The dream of buying a house in Portugal to rent out is still delivering solid profits for investors, despite a slight decline in returns in the third quarter of 2025.
According to the latest data from Idealista, the gross profitability of buying a house for rent in Portugal stood at 6.9% in Q3. While this represents a small decrease of 0.3 percentage points compared to the same period in 2024 (7.2%) and a 0.5-point drop from 2023 (7.4%), it remains higher than the 2020 figure of 6.5%. This indicates the market’s resilience and continued attraction for those interested in real estate investment.
Where to Invest: Top Performing Cities
If you’re considering buying property to rent out, some Portuguese cities offer especially appealing returns. Castelo Branco comes in at the top, boasting a remarkable 9% gross profitability. Bragança follows with 8%, and Santarém delivers 7.1%. Other strong performers include Coimbra (6.7%), Leiria (6.5%), and Viseu (5.9%). Porto, a favorite among international investors, offers a still-reasonable 5.7%, while Braga and Viana do Castelo provide 5.6% and 5.5%, respectively.
On the flip side, the least profitable rental markets are Lisbon, the country’s bustling capital, sitting at 4.6%, and Funchal in Madeira at 4.8%. While these locations may be popular for tourism or lifestyle, rental yields there are less enticing for investors focused solely on profit.
Commercial Real Estate Sees Higher Yields
Idealista’s report also highlights the profitability of commercial real estate. Offices are generating returns of 8%, shops an impressive 8.1%, and garages 5.2%. These figures suggest that investors looking to diversify might consider commercial segments, which are currently outperforming the housing market in terms of yield.
How Profitability is Calculated
To assess market performance, Idealista compares property sale prices with current rental rates across Portugal. The resulting figure, gross profitability, measures the percentage return an owner can expect before taxes and other expenses. It’s a key metric for anyone considering buying a house for renting out in Portugal.
Bottom Line for Investors
Despite slight declines, rental property investment in Portugal remains profitable—particularly in secondary cities. With yields outpacing those of recent years, and commercial segments performing even better, buyers have plenty of options to explore. As always, careful market research and selection of location remain crucial for maximizing returns in Portugal’s dynamic real estate market.
