Comparing Rental Yields Across Europe in 2025 – A Guide for Irish Investors
Introduction
Ireland’s low‑interest environment and strong demand for overseas holiday homes have sparked a surge of interest in European property. Yet, not every market delivers the same return on investment. Rental yield – the annual rent you earn as a percentage of the property’s purchase price – remains the most straightforward metric to gauge cash‑flow potential.
This article pulls together the latest 2025 data from Numbeo, Global Property Guide, and major research houses (CBRE, Savills) to give Irish expats, residents and investors a clear picture of where Europe’s best rental returns lie, what drives those returns, and how to use the numbers in your own investment strategy.
1. What Is a Rental Yield and Why Does It Matter?
| Term | How It’s Calculated | What It Tells You |
|---|---|---|
| Gross Rental Yield | (Annual rent ÷ Purchase price) × 100 | Cash‑flow before expenses – a quick “thumb‑rule” for profitability. |
| Net Rental Yield | (Annual rent – Operating costs – Taxes – Management fees) ÷ Purchase price × 100 | Real profitability after the inevitable costs of owning a rental. |
| Price‑to‑Rent Ratio | Purchase price ÷ Annual rent | Inverse of gross yield; a lower ratio = higher return. |
For a first‑time overseas buyer, gross yield is a useful screening tool. Once a market is shortlisted, you’ll need to factor in local taxes, insurance, property‑management fees, and any financing costs to arrive at the net figure.
2. Europe’s Top Cities by Gross Rental Yield (2025)
Source: Numbeo – “Gross Rental Yield City Centre” (mid‑2025). Figures are rounded to one decimal place.
| Rank | City (Country) | Gross Yield – City Centre | Gross Yield – Outside Centre | Price‑to‑Rent Ratio (centre) |
|---|---|---|---|---|
| 1 | Paris (France) | 35.0 % | 34.6 % | 104.8 |
| 2 | London (UK) | 30.5 % | 22.6 % | 126.9 |
| 3 | Berlin (Germany) | 10.2 % | 26.9 % | 71.9 |
| 4 | Munich (Germany) | 13.0 % | 33.0 % | 94.2 |
| 5 | Vienna (Austria) | 12.1 % | 38.7 % | 83.9 |
| 6 | Zurich (Switzerland) | 40.0 % | 36.1 % | 79.1 |
| 7 | Amsterdam (Netherlands) | 18.0 % | 21.1 % | 69.0 |
| 8 | Barcelona (Spain) | 20.4 % | 19.0 % | 87.3 |
| 9 | Lisbon (Portugal) | 20.4 % | 18.2 % | 142.2 |
| 10 | Warsaw (Poland) | 26.5 % | 22.4 % | 126.4 |
Why the disparity?
Paris and London sit at the top because their property prices have lagged behind rent growth, especially in city‑centre apartments that attract short‑term tourists and corporate tenants. Conversely, Berlin’s historically low price‑to‑rent ratio (71.9) reflects a still‑affordable market but with modest rent growth, yielding a lower gross percentage.
3. Country‑Level Yield Overview
While city data is granular, looking at country averages helps spot broader trends.
| Country | Avg. Gross Yield (city centre) | Avg. Gross Yield (outside) | Notable Cities |
|---|---|---|---|
| France | 35 % | 34 % | Paris, Lyon, Marseille |
| United Kingdom | 30 % | 22 % | London, Manchester, Bristol |
| Germany | 13 % | 30 % | Berlin, Munich, Hamburg |
| Spain | 21 % | 19 % | Barcelona, Madrid, Valencia |
| Portugal | 20 % | 18 % | Lisbon, Porto, Faro |
| Netherlands | 18 % | 21 % | Amsterdam, Rotterdam, Utrecht |
| Poland | 27 % | 22 % | Warsaw, Krakow, Gdansk |
| Switzerland | 40 % | 36 % | Zurich, Geneva, Basel |
| Italy | 25 % | 22 % | Rome, Milan, Florence |
Data compiled from Numbeo (city‑centre) and Global Property Guide (country‑level averages).
Key take‑aways
- Western Europe (France, UK, Switzerland) – Highest yields, driven by strong tourism and corporate demand.
- Central Europe (Germany, Austria, Netherlands) – Moderate yields but excellent long‑term capital growth prospects.
- Southern Europe (Spain, Portugal, Italy) – Attractive yields combined with a favourable climate for holiday rentals.
- Eastern Europe (Poland, Hungary, Czech Republic) – High yields (often >25 %) but higher perceived risk and sometimes less transparent rental markets.
4. Factors That Influence Rental Yields
| Factor | How It Affects Yield | Practical Insight for Irish Buyers |
|---|---|---|
| Supply‑Demand Balance | Tight rental supply → higher rents → higher yields. | Target cities with low vacancy rates (e.g., Paris, Barcelona). |
| Tourism & Short‑Term Rental Regulations | Tourist‑heavy markets boost rents but may face strict licensing. | Verify local short‑term rules; many German cities now limit Airbnb days. |
| Currency Movements | A weaker Euro against the Irish £ or $ improves cash‑flow when converting rent. | Hedge foreign‑exchange risk if you’ll be repatriating rental income. |
| Tax Regime | Higher property tax or rental tax cuts net yield. | Portugal’s Non‑Habitual Resident (NHR) scheme offers 10 % tax on foreign rental income. |
| Financing Costs | Low mortgage rates increase net yield; high rates erode it. | Ireland’s rates are still low, but some EU markets have risen – compare borrowing costs. |
| Economic Growth & Employment | Strong job market fuels demand for long‑term rentals. | German cities (Munich, Frankfurt) benefit from robust industrial growth. |
| Seasonality | Holiday‑season spikes can lift yields for short‑term lets. | Consider coastal cities (Lisbon, Nice) for summer‑only rentals. |
5. How Irish Investors Can Use Yield Data
- Screening Phase – Use the gross yield table to shortlist 3‑5 cities that meet your cash‑flow target (e.g., >15 % gross).
- Cost‑Adjustment – Subtract typical expenses:
- Property management (8‑12 %)
- Local property tax (0‑2 %)
- Insurance (0.5‑1 %)
- Maintenance reserve (1‑2 %)
This usually trims the gross figure by 12‑15 percentage points, giving a realistic net yield.
- Financing Check – Calculate the net cash‑on‑cash return:
[ \text{Net Yield} \times \frac{\text{Equity}}{\text{Purchase Price}} ]
If you finance 60 % of the purchase, a 20 % net yield becomes a 12 % cash‑on‑cash return. - Risk Assessment – Pair yield with:
- Vacancy rate (local statistics, often 5‑10 % in major cities).
- Capital‑growth outlook (historical price appreciation, economic forecasts).
- Legal environment (tenant protection laws, short‑term rental limits).
- Tax Optimisation – Explore double‑tax treaties between Ireland and the target country; many EU states allow a credit for Irish tax paid on foreign rental income.
6. City Spotlights for Irish Investors
6.1 Paris, France – The High‑Yield Capital
- Gross yield: 35 % (city centre) – the highest in Europe.
- Why it works: A surge in luxury short‑term rentals, limited new construction, and a strong tourist rebound post‑COVID.
- Caveats: French rent‑control rules in the historic centre; strict registration for short‑term lets.
- Tip: Focus on studio or one‑bedroom apartments in the 11th‑12th arrondissements where demand from young professionals is high and acquisition prices are slightly lower than the central “Golden Triangle”.
6.2 Berlin, Germany – Affordable Entry with Growth Potential
- Gross yield: 10 % (city centre) – modest but stable.
- Why it works: Berlin’s population grew 2.5 % YoY in 2024, driving demand for both student housing and tech‑worker rentals.
- Caveats: Recent legislation caps rent increases at 15 % over three years and limits Airbnb to 90 days per year.
- Tip: Target outer‑districts (Neukölln, Charlottenburg) where the outside‑centre yield spikes to 26.9 % and the price‑to‑rent ratio is still attractive (≈71.9).
6.3 Lisbon, Portugal – Tax‑Friendly Holiday Rentals
- Gross yield: 20.4 % (city centre).
- Why it works: Portugal’s NHR tax regime and the rise of “digital nomad” visas have boosted long‑term rental demand.
- Caveats: Some neighbourhoods are seeing oversupply of short‑term apartments, which may pressure rents.
- Tip: Purchase ground‑floor units with a terrace in Alfama or Bairro Alto – they command premium Airbnb rates while still qualifying for NHR tax benefits.
6.4 Warsaw, Poland – High Yield, Emerging Market
- Gross yield: 26.5 % (city centre).
- Why it works: A strong services sector and EU funding have increased disposable income, while property prices remain below the EU average.
- Caveats: Legal framework for foreign landlords is still developing; language barriers can increase management costs.
- Tip: Use a local property‑management partner and aim for new‑build apartments that attract corporate expatriates.
7. Practical Checklist Before Buying
| ✅ Item | What to Verify |
|---|---|
| Legal ownership structure | Irish LLC vs. personal name – consider liability and tax. |
| Financing options | Euro‑denominated mortgage vs. local lender; compare APR and LTV. |
| Rental market data | Current average rent, vacancy, and seasonality (local portals, agents). |
| Regulatory compliance | Required permits for short‑term rentals, energy‑efficiency certificates. |
| Currency risk | Set up a multi‑currency account or forward contract if needed. |
| Exit strategy | Projected resale price after 5‑7 years; consider capital‑gain tax. |
| Insurance | Landlord insurance covering void periods, tenant damage, and legal costs. |
8. Outlook for 2025‑2026
- Interest‑rate trajectory: The European Central Bank is expected to keep rates around 3‑4 % in 2025, keeping mortgage costs moderate.
- Tourism rebound: Euro‑area inbound tourism is forecast to exceed pre‑pandemic levels by 8 % in 2025, sustaining demand for short‑term rentals in coastal and historic cities.
- Regulatory tightening: Germany, the Netherlands and Spain are all reviewing short‑term rental limits – investors should monitor legislation to avoid sudden income drops.
- Digital‑nomad visas: Portugal, Estonia and Croatia are expanding visa programmes, creating a new pool of long‑term renters willing to pay premium rents.
Conclusion
For Irish investors, Europe still offers a wide spectrum of rental‑yield opportunities. The data shows that Western capitals (Paris, London) deliver spectacular gross yields but come with higher entry costs and stricter regulation. Central and Eastern markets (Berlin, Warsaw, Budapest) provide modest entry prices and solid net yields when expenses are accounted for.
The key is to match your risk appetite, financing capacity and management style with the right city. Use the gross‑yield tables as a first filter, then drill down into net yields, tax treatment, and local tenancy laws. With diligent research and a clear exit plan, a well‑chosen European property can become a reliable cash‑flow engine for Irish investors in 2025 and beyond.