10 years.

In Warsaw, the situation is different. With negative operating cash flow (instalments exceeding rental income), the return on investment depends almost entirely on property value growth. At a projected nominal growth of 3–4% per year (close to zero in real terms), a full return on capital is a 12–15 year prospect, and in a price stabilisation scenario — even longer. The payback period for an investment in Warsaw is estimated at approximately 240 months (20 years), as confirmed by analysis from the OnGeo.pl portal.

8. Economic stability and macroeconomic outlook

The Spanish economy shows solid fundamentals. GDP grew by 2.6% in 2025, with a forecast of 2.0% for 2026. Inflation is under control (2.3% in 2025, forecast of 1.9% for 2026), and ECB policy supports stable, low loan interest rates. The tourism sector — crucial for the Costa Blanca — continues to break records, and the region’s infrastructure (Alicante-Elche airport with dozens of European connections, road network expansion) is developing steadily.

Poland also records strong growth (GDP +3.7% in Q3 2025), but the property market faces different challenges: still-high interest rates compared to Western Europe, no purchase support programmes (withdrawal of BK2% and “Kredyt na Start”), rising construction costs, tightening short-term rental regulations, and record supply of developer apartments exerting pressure on prices. In Warsaw, the new apartment supply in H1 2025 was 29% higher than a year earlier — extending sales periods and giving buyers bargaining power, but at the same time limiting price growth potential.

It is worth adding the human dimension of this trend. According to data from Registradores de España, since the beginning of 2021 Polish buyers have acquired a total of nearly 12,500 properties in Spain. In 2024, Poland recorded the highest growth in transaction numbers among all foreign buyers — an impressive 36.5% year-on-year. In the first quarter of 2025, Polish investors purchased nearly 1,000 houses and apartments. The Costa Blanca attracts capital not only from Poland but from across Europe — over 40% of transactions involve foreign buyers, which speaks to the confidence international investors place in this market.

Summary: hard data, not emotions

This analysis is not intended to disparage the Polish property market — Warsaw remains an attractive location for many types of investment. However, when we compare both markets through the lens of specific financial indicators in 2026, the Costa Blanca outperforms Warsaw in every key parameter:

• Rental yield: 6–10% vs 4–4.5% gross
• Mortgage cost: 2.55–3.55% vs 5.7–6.9%
• Value growth: +5–8% vs 0–4% (close to zero in real terms)
• Cash flow: positive from the first year vs negative
• Payback period: 5–7 years vs 12–15+ years
• Interest savings: ~95,000 EUR on a 175,000 EUR loan / 25 years
• Forecasts: EURIBOR heading towards <1.5% vs WIBOR ~3.5–3.7% — Spain’s advantage is deepening

For a Polish investor seeking property with higher rental yields, lower financing costs, and real prospects for value growth, the Costa Blanca in 2026 offers parameters that the Warsaw market — under the current economic conditions — simply cannot match. This is not about “sun and beach”. It is about hard numbers.

Disclaimer: This article is for informational purposes only. It does not constitute investment, tax, or legal advice. The data presented is based on publicly available reports and analyses from the turn of 2025/2026. Mortgage simulations are based on Banco Santander (Spain) terms and the most favourable promotional offers in Poland (February 2026). Before making an investment decision, it is recommended to consult a licensed financial adviser and a lawyer specialising in property law of the relevant country. Past performance does not guarantee future returns.