Published on and written by Cyril Jarnias
Choosing between Italy vs Spain vs Portugal: where to invest in real estate in 2026? has never been more strategic. All three markets are driven by tourism, lower benchmark rates, and a surge in rental demand, but their investment profiles differ greatly. Between gross yield, capital appreciation potential, taxation, price per square meter, and regulatory constraints, the gap between a good investment and a financial black hole has “never been wider,” as several analyses on Italy point out.
The goal is not to name a winner, but to identify the country offering the best risk/return ratio for each investor profile. The key question in 2026 is where this ratio best aligns with your strategy.
Three growing markets, three very different dynamics
The data compiled for 2025–2026 paint a common picture: rising prices, insufficient supply, record rents, and European benchmark rates stabilized around 2% according to expectations on the ECB. But behind these similarities, trajectories diverge.
In Spain, the market is described as being in a phase of controlled “boom.” Sale prices surged by about 12.7% in 2025, after 8.4% in 2024, with real increases close to 10% after accounting for inflation. Forecasts still point to growth, but more moderate in 2026, around 3 to 7% depending on the area. Demand remains at very high levels – nearly 750,000 sales in 2025, and still 620,000 expected in 2026 – while new construction cannot keep up. This is far from the 2007 scenario in terms of banking risks, but tensions on housing affordability are strong.
The national average price in Portugal reached about 3,019 €/m² at the end of 2025, with an 8.3% year-on-year increase in spring 2026.
Italy, for its part, progresses at two speeds. Overall, price increases remain moderate: around +1.4% in 2025 and forecasts of +1 to 2.5% in 2026 at the national level, with an average around +1.5%. However, some urban centers (Milan, Rome, Florence, Turin, Bologna) and dynamic mid-sized cities show much stronger growth, between 2 and 7% depending on sources. Above all, gross rental yields can reach 7 to 9% in cities like Turin or Palermo, and 7.2–7.3% on average for the most strained segments, while prime neighborhoods in Milan plateau at 3–5%.
No key figure is provided in the content to summarize.
Average prices and rental dynamics
The table below summarizes some key indicators for 2026 (data from multiple aggregated sources, rephrased):
| Indicator | Italy | Spain | Portugal |
|---|---|---|---|
| National average price (sale, €/m²) | ≈ 1,828–1,957 €/m² | ≈ 2,100–2,600 €/m² | ≈ 2,065–2,898 €/m² |
| Annual price increase (latest available year) | ≈ +1.5% to +3.8% depending on source | ≈ +12–14% | ≈ +8% |
| National average rent (June, €/m²/month) | 14.9 €/m² | 14.6 €/m² | 16.7 €/m² |
| Annual rent increase | ≈ +5.5% | ≈ +9.7% | ≈ +3.5% |
| “Star” rental cities (€/m²/month) | Milan 23.7; Rome 18.4 | Barcelona 23.9; Madrid 22 | Lisbon 22.2; Porto 17.7 |
It is immediately apparent that:
– Spain leads in price and rent growth,
– Portugal is the most expensive per square meter on average, especially in “quality” residential,
– Italy remains the cheapest market to buy among the three, but with increasingly high rents in major cities.
For an investor, this implies clearly different profiles of yield and risk.
Gross yield: Italy leads… but Spain follows closely, Portugal plays the stability card
Gross yield data are a good starting point for comparing Italy vs Spain vs Portugal: where to invest in real estate in 2026? They should be interpreted with caution (averages hide huge gaps depending on cities and products), but they indicate the trend.
Comparison of average gross yields
| Country | Indicative average gross yield | Typical range by area | Main observations |
|---|---|---|---|
| Italy | ≈ 7.2–7.3% on studied segments | 3–5% in prime large cities; 7–9% in mid-sized cities | Strong disparities; high potential in student and secondary cities |
| Spain | ≈ 5.4–6.7% | 4–6% in large cities; 6–7% in small cities and tourist areas | Good yield/liquidity compromise |
| Portugal | ≈ 4.3–6.9% | 4–5% in prime Lisbon/Porto; 5–7% in secondary cities / Algarve | Moderate but stable yields, especially long-term |
In summary:
– Italy is the champion of pure gross yield, especially if you look beyond capitals and target mid-sized student or revitalizing cities with low prices and tight rents.
– Spain offers a very balanced yield/resale combination: slightly lower gross yield than Italy, but a much stronger price dynamic and exceptional liquidity.
– Portugal provides more modest yields, particularly in Lisbon and Porto where values have already risen significantly, but with stability and depth of rental demand that appeal to long-term investors.
Italy: a two-speed market, but yields flirting with 9%
Italy offers multiple advantages for those seeking cash flow:
National average prices remain low (1,705–1,957 €/m²) but with marked North-South differences, rents are rising sharply in large cities and tourist hubs, and gross yields reach 7 to 9% in Turin or Palermo.
Milan illustrates this two-speed market well. In prime neighborhoods like Brera, values reach around 18,500 €/m², with a citywide average around 5,188–5,700 €/m². Rents are very dynamic (23.7 €/m²/month), but the gross yield is often limited to 3–5%, compressed by very high entry prices. Milan is primarily “the hub of urban luxury,” a market for capital preservation and gradual appreciation, more than cash flow.
Conversely, cities like Turin – described as offering the best value for money in the North – or Palermo still boast very reasonable per-square-meter values, with rents supported by student demand, major infrastructure projects (new metro lines, Olympic corridors, etc.), and the rise of remote work. This is where you find 7–9% gross yields today.
Spain: rapid growth, solid yields, and a highly liquid market
In Spain, yields are slightly lower on average than in Italy but remain very attractive:
Estimated gross yields for 2026 by property type and location
National estimates for 2026 hover around 5.4 to 6.7% gross yield.
Apartments often range between 5 and 7%, while villas offer around 4 to 6%.
Murcia shows gross yields close to 7.5%, and Castellón de la Plana around 7.2%.
The big difference with Italy lies in the price dynamic. Spain is the only one of the three countries to have reached historical records in sale prices according to data from a major portal. Over one year, the increase exceeds 14% nationally at certain reference dates, with regions like Madrid, Alicante, Murcia, or Valencia flirting with +15 to +18% annually. Upward cycles have been ongoing for more than 40 quarters.
For an investor, this means that: investment choices must be made carefully in order to optimize returns while minimizing risks.
– gross yields remain high thanks to sharply rising rents (nearly +10% year-on-year for rents nationally),
– and the potential for medium-term capital appreciation is significantly higher than in Italy, even though the market is already under scrutiny from monetary and prudential authorities.
Portugal: calmer yields, but excellent long-term visibility
In Portugal, we observe a dual reality:
In France, the national average gross rental yield in Portugal is about 4.3% at the end of 2025. However, some areas like the Algarve, Porto, Braga, Coimbra, or Viseu show yields of 6 to 7%, with peaks reaching 8% in specific tourist micro-markets.
Detailed figures show, for example: significant trends in consumer behavior, as well as monthly sales variations.
– in Lisbon, a gross yield around 4–5% in long-term rental, with prices close to 6,000 €/m² and increases still above 9% year-on-year in some neighborhoods,
– in Faro and the Algarve, yields rising to 5.9% on average, with cities like Lagos or Albufeira where rental occupancy exceeds 90% over the year and gross yields close to 6.4%,
– in Braga, Coimbra, or Leiria, yields reported between 5.5 and 7%, driven by universities, the rise of remote work, and the upscaling of regional infrastructure.
What especially distinguishes Portugal in 2026 is the perception of stability: more moderate price growth than Spain, an economy progressing around 2.2% GDP, an image of a “mature” and increasingly regulated market (especially regarding affordable housing), and a continuous influx of expats and retirees. For an investor seeking a predictable risk/return ratio over 10 years, this is a very strong argument.
Purchase price: Italy remains the most affordable, Spain in the middle, Portugal on the high end
In terms of entry ticket, the differences between the three countries are very pronounced.
Overview of prices per square meter
| Country / Market | Indicative price level (€/m²) | Summary comment |
|---|---|---|
| Italy – national average | ≈ 1,705–1,957 €/m² | The cheapest of the three countries |
| Spain – average | ≈ 2,100–2,600 €/m² (depending on source and type) | Strong bubbles in major cities and coasts |
| Portugal – average | ≈ 2,065–2,898 €/m² | The most expensive of the three on average |
| Milan | ≈ 5,188–5,700 €/m² | 2 to 3 times the Italian average |
| Rome | ≈ 2,986 €/m² | Italian high tier 2 |
| Florence | ≈ 3,337–5,000 €/m² depending on source | Premium “lifestyle” segment |
| Madrid | ≈ 5,642 €/m² | Up 25% year-on-year |
| Barcelona | ≈ 4,800–4,900 €/m² | Heavy regulation on short-term |
| Valencia | ≈ 3,067 €/m² | +20.1% year-on-year |
| Lisbon | ≈ 6,082 €/m² | Very tight market |
| Porto | ≈ 4,085 €/m² | Strong growth |
| Faro (Algarve) | ≈ 3,549–3,560 €/m² | Tourism and retirees, rapid increases |
Two lessons emerge:
Italy offers the lowest entry ticket, especially in the South and mid-sized cities. Regions like Calabria or Molise still show prices around 960–1,000 €/m², sometimes less, with rural homes between 30,000 and 70,000 €. Portugal is paradoxically the most expensive on average, pulled up by Lisbon, Porto, and the Algarve, even though its market is less speculative than Spain’s. Spain sits between the two, with extreme contrasts between Madrid/Barcelona and the interiors or some still affordable coasts (e.g., Costa Cálida).
For an investor with a limited budget but aiming for yield, Italy maintains a lead. For a wealth profile wanting a prime asset in a dynamic European capital, Spain and Portugal are clearly at the forefront.
Rental markets: maximum pressure in Spain, catch-up in Italy, upscaling in Portugal
Rental demand is the true engine of yields. On this point, the three countries share a common diagnosis: an explosion in the number of households, limited new supply, and massive influx of tourists and digital nomads.
Spain: overheated rents and structural shortage
In Spain, rents have increased by about 9.7% year-on-year according to aggregated data. Some tourist cities like Barcelona, Valencia, Palma, or Malaga record increases around 8–10% annually. The causes are well known:
– population growth of about 500,000 additional inhabitants per year since 2021,
– new household formation (about 225,000 per year) far exceeding new housing production (barely 92,000 deliveries in 2025),
– and regulation of tourist rentals that pushed part of the supply toward long-term… but not enough to offset demand.
The national average rent is 14.6 € per square meter per month.
Italy: rapid catch-up in large cities and tourist hotspots
In Italy, rents are also rising very fast. The annual increase would approach 5.5%, with regions like Aosta Valley reaching average rents of 23.25 €/m²/month, and cities like Milan (23.7 €/m²/month) nearly on par with Barcelona. Rome, Florence, Naples, Cagliari, and Palermo follow with steadily increasing rents.
This rental tension is explained by:
– a sales market that is progressing moderately, keeping a large stock of tenant households,
– tourism that remains very strong (Lake Como, Tuscany, Amalfi Coast, major art cities),
– and a qualitative deficit in the housing stock: renovated, well-located, energy-efficient properties (A or B) are becoming rare and capture most demand, with premium rents.
This is what allows some investors to achieve 7–8% gross yield in areas with high rental demand, even with moderate price increases.
Portugal: shift from seasonal to residential and diversification of profiles
In Portugal, the situation is more nuanced. The country has the highest average rents of the three (16.7 €/m²/month), but the annual increase is calmer (+3.5%). Lisbon (22.2 €/m²/month) and Faro (14.2 €/m²/month, +12% year-on-year) are particularly tight, while cities like Porto (17.7 €/m²/month) follow a trajectory similar to major Spanish cities.
Two trends mark 2026:
1. A gradual shift from ultra-seasonal demand toward more residential demand, driven by digital nomads, year-round expats, and foreign families settling in. 2. A rise in public policies favoring affordable housing, with regimes like the RSAA or rental investment contracts (CIA) that incentivize landlords to charge “moderate” rents in exchange for tax benefits (exemption from IRS or IRC, reduced VAT on renovations, IMI exemptions, etc.).
For an investor, this means the game is shifting: the chase for high pure Airbnb returns is riskier than before, but long-term secured regulated contracts and tax incentives become more attractive.
Rules of the game: taxation, regulation, incentives… a decisive criterion for 2026
Comparing Italy vs Spain vs Portugal: where to invest in real estate in 2026? requires integrating the regulatory layer, because this is often where the difference lies between an optimistic Excel sheet and the reality after taxes, charges, and constraints.
Short-term stays: Spain tightens the screws, Italy and Portugal move in fits and starts
In Spain, short-term rentals have become a minefield if you don’t master the local regulations perfectly:
– almost mandatory requirement to have a tourist license,
– moratoria or license freezes in major destinations: Barcelona (no new licenses, phasing out by 2028), Balearic Islands (freeze), many municipalities on the Costa del Sol (Málaga, Mijas, Fuengirola, Manilva…),
– campaigns to massively remove unauthorized listings (over 65,000 listings removed in 2025, an additional 55,000 identified as non-compliant),
– fines that can reach several hundred thousand euros.
The message is clear: profitability still exists in seasonal rentals, but it requires paying a premium for an already-licensed property, or repositioning toward longer durations (mid-term, coliving, student).
In Italy, regulatory pressure on short-term stays is rising, especially in art cities and metropolises, with variable rules depending on the municipality. Florence, Venice, and Rome restrict new registrations, without matching Barcelona, and political signals indicate a possible tax tightening on short-term rentals.
In Portugal, the big break has already happened: the end of the “real estate” route for the Golden Visa and the establishment of pro-affordable housing regimes. AL (Alojamento Local) licenses have been heavily regulated in some urban centers, but the regulation is less heterogeneous than in Spain. Once again, the center of gravity is shifting toward:
– mid-term (coliving, digital nomads),
– and traditional residential, especially in areas where the state puts tax incentives on the table.
Taxation: some comparative benchmarks
On the tax front, the three countries share similar structures (progressive income taxes, local property taxes, transfer duties), but with important nuances for foreign investors.
A summary table helps clarify by presenting key information in a visual and organized way.
| Aspect | Italy | Spain | Portugal |
|---|---|---|---|
| Tax on rental income (non-resident) | IRPEF progressive 23–43% (option for “cedolare secca” at 21% or 10% depending on lease type) | IRNR 24% (19% for EU residents) or IRPF scale for residents | IRS scale, possibility of full exemption for certain “affordable” leases (RSAA) |
| Capital gains on real estate | 26% if sold within 5 years, exemption beyond (for individuals) | 19–26% depending on bracket | Taxation with possible exemption if reinvestment under conditions |
| Main property tax | IMU 0.4–1.06% on cadastral value (exemption for non-luxury primary residence) | IBI 0.4–1.1% generally | IMI, with multiple exemptions (CIA, RSAA…) |
| Transfer duties | 2–9% (2% “prima casa,” 9% second home) | 6–10% depending on region | IMT with stricter rules for non-residents (flat rate 7.5% in many cases) |
| Incentive regimes | Renovation bonus, Ecobonus, Sismabonus, flat tax on foreign income for wealthy new residents | Ad hoc aid, fewer targeted national incentives for foreign investors | New CIA/RSAA regimes, IMT/IMI/IRS/IRC exemptions, reduced VAT on works (6%) for certain projects |
In Italy, the range of renovation incentives remains very attractive in 2026. The famous Superbonus 110% is officially over, but several measures persist:
– Bonus Ristrutturazioni: 50% deduction on €96,000 of work for a primary residence, 36% for secondary residences and investment properties, spread over 10 years.
– Ecobonus: 50% tax credit on energy efficiency work (insulation, heat pumps, windows, efficient heating systems), with ceilings between €30,000 and €100,000.
– Sismabonus: incentives for seismic retrofitting, with rates potentially reaching 85% in some cases combining energy and seismic improvements.
– Furniture and appliance bonuses, contributions for very efficient appliances, etc.
These mechanisms literally transform the economic equation of a renovation purchase: even if sale prices rise little, the value creation through subsidized renovation can be spectacular, especially if targeting the “gap” between energy-hungry properties (classes F–G, under downward pressure) and efficient ones (A–B), now favored by banks via “green mortgages.”
The rent corresponds to 80% of the municipal median rent, providing affordable housing long-term through the orientation of private capital.
– for the individual landlord, a flat rental tax of only 10% on rents until 2029, or even full IRS exemption under RSAA,
– for the corporate landlord, a reduced tax of 50% on the rental base (IRC),
– for institutional investors, ultra-preferential regimes for funds (OIAs) specialized in this housing stock.
Additionally, there is a VAT reduction from 23% to 6% on construction and rehabilitation work for these programs, plus IMT, IMI, and stamp duty exemptions for CIA contracts meeting certain duration and rent conditions.
In Spain, taxation is less generous for investors, but more readable: no massive renovation deduction program comparable to Italy’s system, nor a regime as structured as Portugal’s CIA/RSAA. The trade-off is greater simplicity and tax predictability appreciated by many foreigners.
Italy, Spain, Portugal: which country for which investor profile in 2026?
Given all these elements, the question Italy vs Spain vs Portugal: where to invest in real estate in 2026? only makes sense based on a specific profile. Nevertheless, we can outline some main trends.
Italy: ideal playground for the yield seeker and renovation hunter
Italy checks several boxes for the patient investor, oriented toward cash flow, comfortable with bureaucracy, and ready to tackle construction projects:
– low purchase prices in many regions,
– potentially high gross yield (up to 7–9% in cities like Turin or Palermo),
– very powerful tax incentives for renovation, especially energy and seismic,
– a tight rental market in large cities and tourist hubs, with rapidly rising rents,
– growth prospects for transactions (+8.4% expected in 2026, invested volumes rising) and rate stabilization.
The flip side:
The slow progression of sale prices nationally limits rapid capital appreciation potential. Additionally, heavy bureaucracy, demanding compliance checks, and strong legal risks in case of irregular work make the investment risky. Finally, the “two-speed” market can lead to net monthly losses due to charges, taxes, and work for energy-inefficient, poorly located, or poorly managed properties.
For an investor targeting:
– high yield,
– a long investment horizon,
– and willing to work with local teams (notary, surveyor, tax advisor, architect),
Italy appears in 2026 as an extremely attractive playground, provided you know how to select locations and leverage renovation bonuses before their scheduled reduction after 2026.
Spain: the best compromise between growth, liquidity, and perceived security
Spain is probably the most balanced country for the average international investor:
– very robust price growth for several years, but still below 2007 peaks in real terms,
– solid gross yields (5–7% in many cities and regions, higher in some provincial capitals),
– highly liquid market, with 620,000 to 750,000 transactions per year,
– growing economy (GDP around 2% expected), dynamic labor market, positive migration flows,
– solid, regulated banking system with a high share of fixed-rate loans,
– stricter but readable short-term rental regulation, pushing investors toward more stable models (mid/long-term).
Risks to keep in mind:
The market suffers from a structural shortage of 600,000 new homes, fueling overheating and social tensions. Prices could lead to tightening of prudential standards (loan-to-income caps). Furthermore, tourist cities are adopting very aggressive regulations against short-term Airbnb rentals.
For the investor looking for: rapid growth, a diversification perspective, or long-term yields.
– a clear capital appreciation outlook over 5–10 years,
– a deep, liquid market with relatively easy exit,
– and a balance between yield and stability,
Spain remains in 2026 a “safe bet,” provided you position yourself intelligently: mid-sized cities with high profitability (Murcia, Castellón, Jaén, Huelva, Lleida…), well-connected suburbs of major metropolises, or coastal areas experiencing strong growth but still affordable (Costa Cálida, Andalusian interiors, some parts of the Costa Blanca).
Portugal: the champion of stability and long-term visibility
Portugal, finally, stands out as the number one choice for the very wealth-oriented profile, prioritizing predictability over the last decimal of yield.
Its strengths:
Price growth remains solid (3–7% depending on area) without overheating, with gross yields of 6–8% in secondary cities and the Algarve thanks to resilient rental demand. The economy is progressing, infrastructure is improving (rail, metros). Public policies secure private investment in affordable housing (CIA, RSAA, reduced VAT, tax benefits for moderate rents). The favorable international image among expats, retirees, and digital nomads ensures sustainable demand.
The limits:
– prices already very high in key markets (Lisbon, Cascais, Porto, premium Algarve), with compressed yields at 3–5%,
– the end of the real estate option for the Golden Visa, removing a major appeal for some non-EU investors,
– tightened purchase taxation for non-residents (flat IMT rate of 7.5% in several cases for 2026), increasing entry costs.
For an investor who:
– wants to secure regular income over the long term,
– is willing to look at secondary cities (Braga, Setúbal, Viseu, Leiria, Coimbra, Aveiro) and inland areas undergoing urbanization,
– appreciates an increasingly structured regulatory environment,
Portugal appears in 2026 as an excellent “home port,” rather than a field for quick speculation.
Conclusion: rather than a country, choose a strategy
Rather than seeking an absolute winner to the question Italy vs Spain vs Portugal: where to invest in real estate in 2026?, the right approach is to start from your strategy:
Comparison of strategic profiles between Italy, Spain, and Portugal for residential real estate investment.
Italy is at the forefront, especially in mid-sized cities and student areas with renovation bonuses, provided you tolerate administrative complexity.
Spain offers the best mix of rising prices, deep market, and rental demand driven by both residents and foreigners, with yields that remain attractive.
Portugal stands out for an increasingly clear framework, high rents, targeted tax incentives for affordable housing, and a perceived lower risk profile.
For a diversified investor, the most relevant answer may be not to choose: combining a high-yield asset in Italy, a highly liquid property in Spain, and a “secured” long-term investment in Portugal would smooth out the specific risks of each market, while capturing the distinct strengths of these three countries which, in 2026, remain at the heart of the European real estate map.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
