Where in Europe will property investment pay off most in 2025?
The best European countries for real estate investment in 2025 are in Central and Eastern Europe, with Moldova leading the way.
The Balkan country earned the highest score in a new study scanning the best property investments in Europe, according to UK insurance company William Russell.
They took a closer look at key elements of property investments, including property tax rates, income tax on rent and gross rental yield.
In a previous study by UK relocation company 1st Move International, Lithuania appeared to be the top choice. In the current listing, the Northern European country earned the second place, only, closely followed by North Macedonia.
Moldova was called 'an emerging, high-yield market for early, risk-tolerant real estate investors' in the study, which found that property buying costs are a maximum of 2.80% of the price and the income tax is 12% on rent, providing a high rental yield rating.
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The country earned a high ranking due to its capital, Chișinău, which has seen steady development in infrastructure, hospitality, and business sectors in recent years.
This, coupled with rising tourism, driven by the country's wine industry and cultural heritage, offers short-term rental opportunities.
However, the country is not part of the EU, currently, it is a candidate to join the bloc.
Lithuania is ranked as the country with the second-best property investment opportunities.
Property prices jumped by nearly 10% in the last three months of 2024 year-on-year, according to Eurostat, and the trend is likely to continue.
Despite real estate prices rising sharply in recent years in the country, the location is appealing to foreigners, as they are not restricted from purchasing property in Lithuania. Rent prices are also attracting investment as they are high in the country, more than 170% of what they were in 2015.
'With a gross rental yield of approximately 6.39% per annum and a maximum of 4.10% buying costs, Lithuania's moderate growth rate means that property prices are likely to increase steadily over time, providing a good return on investment,' the report said.
North Macedonia, another EU candidate country, was ranked as the third-best option. The capital, Skopje, is experiencing urban growth, infrastructure upgrades, and increasing demand for residential and commercial spaces.
The country offers low taxes coupled with a simplified process to acquire property, and there are government incentives for foreign investment. According to the report, North Macedonia also boasts a gross rental yield of approximately 6.47% per annum, indicating a strong return relative to the property's value.
Where else in Europe are there good property investment opportunities?
According to this study, Serbia, Ireland, and Latvia also promise 'very good' yield ratings, with the gross annual rental yield being more than 7%.
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In Ireland, high yields are mainly guaranteed by high rental prices, but elevated taxes could take a bite out of the annual net income. The country is facing a housing crisis with not enough homes being built for the increasing population, as prices continue to soar.
Countries with the highest gross rental yield, coupled with a relatively low average rental income tax, include Andorra, Montenegro, and Bulgaria.
Despite having a slightly higher tax rate (21%), Italy has the third-highest rental return rate due to its high yields (7.56%), which might be appealing depending on specific investment goals.
'While gross rental yield and average rental income tax rate are important factors in property investment analysis, it's crucial to consider other factors such as vacancy rates, property management costs and local market conditions,' the study said.
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