Investing in property in Lisbon?
Find out what is a good rental yield in the capital of Portugal.
Investing in property in Lisbon has become hugely popular with investors from all over the world, as well as those who move to the capital of Portugal to make it their home.
As the main Portuguese city, it’s a business, cultural and visiting centre for the country and the rest of the world.
Table of contents
- Where to buy real estate in Lisbon?
- Is buying real estate in Lisbon a good investment?
- What is a good rental yield in Lisbon?
- Why invest in property in Lisbon?
- What is the tax on rental income in Lisbon?
- Is now a good time to buy property in Lisbon?
- Short, medium or long-term?
- Invest in Lisbon with GuestReady
1. Where to buy real estate in Lisbon?
Among the European capital cities, Lisbon is still one with the lowest prices however, real estate prices have gone up by 12.8% since 2020 and the pandemic didn’t slow them down. The price per square meter in Lisbon has gone up by 1.5% since the beginning of 2022.
Here is a list of the best rental yields in Lisbon to help you determine what neighbourhood suits best your property investment portfolio.
Buy to let Bairro Alto
- 3.1% annual yield
- 5.951€ price per sqm
The streets here come alive at night with people crowding the streets but empty during the daytime as people rest in the Bairro Alto neighbourhood.
Although known for being a party neighbourhood there are still some areas that are sought due to their central location. Demand is high in this neighbourhood and some less noisy areas and good for a living are possible to find.
Buy to let Chiado
- 2.9% annual yield
- 6.129€/m2 average price per sqm
Lisbon’s most elegant shopping neighbourhood was mostly renovated by architects; Alvaro Siza Vieira and Aires Mateus. Known as a meet-up for dining and going on nights out, Chiado is the most central refined neighbourhood in Lisbon downtown.
Annual yields can go up to 2.9% in long-term reservations, but being a touristy central area makes it more appealing for short-term rental businesses.
GuestReady is a short-term rental management company and we create a report with the estimated return of your property. Looking to know how much your property can make? Get in touch with our experts today.
Buy to let Avenida da Liberdade
- 2.7% annual yield
- 7.038€/m2 average price per sqm
Here you will find the highest square per meter in the country. Only exquisite buyers want to buy in this area because of its international shops, status, and lifestyle.
Avenida da Liberdade runs from Restauradores Square to Marquês de Pombal Square, for a 1.6 km and more than 90m wide. It’s a sophisticated avenue with graceful trees and cafe terraces on cobblestone pavement. If you’re looking to buy luxury properties, here’s your place.
Buy to let Príncipe Real
- 3.2% annual yield
- 1.214€/m2 average price per sqm
Príncipe Real atmosphere is a mix of sophisticated hipsters with local bio hippies. Here you’ll find beautiful apartments and an incredible social life around the terraces and gardens in the neighbourhood. Príncipe Real is good for long, mid and short-term rentals because of its versatile lifestyle.
Buy to let Alfama
- 3.0% annual yield
- 5.951€/m2 average price per sqm
Alfama is the oldest neighbourhood in Lisbon and also the most touristy. In the middle of its Moorish architecture and narrow alleys, it is possible to find numerous attractions. Old but renovated buildings can be found here.
It is not the best neighbourhood for families, with buildings with no elevator, and no garage. However, it is possible to rent out to younger singles or couples. Thanks to the high number of tourists, this neighbourhood is perfect for doing short-term rentals.
Buy to let Graça
- 3.8% annual yield
- 4.537€/m2 average price per sqm
Known for its breathtaking views, the Graça neighbourhood is a place with a local feeling, where its people maintain their traditional habits. Prices are a little bit lower than in the downtown neighbourhoods, but good returns are expected.
Buy to let Estrela
- 3.1% annual yield
- 5.531€/m2 average price per sqm
Although having a big cultural heritage and its famous Basílica, Estrela is mainly a residential neighbourhood. Here you can find a quiet slow living, for that reason the location is preferred by families. Estrela is ideal for long-term leases.
2. Is buying real estate in Lisbon a good investment?
Yes. Buying real estate in Lisbon is a good investment, mainly because it’s a safe investment. The market nowadays presents high rental demand and low properties available. Although we’re seeing an overvaluation of the real estate prices, that has not discouraged investors from keeping on buying property in Lisbon.
3. What is a good rental yield in Lisbon?
A good rental yield in Lisbon is above 3%. The pandemics didn’t slow the market and the prices have gone up 12.8% since 2020. The market overall shows a variation of 3.5%.
4. Why invest in property in Lisbon?
The reasons why investing in property in Lisbon are varied – easy to sell in any neighbourhood, the high number of tourists, high renting demand, and the low-interest rates (for now). The weather, the beach and the Portuguese gastronomy are quite inviting and investors are here to stay. Positive economic growth is expected in the upcoming years.
5. What is the tax on rental income in Lisbon?
The tax on rental income in Lisbon is 28%. Residents and non-residents are able to deduct expenses related to the rental. It is possible to be taxed progressively together with other incomes, but this may not be beneficial if your IRS income bracket if lower than 28% – the minimum is 14.5%
6. Is now a good time to invest in property in Lisbon?
Yes. At the moment, demand is incredibly high and the number of properties available is low. Now is a good time to buy real estate in Lisbon because of the low-interest rates (still low), and the expected high growth of the Portuguese economy. These two factors make it an ideal time to invest in real estate in Portugal.
7. Short, medium or long-term?
The real estate market in Lisbon is booming. Houses are sold in record time, as soon as they are put on the market.
To decide whether you should do long-term or short-term, a careful analysis of your asset location and size should be conducted. Knowing upfront what are the estimated returns will help to maximise your investment.
Investing in property in Lisbon is an excellent investment alternative, as it provides secure returns.
7. Invest in Lisbon with GuestReady
If you’re investing in property in Lisbon, GuestReady will help you with an expected return analysis for your property. To find out more, fill out the form below and expect a call from our property experts.