Portugal Luxury Real Estate Rentals: Lisbon Growth Slows

Portugal Luxury Real Estate Rentals: Lisbon Growth Slows

Discover the latest trends in Portugal’s luxury real estate rentals market as Savills reports a slowdown in Lisbon’s prime property rental growth.

The luxury real estate rentals landscape in Lisbon is experiencing a notable deceleration in growth, as highlighted by Savills’ recent analysis, the “Prime Residential World Cities Index.” In 2024, rental prices for high-end properties in the Portuguese capital escalated by a modest 10.5%. This figure, while still impressive, pales in comparison to the staggering 30% surge witnessed in 2023, suggesting a natural cooling of the market following such a meteoric rise.

The Savills report indicates that the luxury real estate rentals sector in Lisbon is now entering a phase characterized by more tempered growth, with an increase of merely 2.8% recorded in the latter half of 2024. This shift signals a potential stabilization in rental values, contrasting sharply with the pronounced spikes observed in previous years. Interestingly, the global luxury rental market remains robust, with 25 out of the 30 cities surveyed reporting positive rent growth throughout 2024. On average, these cities experienced a rental increase of 4.3%.

In neighboring Spain, the scarcity of available properties in both Barcelona and Madrid continues to exert upward pressure on rental prices. Meanwhile, Dubai, which has claimed the top spot in the rankings, is witnessing an unprecedented boom in its luxury real estate rentals market. The influx of new residents from across the globe has propelled rental values in Dubai by an astonishing 23.5% in 2024, eclipsing the market’s previous peak in 2016.

Globally, prime gross yields have seen a slight uptick, rising by five basis points to 3.15% in 2024, as rental markets outpace sales markets in terms of growth. Despite the slower pace of increase, Lisbon’s luxury real estate rentals values are still on the rise, albeit at a more measured rate following the peak in 2023. Projections for 2025 suggest that this trend will persist, supported by stable supply and sustained demand from both domestic and international clientele.

Lisbon’s allure as a desirable place to reside remains undiminished, bolstered by its high quality of life, excellent infrastructure, and comprehensive health and education services. As interest rates continue to hover at elevated levels, it is anticipated that many prospective buyers will gravitate towards the rental market. By 2025, high-end rental prices across the 30 cities included in the World Cities Index are expected to see a slight increase, although this growth is likely to remain below historical averages.

Dubai is poised to lead the charge in rental growth for 2025, with expectations of an increase exceeding 10%. The market is witnessing a surge in demand from both domestic and international tenants eager to partake in the luxurious lifestyle that Dubai has to offer.

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