As noted by «Lenta.ru», the profitability of the rental business primarily depends on location. According to a study by Tranio, the best European cities for investing in housing for short-term rental are Budapest, Prague, and Lisbon. This conclusion was reached after analyzing the 22 most visited cities in Europe (receiving more than two million tourists per year).
Experts took into account factors such as data on legislative restrictions on short-term rentals, tourist growth, occupancy rates, purchase and rental costs, taxes on rental income, and profitability.
MADRID, ROME, LONDON, VIENNA
Outside the top three, but still in the top 7 most profitable European cities for earning from short-term rentals are the capitals of Spain, Italy, the United Kingdom, and Austria.
Madrid is visited by 4.2 million tourists annually. When considering purchasing property, one should expect prices starting from €4,000 per square meter; apartments are rented, on average, for €70 per night.
The Eternal City boasts 8.8 million tourists annually. A square meter of property in Rome will cost €9,500, and you can earn €100 or more per day from rent.
London hosts 17.4 million tourists annually, and everyone needs a place to stay! Unsurprisingly, the daily rental price is the highest in the ranking: from €130 and above. But the average cost per square meter is also high: around €15,000.
Aristocratic Vienna rounds out the ranking with 5.4 million tourists annually, yet its occupancy rate for short-term rentals is almost on par with London's (at 82 percent). A square meter in the city costs, on average, €7,000, and the cost per night is about €70.
And the top three looks like this.
BUDAPEST
Of the top 7 cities for short-term rentals according to Tranio, it is Budapest that has the lowest property prices (on average, €1,500 per square meter), the highest yield (10.2% per annum), and one of the lowest taxes on rental income (16%). In 2015, Budapest was visited by 4.5 million tourists. The average apartment rental price one can expect is €43 per night.
For short-term rental apartments in Budapest, the best districts are Belváros-Lipótváros, which houses famous landmarks (the Parliament building, St. Stephen's Basilica, the Vigadó concert hall, and Lajos Kossuth Square), and Erzsébetváros, with its numerous bars, restaurants, and nightclubs.
PRAGUE
Among the best cities for short-term rentals, Prague boasts the lowest income tax (15%) and the highest yield after Budapest (7%). In 2015, the Czech capital hosted more than 6 million tourists. The leisure and entertainment industry in Prague has developed relatively recently, so this market has growth potential. A square meter in the city costs, on average, just over €3,000, and you can earn €60 per day.
For buying an apartment for rental, popular Prague districts include Vinohrady, Vyšehrad, Holešovice, Hradčany, Žižkov, Josefov, Malá Strana, Staré Město, as well as the streets near the center in the districts of Vršovice, Nusle, and Smíchov.
LISBON
Lisbon has particularly favorable conditions for short-term rentals. Moreover, local authorities allow renting out housing for any number of days, whereas, for example, in London and Amsterdam, an apartment or house can be rented out for a minimum of 90 and 60 days respectively. Over the past six years, among the top 7 cities, the number of tourists has grown the most in the Portuguese capital (by 10.5%). Renting an apartment in Lisbon costs, on average, €28 per night, and the cost per square meter of property is around €2,900.
The best districts in Lisbon for short-term rental housing are Alfama, with its steep picturesque streets, restaurants, and many attractions (Lisbon Cathedral, Church of St. Anthony, etc.), Baixa, with many cafés and souvenir shops, Chiado, which abounds in shops and museums, and Bairro Alto, which attracts music and nightlife enthusiasts.