In the first quarter of 2025, the average gross rental yield in Portugal stood at 7.2%, a slight drop from 7.3% in Q1 2024 but higher than the 6.6% recorded in Q1 2023. Compared to 2022, national profitability has increased by 1.6 percentage points, showing a generally stable real estate investment climate across the country.

While Funchal ranks third in Portugal for highest rental prices at €15.9/m² and also has one of the highest average purchase prices at €3,572/m², the high acquisition cost significantly reduces rental profitability. The gross return for property investment in Funchal is just 5.3%, lower than in Porto (5.7%) and only slightly above Lisbon (4.7%).

The most profitable city for real estate investment in Q1 2025 is Castelo Branco, with an 8.6% gross rental yield. Other high-performing cities include: Santarém: 7.5%, Coimbra: 6.9%, Braga: 6.5%, Leiria: 6.3% and Évora & Viseu: 6.1% each.

Meanwhile, Lisbon remains the least profitable city overall, offering landlords a gross yield of just 4.7%, followed by Viana do Castelo (5.1%) and Aveiro (5.2%).

The study by idealista calculates gross rental yields by dividing the average property sale price by the average rental asking price in each district capital.