Best rental yields in Lisbon
Last updated: January 2025
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.
You can use our calculator to receive an immediate estimate about how much a particular Lisbon property could be generating in passive income, or continue reading this article to find out more about investing in real estate in Portugal.
1. Where to buy real estate in Lisbon?
Lisbon is one of the most beautiful capital cities in Western Europe. It has a rich culture and heritage and many restaurants, bars, and cafes to experience.
While it’s Portugal’s most expensive city for real estate, with an average price of €6,461 per square metre. It’s cheaper than other Western European cities like London and Paris, making it a viable option if you’re looking for a prominent buy-to-let investment opportunity in Europe.
Also, according to Statista, Lisbon will be one of the top cities for real estate investment opportunities in 2025, ranking tenth in the list ahead of cities like Barcelona, Warsaw, and Vienna.
But where should you buy property in Lisbon? Let’s look at some of the neighbourhoods with the best rental yields in the city:
Buy-to-let Barrio Alto
- 3% annual yield
- €6,758 per square metre
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.
Barrio Alto isn’t Lisbon’s most expensive area, but it’s not the cheapest, with an average property cost of €6,758 per square metre in 2025. Also, while there’s a lot of demand for rentals in Barrio Alto, the average yield is around 3%, which isn’t the best you will find in Lisbon’s city centre.
Buy-to-let Chiado
- 3% annual yield
- €7,725 per square metre
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 3% in long-term reservations, but being a touristy central area makes it more appealing for short-term rental businesses.
If you want to buy in Chiado, you will pay an average of €7,725 per square metre, which is more expensive than Barrio Alto and Lisbon as a whole. Still, given the thriving local scene in Chiado, this is definitely one of the hottest places to buy in Lisbon, and you can be sure of a thriving short-term rental market if you invest here.
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
- 2.5%-3% annual yield
- €8,576 per square metre
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%-3.5% annual yield
- €7,870 per square metre
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.
The average cost of property here in 2025 is similar to the price of apartments in Chiado, another upmarket, culturally diverse area within Lisbon. If you buy in Príncipe Real in 2025, you can expect to pay approximately €7,870 per square metre, and your apartment may fetch an annual yield of between 3% and 3.5%.
Buy-to-let Alfama
- 3%-4% annual yield
- €7,300 per square metre
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.
Given its central location, Alfama is fairly expensive, with properties costing €7,300 per square metre on average in 2025. If you rent out your property in Alfama, you can expect yields ranging from 3% to 4%, depending on its location and size.
Buy-to-let Graça
- 4.6% annual yield
- €5,542 per square metre
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.
As properties in Graça average just €5,542 per square metre in 2025 and yields of more than 4.5% can be expected, this is perhaps the best area to begin your search for a buy-to-let property in Lisbon this year, even if it’s not the most central location of those introduced on this list.
Buy-to-let Estrela
- 5% annual yield
- €7,337 per square metre
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.
While property prices continue to creep up in this neighbourhood, it’s still worth investing here. After all, with a typical annual yield of around 5% expected, it’s one of the best spots in the city to secure a long-term buy-to-let investment opportunity.
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?
The average rental yield across Portugal is around 4.96% in 2025, down slightly on previous years. In Lisbon, yields tend to range in the 3% to 4% range, meaning the city has lower than average yields for the country. So, if you can find an area or a street within one of Lisbon’s neighbourhoods with a yield of 4% or higher, you’re doing well.
While Lisbon might not present the best yields in the world, the huge number of annual visitors and the fact that property prices continually increase in the city makes property in Lisbon a viable long-term investment.
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?
2025 is a great time to buy property in Lisbon, Portugal. Though the country experienced a slight slowdown in economic growth in 2024, projections indicate a rebound over the next two years, with expected annual growth rates of 1.9% in 2025 and 2.1% in 2026.
This recovery will be fuelled by increased private consumption and investment, alongside a gradual decline in unemployment. As the nation’s economic hub, Lisbon plays a crucial role in this expansion, serving as a key centre for investment, trade, and tourism.
Tourism remains a major contributor to Portugal’s economy, with international visitor numbers reaching record highs in 2024—rising by 5.3% and bringing in 2.3 million tourists in August alone.
The most recent data for Lisbon shows that the city welcomed over 18 million domestic and international visitors in 2023, highlighting its enduring appeal.
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.
8. 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.
Lisbon rental yields FAQ
Are rental yields in Lisbon lower than average in Portugal?
Yes, rental yields in Lisbon tend to be lower than the average for the rest of Portugal. In 2025, properties in Portugal have an average rental yield of 4.96%, but in Lisbon, you can expect an average yield of between 3% to 4%, depending on the area.
Which is Lisbon’s best area for rental yield in 2025?
Our research found that Estrela is one of Lisbon’s best areas for rental yield in 2025, with an average of around 5%. That said, we rate Graça as the best buy-to-let area in 2025, as the average property price is much lower than in Estrela, and you can expect an average rental yield of around 4.6%, just slightly lower than the average for Portugal as a whole.
