Sofia ranks 8th in terms of the lowest rental yield in Europe with a 4.04% return, BGNES reported.
Rental yield - the annual return from renting out a property - is key for real estate investors. Higher yields mean better returns.
Buying a property for €500,000 and receiving a monthly rent of €2,000 (or €24,000 per year) results in a gross annual rental yield of 4.8%. After accounting for taxes and other administrative costs, the net return will be lower.
Slovakia and the Czech Republic rank after Sofia with a minimal difference - 4.05% for Prague and 4.11% for Bratislava.
Oslo ranks lowest with just a 2.46% average rental yield. For example, a one-bedroom apartment would cost €379,731, collecting an average monthly rent of €894, resulting in a yield of just 2.83%, reports Euronews.
The data reviewed is from the Global Property Guide, updated to the first quarter of 2024.
The 10 worst European cities by rental yield:
1. Oslo, Norway - 2.46%
2. Luxembourg, Luxembourg - 2.71%
3. Zurich, Switzerland - 2.79%
4. Vienna, Austria - 3.64%
5. Valletta, Malta - 3.67%
6. Helsinki, Finland - 3.8%
7. Berlin, Germany - 3.83%
8. Sofia, Bulgaria - 4.04%
9. Prague, Czech Republic - 4.05%
10. Bratislava, Slovak Republic - 4.11%
Looking by country, Luxembourg, offering the lowest yield of 2.67%, is the least attractive for rental property income.
In Luxembourg, the average purchase price of a two-bedroom apartment is €1.2 million. At an average monthly rent of €2,800, however, this investment yields a gross rental yield of just 2.7%.
In Luxembourg, it will take an average of 37 years to pay back the initial housing investment through rentals, assuming constant yields. Switzerland follows closely behind - 33 years.
By country, the statistics almost mirror those in the cities:
1. Luxembourg - 2.67%
2. Switzerland - 3.05%
3. Austria - 3.59%
4. Malta - 3.66%
5. Germany - 3.74%
6. Norway - 3.79%
7. Czech Republic - 3.95%
8. Denmark - 4.16%
9. Belgium - 4.20%
10. Finland - 4.24%
Latvia, Ireland and Italy top the list of countries with very high average rental yields. Latvia, with a rental yield of 8.06%, stands out as the highest in Europe.
1. Latvia - 8.06%
2. Ireland - 7.85%
3. Italy - 7.38%
4. Romania - 6.63%
5. Lithuania - 6.44%
6. Turkey - 6.36%
7. Great Britain - 6.21%
8. Spain - 6.17%
9. North Macedonia - 6.00%
10. Montenegro - 5.95%
If current rental yields remain stable, it will take approximately 12 years of rental income to recoup the initial investment in a property in Latvia. In Ireland and Italy, the required years will be 13 and 14 respectively.
Among major European cities, Dublin is the leader with an average rental yield of 7.33%. With an investment of EUR 365,000 and a monthly rent of EUR 2,500, it results in a yield of 8.22%.
1. Dublin, Ireland - 7.33%
2. Istanbul, Turkey - 6.63%
3. Riga, Latvia - 6.46%
4. Bucharest, Romania - 6.36%
5. Podgorica, Montenegro - 5.7%
6. Lisbon, Portugal - 5.65%
7. London, UK - 5.59%
8. Brussels, Belgium - 5.54%
9. Warsaw, Poland - 5.51%
10. Vilnius, Lithuania - 5.47%
With the highest rental yields, the largest cities also roughly mirror their countries. /BGNES
