Between the stunning sights of the Swiss Alps and the dreamy cruises down the Venetian canals, Europe has always been a vacation hot spot. With many cities to love like Rome, Paris, Berlin, and Barcelona, is it any wonder that investors are flocking to Europe to purchase vacation rental property?
If you’re in this boat, you’ve come to the right place. We’re stepping outside the typical city scenes and giving you the most up-and-coming investment opportunities in Europe in 2024.
Don’t see the form to download our vacation rental business plan template? Click here.
How to assess value when buying a vacation rental property in Europe
For the U.S. buyer, discovering where to invest in Europe can be a bit of a challenge. Depending on the country, many different variables present themselves, such as currency, foreign tax, and vacation rental laws.
To streamline the measures for success and investability, we’ve broken our assessment into the following major factors to find the best places to buy Airbnb property in Europe.
Cap rate
The capitalization (or “cap”) rate is a relatively simple real estate profitability metric that allows investors to compare different housing markets and decide which offers the best opportunities to make money. Although not the only indicator of success, it’s an important marker for the best vacation rental markets.
You can find the cap rate of a property by dividing its expected net operating income by its current market value:
Cap Rate = Net Operating Income (NOI) / Current Market Value (CMV)
Note that determining your NOI requires you to subtract your operating expenses from your revenue. Since operating expenses vary widely and everyone runs their vacation rental businesses differently, we’ve used average revenue in place of NOI. However, keep in mind that your business will incur additional costs that we haven’t taken into account here.
Demand
This is arguably the most important factor, both in Europe and internationally. There are many reasons why vacation rentals are good investments, but demand sits at the top.
If demand in the area is high, your property is far more likely to get booked than a place that’s completely unknown to travelers. You can assess demand for vacation rentals in numerous ways, but we’ll be looking at occupancy rates, specifically.
Seasonality
Many prospective buyers are tempted to head straight for the coast. While beach vacation rentals are a good investment, investors must be wary of their seasonality. If you’re ill-prepared for a slow season, you could end up losing more than your initial investment.
Ideally, your vacation rental should have consistent income throughout the year. Destination locations that aren’t weather-dependent and cities with tourists year-round create a more consistent flow of income and may be better suited for new investors.
ROI
This is a riskier measure, as you’ll never know your true return on investment, or ROI, until you’ve signed the deed and opened for business. Fortunately, there are ways to evaluate the worth of your investment before making the final decision.
Quite simply, you can calculate ROI by subtracting your earnings from your initial investment. In practice, it’s hard to tell what those earnings are before you get started. But getting a rough estimate of what you would earn helps you avoid going into the investment blindly.
By looking on listing sites and taking note of the average price per night for similar properties in the area, then factoring in how many nights on average you anticipate your property to be booked, you can have a vague idea of what the raw income would look like. Compare that with your overhead and cost of investment, and you can get a better feel for whether the investment is worth it.
Top vacation rental markets in Europe for 2024
Thinking about investing in a vacation rental in Europe? We’ve analyzed data from AirDNA and numerous real estate providers to find the top 10 best cities to buy rental property in Europe.
| Location | Occupancy Rate | Average Home Price (80m²)* | Annual Revenue | Cap Rate |
| Crete, Greece | 56% | €128,000 | €42,900 | 33.52% |
| Zakynthos, Greece | 59% | €176,000 | €53,200 | 30.23% |
| Kos, Greece | 61% | €128,000 | €36,000 | 28.13% |
| Seville, Spain | 68% | €128,000 | €34,500 | 26.95% |
| Valencia, Spain | 68% | €112,000 | €29,000 | 25.89% |
| Cyclades, Greece | 72% | €208,000 | €53,300 | 25.63% |
| Azores, Portugal | 63% | €120,000 | €28,200 | 23.50% |
| Vlorë, Albania | 46% | €56,000 | €13,000 | 23.21% |
| Corfu, Greece | 58% | €176,000 | €40,600 | 23.07% |
| Granada, Spain | 60% | €112,000 | €25,000 | 22.32% |
*80m² equals roughly 262 ft².
Note: We’ve listed average home prices based on price per meter squared for consistency with other information you’ll find online when researching European investment properties. However, for U.S. investors who’d like to get an idea of the price per square foot, simply divide the price per square meter by 10.764.
For example, the average price per square meter for properties in Crete, Greece is €1,600. To get the price per square foot, simply use the following equation:
€1,600 / 10.764 = €148.64 per ft²
1. Crete, Greece
- Cap rate: 33.52%
- Occupancy rate: 56%
- Price per m²: €1,600
While Spanish cities performed particularly well last year, Greece is expected to be the top pick this year.
Crete has been a very popular Greek island for a long time but isn’t quite as expensive for vacation rental investment as some of the other islands. As such, the cap rate is highest here at 33%.
2. Zakynthos, Greece
- Cap rate: 30.23%
- Occupancy rate: 59%
- Price per m²: €2,200
Zakynthos, also known as the “Flower of the East,” impresses with its breathtaking coastal landscapes, turquoise waters, and beautiful beaches. The island is a paradise for nature and beach lovers who want to experience the Ionian Islands.
With its warm Mediterranean climate and a wealth of outdoor activities such as boat tours, diving, and hiking, Zakynthos offers an unforgettable holiday experience all year round. The high return combined with the low prices per square foot make the island a good investment opportunity.
3. Kos, Greece
- Cap rate: 28.13%
- Occupancy rate: 61%
- Price per m²: €1,600
Rounding out the top three is yet another Greek island. Kos boasts beautiful beaches, crystal clear water, and a rich history reflected in the ancient ruins and medieval fortresses. As in Crete, the purchase price for a vacation rental is very affordable and the island is only increasing in popularity.
4. Seville, Spain
- Cap rate: 12.63%
- Occupancy rate: 71%
- Price per m²: €2,000
Spain offers not only warm weather, but also a relatively low cost of living. Buying a vacation rental here is usually cheaper than elsewhere in Europe. So it’s no wonder that some of our top 10 cities that offer the best investment opportunities are in Spain.
No. 4 is Seville, the largest city in Spain’s southernmost region. More than 3 million tourists visit Seville every year to soak up the sunshine, admire the Arabic architecture, and enjoy the food in this Andalusian city.
5. Valencia, Spain
- Cap rate: 26.95%
- Occupancy rate: 68%
- Price per m²: €1,400
Spain’s giving Greece a run for its money with another Spanish city coming in as No. 5.
Valencia is located on the east coast and is becoming increasingly popular. Although the city didn’t make it into Europe’s top 10 cities for investment last year, it’s clearly worth keeping an eye on. Speculators predict that Valencia may be a lucrative investment, especially since it’s still in its infancy.
6. Cyclades, Greece
- Cap rate: 25.63%
- Occupancy rate: 72%
- Price per m²: €2,600
Next we have Greece coming up yet again, this time with a whole group of islands: the Cyclades.
Located to the east of the mainland, the Cyclades performed well both as a whole and as individual islands. The islands of Milos, Ios, Naxos, Paros, and Sifnos have particularly good cap rates. A very high return on investment can also compensate for the sometimes slightly higher prices per square foot.
7. Azores, Portugal
- Cap rate: 23.50%
- Occupancy rate: 63%
- Price per m²: €1,500
Islands are clearly trending, because next up we have a group of islands in Portugal.
The Azores are located in the Atlantic and impress with spectacular landscapes, lots of grassland, and mild weather—not too cold in the winter nor too hot in the summer. While the Azores aren’t currently a tourist hotspot, travel influencers, vacation sites, and other industry insiders have been promoting them, so it’s only a matter of time.
8. Vlorë, Albania
- Cap rate: 23.21%
- Occupancy rate: 46%
- Price per m²: €700
The Balkan countries of Albania and Croatia are becoming increasingly popular alternatives to Greece, Italy, and Spain thanks to their lower prices and beautiful coast on the Adriatic Sea. And while there are numerous cities to choose from for investing, Vlorë’s low property prices make it particularly attractive.
Vlorë is, along with Saranda in Albania, the most touristic city so far and is located directly on the coast. It’s also only two hours away by car and ferry from the next investment destination on our list.
9. Corfu, Greece
- Cap rate: 23.07%
- Occupancy rate: 58%
- Price per m²: €2,200
Even though the island of Corfu has now made the rounds in the tourism industry, it’s still considered a newcomer among the Greek islands. In the middle of the Ionian Sea, the island impresses above all with its crystal-clear turquoise water.
Since the whole of Corfu is attractive to tourists and not just the capital, property prices are quite consistent across the entire island.
10. Granada, Spain
- Cap rate: 22.32%
- Check-out rate: 60%
- Price per m²: €1,400
Located in the south of Spain, Granada attracts tourists with its Moorish influences, including the famous Alhambra, as well as its excellent tapas culture. Granada is also conveniently located, just a short drive from both the Mediterranean and the Sierra Nevada mountain range, with its winter skiing.
This diversity attracts numerous tourists, helping Granada to make it into our top 10!
Takeaways
If Europe has been high on your wish list for a vacation rental investment, then consider one of these top 10 destinations. Striking a balance between a beautiful location and competitive pricing, you’ll find that any one of these 10 cities will make you some serious vacation rental profits.
Once you take the plunge and buy a property in Europe, you’ll need vacation rental software to run your business. With Lodgify, you can manage your bookings, connect with major booking platforms like Airbnb and Vrbo, and create your own website from one convenient place. Try Lodgify for free to see for yourself with a seven-day trial, product demo, or demo call.
Don’t see the form to download our vacation rental business plan template? Click here.
