With breathtaking views of the Swiss Alps and romantic cruises through Venetian canals, Europe has always been a popular holiday destination. With destinations like Rome, Paris, Berlin, and Barcelona to fall in love with, is it any surprise that investors are coming to Europe to acquire holiday rental property?

Apart from the lovely experiences, investing in European holiday rental houses is a sound financial decision. The 2022 real estate market is booming right now, making it an ideal opportunity to invest strategically. We’re venturing beyond the conventional cityscapes to bring you the most exciting investment prospects in Europe for 2022.

How to determine the market value of a holiday rental property in Europe

Discovering where to invest in Europe might be a bit of a difficulty for the American shopper. Much of the vocabulary and investment metrics associated with real estate do not easily transfer to what performs well on the other side of the globe.

While it is normal to practice outside of Europe to consider the CAP rate or other real estate indicators when acquiring a home in the United States, Europe is a different story. Numerous factors vary for each nation, including currency, foreign tax, and holiday rental legislation. To simplify the evaluation of performance and instability, we’ve divided it into three primary categories.

Demand

This is undoubtedly the most critical aspect in both Europe and the rest of the world. There are several reasons why vacation rentals are excellent investments, but demand is the most compelling. If demand is strong in that region, your hotel is considerably more likely to be booked than a location that people are unfamiliar with. Numerous methods exist for determining the demand for holiday rentals. Vacancy rates, Airbnb occupancy rates, and average daily rate (ADR) all contribute to determining whether or not a region is popular with tourists.

Seasonality

Numerous potential purchasers are enticed to make a beeline towards the seaside. While beach vacation rentals are an excellent business, investors must be mindful of their seasonal nature. If you are unprepared for a poor season, you risk losing more money than you invested.

In an ideal world, your holiday rental would provide a constant revenue stream throughout the year. Destination sites that are less weather-dependent and cities with year-round tourism provide a more regular stream of revenue and may be more suitable for new investors.

ROI is a risky metric to employ since you will not know your real return on investment, or ROI until the deed is signed and the home is acquired. Fortunately, there are methods for determining the value of an investment before making a final choice.

Simply said, return on investment (ROI) is computed by deducting your profits from your original investment. In actuality, it’s difficult to predict how much money you’ll generate before you open your doors for business. Having a general idea of what you would earn enables you to avoid investing blindly.

By searching listing sites and noting the average price per night in the region for properties comparable to your possible property, and then adding in the typical number of nights you estimate your property would be booked, you may get a sense of the raw revenue. Subtract it from your overhead and investment costs to get a clearer sense of whether the investment is worthwhile.

These figures are always changing, fluctuating, and difficult to follow, which is why you should consider using vacation rental software that has built-in accounting capabilities to assist you in managing your investment more effectively.

Europe’s top holiday rental markets for 2022:

Now is a better time than ever to capitalize on this fantastic investment opportunity. Europe vacation rentals are more popular than ever right now. The combination of low lending rates and rising housing prices after the 2008 financial crisis and the desire of many tourists to return to travel following the peak of COVID-19 has resulted in a thriving vacation rental business.

If you’ve been considering a vacation rental investment in Europe but aren’t sure where to start, we’ve identified the top areas that are ideal for you. We studied our customer data to see which places have been gaining momentum and compared them to housing prices, vacancy rates, and other indicators of investment. Which of these cities will your future holiday rental be located in?

1. Marseilles, France 

Marseille combines the splendor of French architecture, food, and culture with the convenience of a Mediterranean gateway. Marseille benefits from year-round tourism due to its combination of great summer weather and enduring cultural attractiveness.

This is an excellent investment for the owner who wants to maintain reservations throughout the year. Additionally, there are several options for marketing and collaboration with local companies, since Marseille is brimming with things to do and Michelin-starred restaurants to eat at.

2. Spain’s Formentera

Marseille may be the Mediterranean’s entryway, but Formentera is the Mediterranean. This enchanting tiny island has remained mostly untouched despite its proximity to one of the larger Balearic Islands, Ibiza.

Purchasing a house in Formentera almost removes the need to market your holiday home since this island benefits from Ibiza’s fame but with a more opulent vibe. When you acquire a holiday property in Formentera, you can expect high-quality visitors and significant revenue.

3. Shanklin, United Kingdom

Although Brexit was a significant setback for international tourists, it increased domestic travel for British people. Rather than combing through paperwork, new laws, and visa requirements, more Brits are electing to holiday in their backyard, resulting in an increase in popularity for seaside communities like Shanklin. This adorable English village is situated on the Isle of Wight, which has long been a popular holiday destination for the British.

It’s critical to understand that England does not have a flat tax on rental revenue. Rather than that, taxes are calculated according to earned income tiers, which means that if you’re considering purchasing a holiday rental that you’ll only rent out infrequently, this may be an excellent place for you. The lowest tax brackets are very favorable for short-term rental operators, but they narrow as income increases.

4. Andorra la Vella (Andorra la Vella), Andorra

Apart from the stunning vistas, the majority of individuals who acquire property in Andorra do so for one primary reason: the low taxes. Andorra’s tax structure is exceptionally beneficial, which attracts both permanent inhabitants and visitors.

Many of Andorra’s guests are eager to invest in luxury since this little nation is home to some of Europe’s most lavish ski resorts. Lodges and ski lodges retain incredibly high average daily rates, which means that your company will earn more money if you choose to invest.

5. Sylt, Germany 

What comes to mind when you think of Germany — magnificent cathedrals, ancient breweries, or meandering brick roads? Many residents and visitors from surrounding nations immediately think of the beach! Sylt is one of Germany’s greatest natural retreats and one of the country’s few islands.

The island of Sylt is home to some of Germany’s most costly properties, and it’s easy to see why. Apart from its natural beauty, Sylt readily draws luxury travelers with its upscale services like good restaurants and spa facilities. Sylt is Germany’s Hamptons, so if you want to enter into luxury tourism, here is the place to start.

6. Italy’s Sardinia

Italy is one of the most widely renowned tourist attractions in its entirety. Italy is already well-known in the tourism sector due to its iconic cities such as Rome, Milan, and Venice. Sardinia benefits from second-hand exposure without the drawbacks associated with big-city tourism, such as excessive regulation, exorbitant tax rates, and hostile holiday rental rules.

7. Belgium, Gierle

Following the pandemic’s peak, many tourists sought vengeance by abandoning cities and venturing off the grid. The girl is the secluded location that many visitors desire. Apart from its out-of-the-way appeal, it’s an excellent investment for a variety of reasons.

Giselle is one of the more cheap towns in Belgium, so if you’re looking to invest in a Belgian chalet without paying a fortune, this town is a good choice. It’s not far from Antwerp, which means you can easily attract travelers looking for a peaceful break.

Takeaways

If a vacation rental investment in Europe has been on your dream list, consider one of these top 10 places. By striking a balance between a stunning location and competitive price, you’ll discover that any of these 10 cities will generate significant vacation rental earnings.

When you decide to purchase a vacation rental home in Europe, you’ll want the software to manage your company. Manage your reservations, link to major online travel agencies (OTAs) such as Airbnb and Vrbo, and design your website all in one handy location. The initial stage is to acquire the property, followed immediately by the implementation of Lodgable’s cutting-edge vacation rental software.