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Yes, the analysis of Montevideo's property market is included in our pack
Montevideo rental yields averaged 4.97% in 2025, making it a competitive choice for real estate investors in South America.
Yields vary significantly by neighborhood, with Malvín offering the highest returns at 6.4-6.7%, while premium areas like Punta Carretas deliver 4.0-4.5%. Net yields after all expenses typically run 1.5-2 percentage points lower than gross figures.
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Montevideo rental yields average 4.97% gross in 2025, with significant variations by neighborhood and property type.
Net yields after expenses typically range 2.8-3.5%, while short-term rentals can achieve 8-12% but require more management.
| Neighborhood | Gross Yield Range | Property Types |
|---|---|---|
| Malvín | 6.4-6.7% | All types, best value |
| Cordón & Centro | 5.0-5.3% | Studios, 1-2 bedrooms |
| Las Acacias | 5.5-6.0% | Family apartments |
| Pocitos | 4.5-5.0% | Premium apartments |
| Punta Carretas | 4.0-4.5% | Luxury properties |
| City Average | 4.97% | All apartments |
What are the average rental yields in Montevideo right now?
As of September 2025, Montevideo apartment rental yields average 4.97% gross across the city.
This represents a decline from 5.37% recorded in Q2 2024, indicating that property prices have risen faster than rental rates. The current yield environment reflects a maturing market where price appreciation has outpaced rental growth.
Yields vary significantly by location, with outlying neighborhoods like Malvín achieving 6.4-6.7% while premium central areas like Punta Carretas deliver 4.0-4.5%. The citywide average masks substantial differences in returns based on neighborhood desirability and property values.
These gross figures don't account for expenses, taxes, and vacancy periods that reduce actual investor returns. Net yields typically run 1.5-2 percentage points lower than gross calculations.
Current yields place Montevideo competitively within the regional context, outperforming Buenos Aires but trailing cities like Bogotá and Lima.
How do yields differ across main neighborhoods and districts of the city?
Malvín leads Montevideo neighborhoods with gross yields of 6.4-6.7%, offering the best balance of affordability and rental demand.
Central districts Cordón and Centro deliver yields of 5.0-5.3%, benefiting from proximity to business districts and universities that drive consistent rental demand. Las Acacias achieves 5.5-6.0% yields due to lower purchase prices while maintaining decent rental rates.
Premium coastal neighborhoods show compressed yields despite higher absolute rental rates. Pocitos yields range 4.5-5.0%, while upscale Punta Carretas delivers 4.0-4.5%. These areas command premium purchase prices that reduce percentage returns even with higher rents.
Carrasco, the city's most exclusive neighborhood, typically achieves yields on the lower end due to luxury property premiums. However, these areas offer greater price stability and attract higher-income tenants with longer lease terms.
Neighborhood yield differences reflect the trade-off between capital appreciation potential and current income generation in Montevideo's real estate market.
How do yields compare between apartments, houses, studios, and larger family properties?
Studios deliver the highest yields at 5.15-6.02% gross, benefiting from strong demand from students and young professionals.
| Property Type | Gross Yield Range | Target Tenants |
|---|---|---|
| Studios | 5.15-6.02% | Students, young professionals |
| 1-bedroom | 4.82-6.43% | Singles, couples |
| 2-bedroom | 4.23-6.68% | Small families, expats |
| 3-bedroom | 4.24-6.00% | Families, executives |
| Houses | 4.0-5.0% | Large families, luxury renters |
How do surface size and total purchase price, including closing fees, affect rental yields?
Smaller apartments consistently deliver higher yields per invested dollar due to lower purchase prices and proportionally higher rental rates.
Studios and one-bedroom units achieve the best yield efficiency because rental rates don't decrease proportionally with size. A studio might rent for $800 monthly while a three-bedroom commands $1,800, but the purchase price difference is often much greater than the 2.25x rental multiple.
Closing costs add 7-10% to the total acquisition price through legal fees, taxes, and notary expenses. Investors who calculate yields based only on the listed property price overstate their actual returns by failing to include these mandatory costs.
Luxury properties face yield compression as purchase premiums exceed rental premiums. A luxury apartment might cost 50% more than a standard unit but only command 25% higher rents, reducing the yield calculation.
Purchase price per square meter directly impacts yield calculations, making affordable neighborhoods with decent rental demand the most attractive for yield-focused investors.
What is the difference in gross yield versus net yield once we include all expenses and taxes?
Net yields run 1.5-2 percentage points below gross yields after accounting for all ownership expenses and taxes.
Gross yields represent the simple calculation of annual rental income divided by purchase price, while net yields subtract all operating expenses. In Montevideo's market, this typically reduces returns from 4.97% gross to 2.8-3.5% net.
The substantial difference between gross and net yields makes expense analysis crucial for investment decisions. Properties showing attractive gross yields may deliver disappointing net returns once all costs are included.
Non-resident investors face additional tax obligations that further reduce net yields. The 10.5-12% withholding tax on rental income significantly impacts cash flow for foreign property owners.
Realistic yield expectations require net calculations that include all expenses, taxes, and vacancy allowances to provide accurate investment returns.
What typical expenses should be factored in, such as maintenance, condo fees, insurance, property taxes, and management?
Monthly expenses typically total $200-400 for standard apartments, significantly impacting net yields.
1. **Condo fees (Gastos Comunes)**: $80-150/month for typical apartments, higher for premium buildings with amenities2. **Maintenance and repairs**: $50-150/month depending on building age and property condition3. **Property insurance**: $15-35/month for comprehensive coverage4. **Property taxes (Contribución Inmobiliaria)**: 0.2-0.35% of fiscal value annually5. **Income tax withholding**: 10.5-12% of rental income for non-residents6. **Property management fees**: 8-10% of collected rent if professional management is used7. **Vacancy allowance**: 5-8% buffer for periods between tenantsThese expenses are largely fixed regardless of rental income, making them proportionally more impactful on lower-yield properties. Property management becomes essential for non-resident owners but adds significant ongoing costs.
What role does financing play, and how do mortgage costs impact effective yields?
Current mortgage rates of 6-10% often exceed net rental yields, making leveraged purchases cash-flow negative.
Financing costs typically eliminate positive cash flow in Montevideo's current yield environment. With net yields of 2.8-3.5% and mortgage rates of 6-10%, leveraged investors face negative monthly cash flow requiring additional capital injections.
Leveraged purchases only make financial sense if investors expect significant capital appreciation to offset negative cash flow. The low yield environment makes debt financing unattractive for income-focused investors.
Cash purchases provide the best opportunity for positive cash flow and simplified property management. Financing may still make sense for investors with limited capital who can accept negative cash flow for market exposure.
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What is the difference in rental yields for short-term rentals like Airbnb versus long-term leases?
Short-term rentals achieve median gross returns of 8-12% in prime locations, significantly outperforming long-term yields.
Top-performing Airbnb properties in areas like Pocitos, Ciudad Vieja, and Malvín can exceed $1,800 monthly income with 88%+ occupancy rates. The median Airbnb earnings reach $825 monthly with typical occupancy around 50%, peaking above 60% during high season.
Short-term rentals require significantly more management including cleaning, guest communication, maintenance, and marketing. These operational demands either require personal time investment or professional management fees of 20-30% of gross income.
Long-term rentals provide stability with yields of 4-6% gross but minimal vacancy risk and lower management requirements. They appeal to investors seeking passive income without operational involvement.
The choice between short and long-term rentals depends on investor involvement capacity, local market knowledge, and risk tolerance for occupancy fluctuations.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Uruguay versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What kind of vacancy rates exist across different areas and property types, and how do they affect net returns?
Montevideo maintains low vacancy rates of 5-7% citywide, expected to drop to 5% by 2026 as demand outpaces new supply.
Prime neighborhoods like Pocitos and Malvín experience lower vacancy rates of 3-5% due to consistent demand from quality tenants. These areas attract families, expats, and professionals who typically sign longer lease terms.
Older or peripheral neighborhoods face higher vacancy rates of 7-10%, particularly for large or poorly maintained properties. These areas depend more heavily on price-sensitive renters who move more frequently.
Property type significantly impacts vacancy risk. Studios and one-bedroom apartments in central locations rarely stay vacant long due to student and young professional demand. Large family homes face longer vacancy periods between suitable tenants.
Vacancy rates directly reduce net yields through lost rental income and turnover costs. A 5% vacancy rate effectively reduces a 5% gross yield to 4.75% before other expenses, making low-vacancy locations crucial for maintaining returns.
Who are the main renter profiles in Montevideo, and how does that shape demand by property type?
Montevideo's rental market serves four primary tenant categories, each driving demand for specific property types.
1. **Students and young workers**: Prefer studios and 1-bedroom units in Cordón, Centro, and Tres Cruces near universities and employment centers2. **Expats and business professionals**: Seek premium 1-2 bedroom apartments in Pocitos, Punta Carretas, and Carrasco with modern amenities3. **Local families**: Demand 3-4 bedroom apartments or houses in safer neighborhoods like Malvín, Carrasco, and coastal areas4. **Short-term tourists and digital nomads**: Target furnished studios and 1-2 bedroom units in tourist zones like Ciudad Vieja and Pocitos5. **Retirees and older residents**: Prefer ground-floor or elevator-accessible apartments in established neighborhoods with healthcare accessStudent demand drives the market for smaller, affordable units near educational institutions. This demographic accepts older buildings and basic amenities in exchange for location and price advantages.
Expat and professional demand focuses on modern apartments with security, parking, and amenities. These tenants pay premium rents for quality and typically sign longer leases.
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How have rents and yields evolved compared with 5 years ago and compared with 1 year ago, and what are the forecasts for 1, 5, and 10 years?
Montevideo rental yields have declined significantly over the past five years, dropping from 5.5-6% in 2020-21 to 4.97% in 2025.
Property prices rose 2.9% in 2024 alone while rental growth lagged, creating yield compression. This trend reflects increasing investor interest in Montevideo real estate driving up purchase prices faster than rental rates can adjust.
The one-year trend shows continued yield compression as costs and property values outpace rental increases. Market maturation has reduced the outsized returns available in earlier years.
| Time Period | Yield Forecast | Market Drivers |
|---|---|---|
| 2026 (1 year) | 4.8-5.1% | Continued price growth, stable rents |
| 2030 (5 years) | 4.5-4.8% | New supply, market maturation |
| 2035 (10 years) | 4.5-5.0% | Economic cycles, regional factors |
How do Montevideo's yields compare with other similar cities in the region, and what are considered the smartest choices for investors today?
Montevideo's 4.97% average yield positions it competitively within South America's capital cities.
Buenos Aires delivers lower yields of 2.2-3.5% due to rent controls and inflation challenges. Santiago achieves 3.8-5% yields but faces greater political uncertainty. Bogotá offers higher yields of 6-8% but with increased security and economic risks.
Lima provides yields of 5.5-6.5%, making it attractive for risk-tolerant investors. Punta del Este offers higher seasonal rental yields but with greater volatility and seasonal vacancy risks.
Within Montevideo, the smartest investment choices balance yield potential with stability. Malvín and Cordón neighborhoods offer the best risk-adjusted returns at 5-7% gross yields with strong rental demand fundamentals.
For higher risk tolerance, short-term rentals in central neighborhoods can achieve 8-12% returns but require active management or local partnerships. Conservative investors should focus on established neighborhoods with proven rental demand and lower vacancy risks.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Montevideo's rental market offers moderate yields with strong legal protections and market stability for international investors.
Success requires careful neighborhood selection, realistic expense calculations, and understanding local tenant preferences to maximize returns.
Sources
- Global Property Guide - Uruguay Rental Yields
- The LatinVestor - Montevideo Property
- The LatinVestor - Montevideo Best Neighborhoods
- Global Property Guide - Uruguay Taxes and Costs
- Real Estate in Uruguay - Property Tax Guide
- The LatinVestor - Montevideo Price Forecasts
- AirROI - Montevideo Airbnb Analysis
- Airbtics - Montevideo Airbnb Revenue
- The LatinVestor - Uruguay Real Estate Market
- Global Property Guide - Uruguay Price History