Ireland has been named the most attractive of 29 European countries for rented residential investors for the third consecutive year.

A European ranking by payments company WorldFirst reveals that Ireland provides the highest average rental returns at 7.86%. The company said investors in Ireland are seeing such significant yields largely because of the country's reasonable property prices in comparison to other European markets. A stable euro, continued economic growth and consistent rental demand are other contributing factors to Ireland's strong performance.

With average yields of 6.87%, Cyprus was ranked second, jumping up from ninth place last year.  The U.K. — where average rental returns are 4.67% — was placed 16th overall, up from 25th last year. France was placed last, with average rental yields of 3.2%.

Dublin came out on top in WorldFirst's ranking of 10 of Europe’s largest cities, with an average 6.46% rental yield. Next up was Amsterdam with 5.33% and Warsaw with 5.15%. London was ranked ninth with 3.17%, while Paris was bottom of the table with 2.89%.

“Buy-to-let investors looking for the best rental yields in Europe once again need to look no further than Ireland,” WorldFirst Chief Economist Jeremy Thomson-Cook said.

“Part of the reason for Ireland’s buy-to-let success is while average house prices across the country are on the rise, they still sit some way below the country’s 2008 peak. What’s more, only Malta, Luxembourg and Sweden have experienced higher population growth than Ireland meaning that rental demand continues to go from strength to strength. Add these two factors together and you have a compelling overall proposition for buy-to-let investors.”