Andorra’s Real Estate Market in 2025: Rising Prices and Rental Dynamics

In 2025, Andorra's real estate market maintains a positive trajectory. Limited supply and steady demand from international investors continue to drive prices upward. The country’s favorable tax environment attracts both buyers and renters, although rental yields may be limited due to insufficient occupancy.

Housing Prices on the Rise

Between 2019 and 2024, the average housing price in Andorra increased by nearly 50% — from €3,112 to €4,582 per square meter. In 2024 alone, prices surged by 14.4%, followed by another 4.86% rise in Q1 2025 compared to the previous quarter. According to Global Property Guide, Andorra remains one of Europe’s most stable markets in terms of price growth.

The most dynamic price growth is recorded in Escaldes-Engordany (€5,689/sq. m, +20.1% YoY). Prices in Andorra la Vella reached €5,032 (+5%), and La Massana saw €4,221 (+13.7%). More affordable areas like Encamp and Sant Julia de Loria range between €3,600–€4,100 per sq. m, yet these zones have also witnessed price growth exceeding 50% over five years.

Rental Yields and Challenges

Price growth doesn’t always translate into profitable rentals. Due to seasonal demand and legal limits on short-term leasing, returns vary significantly. According to AirROI, properties in tourist areas such as El Tarter bring significant income only with high occupancy. While the average daily rate is $304, annual occupancy is just 32.4%, yielding gross income of around $27,700. Only the top 10% of listings generate over $7,000 per month with occupancy up to 66%.

Median monthly rental income is approximately $1,800, while the least profitable listings bring less than $850 with 13% occupancy. Over 60% of properties are leased for periods of 30+ days due to seasonal constraints and rental restrictions introduced in 2023.

Analysts at Global Property Guide report that the rental index rose by 4% in Q4 2024 year-over-year. Average yields stand at about 5.8%, with the highest returns on 1–2 bedroom apartments.

Purchase Process and Regulations

Foreigners who haven’t resided legally in Andorra for at least two years must obtain government authorization to buy property. The application must include financing sources, intended use, and supporting documentation. Transactions are finalized via notary and must be registered in the cadastre.

Additional costs include:

Property transfer tax (IGI): 4.5%

Notary and registration fees: 0.5–1%

Real estate agent commission: up to 5%

Short-term rentals are restricted in key tourist and urban zones to curb speculative growth and protect housing affordability for locals. As a result, investors increasingly favor long-term rental strategies.

Outlook: Economy and Housing

According to the IMF, Andorra’s economy remains stable. GDP growth was about 2.1% in 2024 and is expected to slow to 1.5–1.7% in 2025 before stabilizing. Inflation is forecasted to remain around 2–2.5%.

Esales International anticipates continued price growth due to low supply, favorable taxes, and investor interest. However, some analysts warn that prices may level off if demand weakens. Gerard Casellas, President of the Andorran Real Estate Agents Association (AGIA), said that price adjustments usually take 4–5 quarters. “We’re likely in a cooling-off phase with slightly reduced market activity,” he noted in late 2024.