Real estate continues to be a safe haven for investment, especially in these times of global uncertainty with the new trade war that has broken out in the US with Trump's tariffs, which have turned the world economy and financial markets upside down.
Among the various segments, the residential sector stands out, continuing to offer business opportunities in Portugal given the high demand and scarce supply of housing. This is, in fact, a trend that has already been observed, with buying a house to put on the rental market yielding a gross return of 7.2% in the first quarter of 2025, one of the highest figures in recent years.
Investing in the purchase of a home to rent out had a gross return of 7.2% at the beginning of 2025, which is about 0.1 percentage points (p.p.) lower than that calculated for the same period in 2024 (7.3%). However, buying a house to rent is now yielding 0.6 p.p. more than in 2023 and 1.6 p.p. more than at the beginning of 2022.
Housing profitability is thus at one of its highest levels in recent years, surpassed only by the rate recorded a year ago and the rate calculated for early 2019 (7.5%), before the pandemic. It is important to remember that the higher the profitability, the greater the business risk. And even though house prices have been rising faster than rents (6.3% and 4.9%, respectively, at the beginning of 2025).
What is the profitability of housing in each city?
Looking at the 14 district capitals/autonomous regions, it is clear that Castelo Branco is the most profitable place to buy a house for investment, with a return of around 8.6% - but here too the risks are greater, as it may be more difficult to rent out the house or for the property to increase in value in the future.
The list of the most profitable cities for investing in a house and then putting it on the rental market continues with Santarém (7.5%), Coimbra (6.9%), Braga (6.5%), Leiria (6.3%), Évora (6.1%), Viseu (6.1%), Porto (5.7%), Faro (5.5%), Setúbal (5.4%), and Funchal (5.3%).
The lowest returns on housing are obtained by owners of rented homes in Lisbon (4.7%), Viana do Castelo (5.1%), and Aveiro (5.2%). The good news is that in these cities, the investment risks are lower, and there is a greater probability of renting the home and the property increasing in value.
Source: https://www.idealista.pt