One crucial aspect to evaluate when investing in the flourishing Portuguese real estate market is the potential Portugal rental yield. As one of Europe’s most captivating destinations, making a significant financial commitment to buying rental property in Portugal needs proper planning. Hence, this article aims to explore the gross rental yield in Portugal and shed light on how this factor can be pivotal in shaping your investment strategy.
Average rental yields in Portugal
The Portugal rental market has been attracting considerable attention. As of 2022, the average rental yields in Portugal hover around 5.2%, making it an appealing destination for potential investors. As a country with the best rental yield, it continues to thrive as a preferred destination for tourism and living; the rental market presents a promising potential for foreigners seeking profitable returns on their real estate investments.
Portugal rental yield by city
One of the key factors that investors consider is the rental yield, which can vary significantly from city to city. We will explore the gross rental yield by city to provide you with insight into where to invest your money best.
1. Lisbon rental yield
As a tourist hotspot, it is without a doubt that rental yields in Lisbon are never decreasing. The real estate market is always in high demand from tourists and locals, making it a sought-after place to find a rental property in Lisbon, Portugal. The rental yield in Lisbon ranges from 4.7% to 5.7%.
2. Algarve rental yield
Algarve is another beloved region in Portugal due to its stunning coastlines and beach culture. As countries opened their borders, many people wanted to connect with nature. As a result, Algarve has welcomed numerous tourists and expats worldwide, making short-term and long-term property rental a significant investment. The average yield in Algarve is 3.3%.
3. Porto rental yield
Porto, the second-largest city in Portugal, is a hub of real estate potential for commercial and residential opportunities. With a diverse range of properties and a thriving local economy, Porto boasts an average rental yield rate of 4%. Amidst its bustling atmosphere, Porto’s rental market stands out as a promising avenue for investors.
4. Braga rental yield
Investing in property in Braga offers excellent opportunities. The city is famous for its rich history and unique blend of urban and rural charms. It is home to ancient churches, palaces, and plazas, so thousands of tourists flock to the area daily. With a rental yield of 4.78%, Braga is an attractive option for property rentals, appealing to locals and tourists looking for a fulfilling living experience.
ROI on property investment Portugal
There are a lot of lucrative opportunities in Portugal’s rental market. In 2022, there was an 8% return on investment in Portuguese commercial real estate. It includes office spaces and rental properties even though in 2022, the pandemic was still looming. It highlights the potential for rental properties, especially now that borders open up and tourists and expats are flocking to find decent rental properties in Portugal.
How to buy property in Portugal?
Now that you can identify the Portugal rental yield and the gross rental yield by city, you might be curious about the process of buying property in this European country. Portugal welcomes foreigners from EU states and beyond to invest in its real estate market. For non-EU citizens, two visa options are available: the Golden Visa and the D7 Visa.
The Golden Visa Program in Portugal presents an enticing opportunity to gain residency and citizenship by investing in the country’s real estate. Participants in this program can enjoy various benefits, such as visa-free travel within the Schengen Area and the possibility of obtaining permanent residency or citizenship after five years. However, it’s important to note that the Golden Visa does not apply to Lisbon, Porto, and the coastal Algarve region residential properties.
The D7 Visa, commonly known as the “Passive Income Visa” or “Retirement Visa,” provides a residence permit for non-EU citizens based on income or passive income rather than employment. One of the requirements is to have a suitable sufficient monthly payment to support yourself. Additionally, you must find reasonable accommodation and can do so by renting and buying rental property in Portugal.
Engage a professional real estate agent in Portugal
Having a real estate agent in Portugal can streamline your property journey and minimize the stress of investing in properties. You can leave the trouble of finding buyers, tenants and dealing with paperwork to a skilled professional. With a real estate agent by your side, transactions become more seamless and ensure you can secure the best value for your property.
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Frequently Asked Questions (FAQs)
What is the average rental yield in Portugal?
The average Portugal rental yield varies depending on the location and type of property, but it generally averages 5.2%.
Is the property in Portugal a good investment?
Property investment in Portugal has a favorable option due to its stable real estate market, growing tourism industry, and attractive rental yields. However, like any investment, it comes with risks and considerations, so it’s crucial to conduct thorough research and seek professional advice before making any decisions.
What is the average rental yield in Lisbon?
Generally, the gross rental yield in Lisbon ranges from 4.7% to 5.7%. As a result, rental property in Lisbon, Portugal, is always in demand.
Is it better to buy property in Spain or Portugal?
It depends on individual preferences, investment goals, and market conditions at the time of purchase. It’s good to note that both countries offer the Golden Visa Program and the D7 Visa.
Do you have to pay tax in Portugal on rental property?
Yes, income tax from rental property in Portugal is between 21% to 28%. It varies whether it is short-term or long-term property rental. For a more in-depth discussion, check out our comprehensive guide on rental property taxes.