Short-Term Rental in Europe: Which Property Types Earn the Most, By City

The European short-term rental market is no longer a uniform play. A studio in Lisbon and a studio in Vienna are different businesses with different economics, different occupancy patterns, and different regulatory regimes. The investors who treat STR as a generic asset class get a generic result. The ones who understand the specific layout-to-city pairing that performs in each market earn the outsized yield.

The data underlying this article comes from publicly-disclosed AirDNA market reports, host-side disclosures, and operator-side conversations across our coverage map. AirDNA is the most-cited reference source for European STR market data; serious owners should buy a subscription or use the free city snapshots before committing capital to a specific layout.

The three variables that actually move the needle

Across every city we cover, three factors do more work than any other:

• Layout-to-traveller-group fit. A studio that sleeps two cannot capture the family or group-of-four travel segment, regardless of how good the photos are. A 2BR/2BA in the right city competes for both couples and small groups simultaneously, which expands the addressable demand.
• Regulatory regime. The legal STR landscape varies dramatically by city. Properties in cities with restrictive regimes (90-day caps, primary-residence requirements, mandatory licences) earn meaningfully less in revenue per available night than properties in permissive regimes, even with identical layouts.
• Photography and listing copy. The single most-undervalued cost line in STR. €600-1,200 spent on a professional photo set with a copywriter who understands the segment recovers within the first 90 days of bookings, in almost every market.

The studio question

Studios outperform in three specific contexts: very high-cost city centres where unit price-per-square-metre is prohibitive (Paris, Amsterdam, central London, central Stockholm), business-travel-heavy markets with short midweek stays (Vienna, Frankfurt, Brussels), and walkable historic centres where solo and couple travellers stay 3-4 nights (Florence, Porto, Krakow).

Studios underperform in markets where the traveller mix skews family or group (the Algarve, Tuscany rural, Mallorca, Croatian coast), where the unit's occupancy is structurally capped at 2.

The 1BR sweet spot

Across the majority of European city markets, the 1BR apartment is the highest-RevPAR (revenue per available room-night) layout. A 1BR sleeps 2-4 (with a sofa-bed) and captures both the couple-weekend market and the friends-pair market. Booking lead times are shorter than for 2BR+ properties because the friction of a couple-trip booking is lower than that of a group coordination exercise.

The cities where the 1BR is the dominant earner: Lisbon, Barcelona (where allowed), Madrid, Berlin (where allowed), Vienna, Budapest, Prague, Copenhagen, Munich, Milan, Naples. In these markets, a well-photographed 1BR with reliable cleaning and dynamic pricing typically achieves 65-75% occupancy at the city's median ADR.

The 2BR/2BA group play

Two bedrooms with two bathrooms (2BR/2BA) is the specific layout that captures the high-revenue traveller segment that 1BRs cannot: groups of 3-4 unrelated adults, families of 4-5, and small friend groups. Two bathrooms is genuinely load-bearing in this segment because the same group will not book a 2BR/1BA at the same rate.

The cities where 2BR/2BA materially outperforms 1BR on per-night revenue: the Algarve (Lagos, Albufeira, Tavira), the Costa del Sol (Marbella, Estepona), the Croatian coast (Split, Dubrovnik), the Italian lakes (Como, Garda), Tuscany, the Greek islands (Mykonos, Santorini, Crete), and Mallorca. In these markets, the 2BR/2BA layout often earns 80-150% more than a comparably-sized 1BR.

Where regulation kills the play

Several major European cities have STR regulations strict enough to materially change the investment case:

• Amsterdam, 30-night annual cap for non-primary residences. Effectively impossible to run a non-hosted STR as a primary business model.
• Paris, 120-night cap for primary residences, no STR permitted in many districts for non-primary residences without a commercial registration which is itself capped.
• Berlin, primary-residence requirement plus permit gating. Non-primary STR has been functionally impossible since 2018.
• Barcelona, full ban on new STR licences in most of the city. Existing licences trade at €100,000-300,000 standalone.
• New York is not European but worth noting because the pattern is widely cited; the 2023 NYC enforcement removed roughly 70% of STR supply, a parallel to what is happening in Mediterranean cities.
• Lisbon, AL (alojamento local) licence freeze in central neighbourhoods (Alfama, Mouraria, Bairro Alto, parts of Príncipe Real). New licences not available, existing AL licences transfer with the property.

Owners contemplating an STR purchase in any of these cities should treat the licence itself as the primary asset and the property as the secondary one.

Where the regulation favours new entrants

Several European markets have permissive or stable STR regimes that continue to attract new supply at attractive yields:

• The Algarve, Portugal, AL licences continue to be available outside the central freeze zones. Strong family-tourism demand.
• The Costa del Sol, Spain, VFT (Vivienda con Fines Turísticos) registration is straightforward at municipal level outside Marbella's historic centre.
• The Greek islands, the EOT (Greek National Tourism Organisation) licence is available for almost all categories of accommodation.
• Croatia, the obrt or trgovačko društvo registration process is well-trodden and the regulatory environment has been stable for a decade.
• Estonia, Latvia, Lithuania, the Baltic capitals have stable STR regimes and growing weekend-traveller demand from the Nordic and German markets.
• Tuscany rural, agriturismo and CAV (casa per vacanze) registrations are available with reasonable comune-level oversight.

Specific city-by-layout reads

• Lisbon, 1BR in Príncipe Real or Bairro Alto (where licence is grandfathered) dominates. 2BR/2BA performs in Cascais and Sintra.
• Porto, 1BR in Cedofeita, Bonfim. Studios underperform here because traveller stays skew longer than in Lisbon.
• Madrid, 1BR in Malasaña, Chueca, La Latina. Group traveller demand is concentrated in 2BR layouts.
• Barcelona, anything with a valid licence; layout matters less than licence transferability.
• Seville, 1BR in Santa Cruz or Triana, with terrace if possible. ADR premium of 25-40% for outdoor space.
• Florence, 1BR or small 2BR in Oltrarno or Santa Croce. Solo travellers and couples dominate.
• Rome, 1BR central. Group travel in Rome trends toward hotel rather than STR.
• Naples, 1BR or 2BR in Spaccanapoli, Chiaia, Vomero. Growing market with reasonable licence availability.
• Vienna, large 2BR or 3BR apartments outperform smaller units, the city's STR demographics skew family.
• Berlin, primary-residence rooms are the only viable play. Studio investments are economically dead.
• Stockholm, monthly furnished rental (Blocket Bostad, BostadDirekt) typically outperforms nightly STR after regulatory costs.
• Copenhagen, similar to Stockholm. Long-stay corporate rental is the better revenue model.
• Amsterdam, 30-night cap restricts the play. Boats and houseboats have a separate (less restricted) regime.
• The Algarve, 2BR/2BA villa with pool is the dominant earner. Premium for sea view, sub-200m walk to beach, dedicated parking.
• Mallorca, similar pattern, with rural finca renovations earning a strong shoulder-season premium.
• Mykonos, Santorini, 1-2BR with private outdoor space. Photography and listing copy disproportionately important.
• Split, Dubrovnik, 1BR or 2BR within the old-town walls earn the premium. Outside-walls properties earn less but face fewer licence constraints.

The metrics that actually predict revenue

Three metrics from AirDNA-style market data are sufficient to evaluate any prospective STR investment: occupancy rate (% of nights booked, target 60-75% in mature markets), average daily rate (ADR, the price per booked night), and revenue per available night (RevPAR, ADR multiplied by occupancy). The third number is the headline. A property in Lisbon at €120 ADR with 72% occupancy generates €86/night RevPAR. A property in Vienna at €180 ADR with 55% occupancy generates €99/night RevPAR. Vienna wins on revenue, despite lower occupancy, because of the rate differential.

Owners frequently optimise for occupancy when they should be optimising for RevPAR. A property running at 95% occupancy is almost certainly underpriced.

Operational details that change the outcome

Three operational habits separate the top-decile STR property from the median in the same market: a professional photo set (refreshed every 24 months), dynamic pricing (managed via PriceLabs, Beyond Pricing, or Wheelhouse rather than fixed seasonal rates), and a same-day-cleaning operation that allows zero-night turnovers. Combined, these three items typically add 25-40% to gross revenue on the same underlying property.

European short-term rental is no longer a single market with a single optimal strategy. It is a collection of regional markets, each with its own regulatory regime, traveller demographic, and dominant property type. The owners who study the specific city before buying the property earn the returns the asset class is supposed to produce. The ones who do not, do not.