Central and Eastern Europe are set to offer the most lucrative returns for property investment in 2025, with Moldova emerging as the top destination, according to a recent study by UK insurance company William Russell.
The research analyzed key factors such as property tax rates, income tax on rent, and gross rental yield to determine the best locations for real estate investment.
Moldova stood out in the report as the highest-scoring country for property investment, earning praise as “an emerging, high-yield market for early, risk-tolerant real estate investors.” The country has low property buying costs, with a maximum of 2.80% of the purchase price, and a 12% income tax on rental income, contributing to a high rental yield. Moldova’s capital, Chișinău, has seen steady infrastructure, hospitality, and business sector growth, while increasing tourism, largely driven by the country’s wine industry and cultural heritage, creates excellent short-term rental opportunities.
Despite being a non-EU member, Moldova is a candidate to join the EU. Lithuania secured second place in the rankings, with property prices rising nearly 10% in the last quarter of 2024. The country remains attractive to foreign investors, who face no restrictions on property purchases. Rental prices have surged by over 170% since 2015, while Lithuania boasts a gross rental yield of approximately 6.39% per year. “With 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 noted.
North Macedonia, another EU candidate country, ranked third in the study. Skopje, the capital, is undergoing urban expansion, infrastructure upgrades, and rising demand for both residential and commercial properties. North Macedonia benefits from low taxes and a streamlined property acquisition process, alongside government incentives for foreign investors. The country offers a gross rental yield of approximately 6.47% per annum, indicating strong returns relative to property values.
The study also highlighted Serbia, Ireland, and Latvia as countries with “very good” rental yields, with annual gross yields exceeding 7%. In Ireland, high rental prices have driven yields, although elevated taxes may reduce net income. The country is grappling with a housing crisis, as the increasing population outpaces new housing construction, causing property prices to continue rising.
Andorra, Montenegro, and Bulgaria also feature among the best options for investment, with high gross rental yields and relatively low rental income taxes. Meanwhile, Italy, despite a slightly higher tax rate of 21%, offers an appealing 7.56% gross rental yield, making it a strong contender for investors with specific financial 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 concluded.
