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Top 5 Short Term Rental Markets for Investment in Europe + Best Neighborhoods for Airbnb

Last updated on November 18th, 2022

Short-term rental investments can be profitable if the right market is targeted and Airbnb key metrics have been anticipated beforehand. Particularly in Europe, which currently ranks as the highest Airbnb occupancy rate worldwide. The best short term rental markets for investment in Europe vary according to their respective locations and is crucial for achieving profitability. United Nations World Tourism Organization (UNWTO) recently confirmed that Europe is responsible for almost 50% of the world’s tourist arrivals, making it the most visited region in the world. Relatively, short-term rental accommodations booked in Europe have exceeded pre-pandemic levels with a breaking record of 138% compared to 2021. In this article, we’ll feature the top 5 short-term rental markets recommended for investment in Europe, along with the most profitable neighborhoods for Airbnb!

Overview of Airbnb Rules in Europe

While there are various rules for operating short-term rentals, the good news is that Airbnb is legal in Europe and usually requires hosts to register with their city councils or get a permit. Recently, 23 European cities are proposing to the European Commission to limit short-term rentals due to over-tourism. To date, there are still no single rules for regulating vacation rental platforms in Europe. Check out some of the most popular tourist destinations in Europe and a brief overview of their Airbnb rules:
Airbnb rules in Paris
Here are some of the existing short-term rental rules in Paris:
  1. Registration is NOT necessary if you’re only offering private rooms for short-term rental, but is necessary if you’re renting an entire property, and if the property is your primary or secondary residence
  2. If you manage multiple listings, you’ll need to register each listing individually, receiving a registration number for each property you intend to list
  3. Rentals with “bail mobilité” (mobility lease) do NOT need to register
  4. If you plan to host guests throughout the year, you will need to convert your accommodation’s destination status by filing an application for urban planning permission to the City Hall
  5. Subsidized housing usually has rules that prohibit subletting without permission
Airbnb rules in Barcelona
While Spain has general legislation to operate short-term rentals in a specific area, check out some of the existing short-term rental rules in Barcelona:
  1. A Tourist Use House license is necessary to operate
  2. Apartment types in Barcelona include anything with rental duration of fewer than 31 days
  3. Short-term stays are allowed for 30 days or more
Airbnb rules in London
In the UK, the letting must not be for longer than 31 continuous days, otherwise, it’s considered a long stay. Learn about some of the short-term rental rules in London:
  1. It is allowed to operate for 90 days (without a permit) similar to Manchester.
  2. There is NO limit on renting out a portion of your home as long as you live there.
  3. Hosts are liable to pay council tax and a planning permit is necessary for more than 90 days of rent.
Airbnb rules in Florence
Here are some of the existing short-term rental rules in Florence:
  1. It is required for hosts to prepare a written short-term rental contract for rentals less than 30 days.
  2. Complete and submit an SCIA (Segnalazione Certificata di Inizio Attività) at Impresa Giorno website.
  3. Request permission from your town or city council to operate short-term rent.
  4. Verify your permission through the Turismo5 online portal to receive your CIR code.
  5. Display your CIR code on all listings and advertisements for your short-term rental.

Why Invest in an Airbnb in Europe?

A year after the pandemic started, the majority of tourist destinations have closed and restricted their borders for travel. Surprisingly, despite the restrictions and limitations on flights and local travel, Europe still managed to be booked at 1.8 billion nights by tourists in 2021.  Let’s look closely and identify the reasons why investing in short-term rentals in Europe is a practical decision in 2022:
1. Year-round Tourist Destinations
Without a doubt, Europe is certainly the most popular tourist destination across the globe. Based on recent European statistics, more and more tourists and professionals are visiting the region for various reasons such as business, leisure, and recreational purposes.  To be specific, in Paris, Airbtics shows that 88.2% are domestic travelers while 11.8% international travelers. Next to France, the guests’ top country of origin is the USA.
short term rental markets for investment europe

It was also recently discovered that among all the continents worldwide, Europe has the highest Airbnb occupancy rate worldwide next to North America.

short term rental markets for investment europe
2. Increase in Short-Term Rental Bookings

Since Europe is a year-round favorite tourist destination by many visitors (including me), it’s no doubt that there’s a massive increase in short-term rental bookings! Eurostat confirms that short-term rental bookings in 2022 so far have already a whopping total of 200 million nights – which is about a 138% increase compared to 2021. 

Here’s a great example of the increase in short-term rental supply in Rome, Italy. Because there has been a significant increase in STR bookings, the supply of total available nights in Rome has also increased in 11 months. Based on Airbtics’ data, an average host in Rome such as Nicoletta, who owns 26 listings, earns about €2,199,547 yearly!

short term rental markets for investment europe
short term rental markets for investment europe
3. Strong Economic Growth 

Europe’s strong economic growth is definitely a must-place to invest in for the majority of property investors. Known as the second-largest economy in the world, Statista confirms that some of the European countries with the strongest economies are Germany, the UK, France, Italy, and Spain.

4. Assurance of Profitability

In general, European countries earn more profit in comparison to other continents worldwide due to their popularity and a wide variety of historical landmarks and attractions. While there’s the assurance of profitability in Europe, it’s still best to look into specific markets and neighborhoods to invest in to assure long-term profitability.

5 Top Short Term Rental Markets & Neighborhoods in Europe

It’s certainly a tedious task to manually look for STR markets and neighborhoods in Europe, and it’s almost impossible to get accurate results. Using Airbtics calculator, we were able to get precise data to discover the best short term rental markets for investment in Europe:

 1. Valencia, Spain
  • 4,299 Airbnb listings and 1,049 2-bedroom properties
  • Annual revenue: €26,335
  • Occupancy rate: 81%
  • Average nightly rate: €88

Home to three magnificent UNESCO World Heritage Declarations, Valencia is certainly more than just its famous paella recipe! The city attracts 2.2 million visitors annually for some of its tourist attractions such as the Valencia Cathedral and Old Town. Some of the Airbnb rules in Valencia include submitting an occupation license and responsible declarations to local tourism, it’s certainly legal to operate short-term rentals in the area.

Valencia
Best Neighborhoods for Airbnb in Valencia

1. Ciutat Vella

  • Historical centre with cultural attractions and museums, ceramics, and other craft stores.
Average Home Price Average Rental Price Monthly Revenue
€460,000 €1,250 €3,392

2. Eixample

  • Commercial area with popular shopping centres and accessible public transportation
Average Home Price Average Rental Price Monthly Revenue
€395,000 €1,150 €2,295

3. Extramurs

  • Residential & oldest neighborhoods with fascinating natural attractions.
Average Home Price Average Rental Price Monthly Revenue
€330,000 €950 €3,601
2. Luxembourg, France
  • 920 Airbnb listings and 286 1-bedroom properties
  • Annual revenue: €37,385
  • Occupancy rate: 73%
  • Average nightly rate: €148

Luxembourg has the highest median occupancy rate in the entire European region, which highlights its potential short-term rental profitability. Being the second-richest country in the world, it offers the highest minimum wage in Europe. Some of Luxembourg’s favorite tourist attractions are Palais Grand-Ducal, Vianden Castle, and Bock Casemates.

Luxembourg
Best Neighborhoods for Airbnb in Luxembourg

1. Esch-Sur-Alzette

  • Near the French border and walking distance to entertainment and business premises
Average Home Price Average Rental Price Monthly Revenue
€690,000 €1,500 €2,170

2. Luxembourg City Centre

  • Common tourist areas with luxury boutiques and shopping districts
Average Home Price Average Rental Price Monthly Revenue
€890,000 €1,700 €4,347

3. Bertrange

  • Village-like district in Luxembourg with baroque furnitures and art exhibits
Average Home Price Average Rental Price Monthly Revenue
€950,000 €1,750 €3,047
3. Lagos, Portugal
  • 611 Airbnb listings and 475 2-bedroom properties
  • Annual revenue: €24,983
  • Occupancy rate: 62%
  • Average nightly rate: €99

Lagos is one of the most popular touristic destinations in Europe, hence it has a high potential for strong returns on investments. In Lagos, every kind of tourist can find something for them to do, whether they are interested in historic places or golden beaches, they can find it all here.

Lagos
Best Neighborhoods for Airbnb in Lagos

1. Torralta

  • Located near the main beaches like Praia do Carnaval, Praia Dona Ana and Batata Beach, Torralta is a great spot for family holidays.
Average Home Price Average Rental Price Monthly Revenue
€560,000 €1,150 €2,351

2. Centro

  • This area is near the main historic attractions from Lagos’ Old Town and its attractive beaches. This neighborhood has everything to make all travelers happy all year round.
Average Home Price Average Rental Price Monthly Revenue
€525,000 €1,100 €2,501

3. Porto de Mós

  • This is a quiet neighborhood that is close to all amenities, here you can find the second largest beach in Lagos. It has a great geographical location and is a few kilometers away from Faro International Airport.
Average Home Price Average Rental Price Monthly Revenue
€510,000 €1,200 €3,053
4. Berlin, Germany
  • 1,260 Airbnb listings and 715 2-bedroom properties
  • Annual revenue: €41,702
  • Occupancy rate: 85%
  • Average nightly rate: €127

Berlin has surprisingly a variety of cultural art galleries, classic architecture, and is popular for historical landmarks about World War II. As the capital of Germany, it also has diverse tourist attractions and low-interest rates for properties – a sweet choice for property investors!

Berlin
Best Neighborhoods for Airbnb in Berlin

1. Mitte

  • Situated in the middle part of Berlin, excellent public transport system, and is the most demanded district for international guests.
Average Home Price Average Rental Price Monthly Revenue
€875,000 €1,950 €3,784

2. Charlottenburg-Wilmersdorf

  • Best for property investors who prefer to target student renters (university area) and tourists with close proximity to shopping centres.
Average Home Price Average Rental Price Monthly Revenue
€819,000 €1,180 €3,108

3. Tempelhof-Schöneberg

  • The northern sub-districts have a high demand for properties due to the quality infrastructure, shopping districts, and recreational premises.
Average Home Price Average Rental Price Monthly Revenue
€642,500 €1,550 €3,012
5. Florence, Italy
  • 2,238 Airbnb listings and 1,228 2-bedroom properties
  • Annual revenue: €33,359
  • Occupancy rate: 73%
  • Average nightly rate: €116

Looking for a classic city with exquisite architecture and renaissance art? Florence is one of the best places! The quiet and artsy city with delicious cuisine fills Florence with excitement for travelers across the globe. It is also one of the preferences of some property investors as this city has cheaper costs in comparison to the UK and France.

short term rental markets for investment europe
Best Neighborhoods for Airbnb in Florence

1. Santa Croce

  • This neighborhood is surrounded by historic buildings and offers extensive options when it comes to shopping and relaxing.
Average Home Price Average Rental Price Monthly Revenue
€349,000 €1,250 €3,498

2. Oltrarno

  • Offers the lowest rent prices among the other central areas and is a peaceful neighborhood.
Average Home Price Average Rental Price Monthly Revenue
€310,000 €1,300 €3,425

2. San Marco

  • This neighborhood provides a high quality of life and has a student population with many leisure activities and entertainment available.
Average Home Price Average Rental Price Monthly Revenue
€290,000 €1,600 €3,713

Conclusion

In general, property markets with the highest demand in Europe are usually located in the tourist and economic areas – and it’s always best to invest now while the prices are still affordable! Once you have decided to purchase a property in a particular country in Europe, it’s highly recommended to compare the areas and look at your competitors’ performance to properly understand the market. 

Using an accurate data analytics tool can help your business stand out among your surrounding competitors and benchmark your property by tracking the occupancy rates of competing listings in your preferred city. With the help of our all-in-one analytics service, you can vastly enhance your monthly revenue, create a comparison for each neighborhood, add the appropriate amenities and so many more exciting features. Try Airbtics now and stand out like a pro!

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