In terms of return, Barreiro, Setúbal and Seixal lead the yeld. Cascais and Oeira rents register increases of more than 30 percent.
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The city of Lisbon is the one with the lowest return on investment in Portugal, with the lowest yield – annual profitability measure – in the country of just 4.6%, followed by Guimarães (4.6%) and Faro (4.9%), revealed the digital real estate consultancy imovendo, in an analysis of the profitability of the rental market.
As opposed to the capital, the highest return on investment in the country is currently in cities on the south bank, such as Barreiro, Setúbal and Seixal, with rates of return on investment of 7.1%, 6.7% and 6. 2%, respectively.
The lower yield percentage in cities like Lisbon is explained by the high price of properties available for purchase, compared to the actual expected return on renting.
“Even with the price of rents rising by more than 30% between 2021 and 2022, the rental market in the capital is no longer so attractive, with low returns and an ever-decreasing supply of properties”, clarifies Miguel Mascarenhas, CEO of imovendo.
Despite the instability of the market and the economy, the value of rents in Portugal grew by 21.1% last January compared to the same period in 2022 and, according to the consultant, the trend will continue in the first quarter of this year.
Moderation in 2023
After Lisbon, rent price growth was more significant in the neighboring municipalities of Oeiras (+ 24.5%) and Cascais (+ 32.9%) compared to last year, cities where the return is also low.
“It is expected that 2023 will be a year of moderation, and, despite the tendency to maximize investments, it will be necessary to carefully study the market and avoid overloaded cities like Lisbon”, underlines the same official.
Imovendo thus points to a year of 2023 with high rental prices, with no forecast yet for a slowdown and the relief of price pressure requires more structured measures than just temporary support.
“It will be necessary to go beyond the withholding tax to which income from rentals is subject. A general decrease in IRS will not lead to a drop in prices, nor will it relieve pressure on the real estate market”, concludes Miguel Mascarenhas.
Top 10 Cities with Lowest Yield
- Lisbon (4.6%)
- Guimaraes (4.6%)
- Faro (4.9%)
- Oeiras (4.9%)
- Santa Maria da Feira (4.9%)
- Maia (5.1%)
- Cascais (5.2%)
- Viana do Castelo (5.1%)
- Odivelas (5.3%)
- Porto (5.3%)
Top 10 Cities with Highest Yield
- Barreiro (7.1%)
- Setúbal (6.7%)
- Seixal (6.2%)
- Amateur (6.1%)
- Sintra (6.1%)
- Aveiro (6.0%)
- Figueira da Foz (6.0%)
- Vila Franca de Xira (6.0%)
- Palmela (5.9%)
- Vila Nova de Gaia (5.9%)