Rental Yields in Andorra: What Investors Need to Know
- 1 day ago
- 9 min read
If you're weighing up Andorra as a rental investment, yield is usually the first number people ask about — and it's also the number most often misquoted, because it depends heavily on where in the country you're looking, what kind of property you're comparing, and importantly the time of year the rental property will go on the market. This guide breaks down what rental yields in Andorra actually look like, what drives the differences between parishes and seasonal rent prices, and what to factor in before running the numbers yourself.
What is Rental Yield, and How is it Calculated in Andorra?
Gross rental yield is a simple formula: annual rent income divided by the property's purchase price, expressed as a percentage.
(Monthly Rent × 12) ÷ Purchase Price × 100 = Gross Rental Yield
So a property bought for €300,000 and rented at €1,200/month would generate a gross yield of 4.8%. This figure ignores costs like taxes, maintenance, fees, and any periods the property sits empty — for a true picture, you'd want to look at net yield, which factors those in. As a rule of thumb, expect net yield to run 0.5-1 percentage points below gross yield in Andorra once running costs are accounted for.
Average Gross Rental Yields in Andorra
As of 2026, the average gross rental yield across Andorra sits at around 4,5%, though this varies noticeably by property size and location.
Yields also vary by property type:
Property Type | Average Yield |
Studio | 4% |
1-bedroom | 4-4.5% |
2-bedroom | 4.5+% |
3-bedroom | 4-4.5% |
4+ bedroom | 3.5-4% |
Smaller units are in high demand from investors — particularly studios and 1-beds close to the capital — and that demand has pushed prices per m² up sharply. While the national average property price sits at around €4,600/m², properties under 60m² outside the capital typically now sell for €5,000–6,000/m². This premium on smaller units has, in turn, pulled their yields down relative to slightly larger properties, since price has risen faster than the rent it can command.
It's also worth flagging a quirk of the local market: on public listing portals, the average advertised price for all second-hand properties often sits closer to €6,000/m². This isn't a realistic reflection of what properties actually sell for — it's an inflated asking price that many owners and agencies publish speculatively. Treat portal listing prices as a starting point for negotiation, not a benchmark for calculating yield.
Rents don't scale down proportionally with size the way purchase prices do. As a property gets larger — moving from an apartment into chalet territory — yields tend to fall, simply because rental demand for larger properties is much thinner than demand for 2- and 3-bedroom apartments. A typical second-hand 3-bedroom apartment (around 120m²) now sells for €600,000–700,000, while achievable rent sits in the €2,200–2,800 range — a combination that again produces a comparatively lower yield. Part of this comes down to affordability: there's limited rental demand above the €2,000/month mark, since that price point is out of reach for the average working family in Andorra, which narrows the pool of potential tenants for larger, pricier units.
For this reason, the strongest net yields through 2026 and 2027 are likely to come from the middle of the market: 2-bedroom apartments around 100m². These typically sell for €450,000–600,000 and rent for €1,800–2,300, striking the best balance between achievable purchase price and genuine rental demand.
Rental Yields by Parish
Andorra's seven parishes each behave differently as rental markets:
Andorra la Vella — the capital carries the highest liquidity and most consistent rental demand, but also the highest purchase prices, yields can vary considerably between properties with luxury new-build apartments in Andorra’s centre (1M-4M price tag), having yields towards the lower end (3%), while second hand properties offering higher gross yields of up to 5%
Escaldes-Engordany — similarly high-priced given its proximity to the capital and the Caldea thermal spa complex, with yields typically in the 4-4.5% range.
Encamp — generally the most affordable parish to buy into, which often means comparatively stronger yields, closer to 4.5%.
La Massana and Ordino — popular with luxury and second-home buyers thanks to ski access and mountain scenery; capital appreciation tends to outperform yield here, which typically sits around 4-4.5%.
Canillo and Sant Julià de Lòria — smaller, quieter markets where 4.5% yields are achievable but liquidity (how quickly you could resell or re-let) and occupancy is lower than in the capital.
Rental Yields by Season
The figures above are calculated on rents typically achieved in mid-season — outside the peak winter rush. If, instead, you bring a property to market between mid-September and the end of December (sometimes stretching into January), you can generally command a noticeably higher price.
This period sees the arrival of an estimated 5,000 seasonal winter workers. Their arrival puts pressure across every tier of the Andorran rental market — properties that would normally rent for up to around €3,000 in mid-season see their achievable rent rise across the board during this window, so a property that might typically fetch €1,500 could reach closer to €2,000, and one at €3,000 could push toward €3,500. It's by far the strongest window to bring a new rental onto the market, and landlords who time it well can push gross yield toward 5% during this period — a meaningful step up from the mid-season baseline.
Timing matters as much as pricing. Listing too late into the season means missing the initial wave of workers securing housing before the resorts open, so getting a property market-ready by early-to-mid September, rather than waiting for the seasonal rush to peak, tends to capture the best rates.
Rental Yields: Occupancy
One of the biggest factors in all of the above is the occupancy rate you can realistically expect — a headline yield figure means little if the property spends several months a year sitting empty. Several factors specific to the Andorran market affect occupancy:
New residents. Since a signed rental contract is a requirement for most Andorran residency applications, it's common for a new resident — particularly expats, as opposed to seasonal workers — to take on a rental purely to satisfy that requirement, stay for somewhere between 6 and 18 months, and then move on, either to buy their own property or to upgrade to a better rental once they're settled. If you're renting to a new-resident expat, it's realistic to expect turnover within a year or two, often around the summer.
Winter-signed contracts. Tenants who sign during winter tend to accept an inflated rent, simply because availability is tightest at that time of year. Once summer arrives, though, more choice opens up on the market — better properties at more competitive prices — and tenants who signed at a winter premium often use this window to end their contract and move to a better deal.
Un-affordability. If your rent is priced above what the average local worker can afford, you're effectively fishing in a much smaller pool — largely limited to expat residents who can absorb rents of €2,000+ a month. Despite genuinely high overall demand for rentals in Andorra, demand at this price point specifically can be thin. In practice, this can mean a property sitting on the market for months before it's let, or having to accept a materially lower yield than you originally budgeted for.
Temporary vs. long-term contracts. Andorra has two standard contract types: a 5-year long-term lease, or a short 4–6 month temporary contract. Five years is a long commitment, and with recent legal changes, landlords can no longer assume with full confidence that a 5-year contract won't be extended further by law. For that reason, seasonal/temporary letting can be an appealing alternative — gross yields during the winter season (November to mid-April) can reach 5–6%, and around 5% over the summer season (June to September). The trade-off is that the property typically sits empty for 3–4 months of the year between seasons, which brings the effective annual gross yield down to a more modest 3.5–4% once that vacancy is accounted for. It's also worth weighing tenant quality carefully here — seasonal/temporary workers aren't always the most reliable tenants, so it's worth thinking twice before putting a brand-new build, or a fully furnished apartment with higher-value furniture, up for this kind of short-term let.
What's Driving Andorran Rental Yields Right Now
A few structural factors are shaping the current rental market and worth understanding before you invest:
Rental supply is tight. Andorra's population has grown quickly in recent years — driven by foreign investment, the appeal of its tax regime and the quality of life on offer — while housing supply hasn't kept pace. This imbalance has kept upward pressure on rents, which is generally good news for yield, though it also reflects a genuine housing access issue for the resident population.
The 2024–2026 Omnibus Law changes matter here. Thousands of older rental contracts that had benefited from long-standing forced extensions are no longer being automatically renewed, allowing landlords to sell and pull more properties from the rental market. If you're modelling yield on an existing tenancy, post-liberalisation rents can look very different from the figure currently being paid so be careful when considering investing in already rented properties in Andorra.
Foreign investment taxes have increased. Recent changes have raised the tax on foreign property purchases, with different rates depending on whether it's your first Andorran property or a subsequent one. This doesn't affect gross yield directly (gross yield is a rent-vs-price calculation), but it does affect your total entry cost and therefore your effective return / net yield — so it's essential to factor into any real return calculation, not just the advertised gross yield.
Gross Yield vs. Net Return in Andorra: What Actually Lands in Your Pocket?
Before treating any advertised yield figure as your expected return, it's worth deducting the real costs that sit between gross rent and what actually lands in your pocket:
Rental income tax — landlords in Andorra pay a flat 10% tax on rental income.
Property transfer tax (ITP) paid on purchase — currently 4%, plus a foreign investment surcharge where applicable (6–10%).
Agency fees — effectively free to the landlord, since it's standard practice in Andorra for the tenant to cover the full agency fee.
Management fees — typically minimal. Most Andorran rentals are apartments, so major maintenance is already covered through the community fee, and day-to-day tenant issues are usually handled by simply pointing the tenant toward the property owner directly, rather than through a paid management service.
Community fees — generally paid by the owner, not the tenant. Expect somewhere in the region of €1,000–2,500 a year for a 2–3 bedroom apartment, covering things like lift maintenance, cleaning of communal areas, and shared garden upkeep.
Vacancy periods — even in a tight market, turnover between tenants isn't instant, as covered in the occupancy section above.
A property advertised at a headline gross yield of 4.5% can easily net closer to 3.8% once all of this is factored in — still often fairly competitive by Western European standards, but worth modelling properly rather than taking the marketing figure at face value.
Is Andorra a Good Market for Rental Yield Right in 2026?
Andorra's yields are broadly in line with those seen in major Spanish cities like Madrid and Barcelona. But the number that really sets Andorra apart isn't the yield itself — it's what happens to that income once tax comes into play. Andorra levies no wealth tax and no annual property tax, and rental income is taxed at a flat 10%, well below Spain's progressive rates of up to 47% for non-resident landlords, so the net-of-tax comparison likely favours Andorra even more than the raw yield percentages suggest — worth a caveat that this compares yield only, not the full after-tax return, which is where Andorra's real edge tends to show up. That said, yield alone isn't the whole story — Andorra's property market has also delivered strong capital appreciation over the past several years, meaning many investors here are balancing yield against long-term price growth rather than optimising purely for cash flow.
For anyone using property purchase as a route toward Andorra residency, it's also worth noting that certain investment-residency pathways come with restrictions — including, in some cases, a requirement that the qualifying property cannot be rented out while it's being used to satisfy residency conditions. If yield is a core part of your strategy, this is worth clarifying before you commit to a specific investment route.
