Whether you’re after a one-bed studio in the heart of Tokyo or a 12-person villa in the South of France, Airbnb has really taken over the holiday rental market. Recent company data has revealed that the number of worldwide bookings increased by 31% in 2022 to a huge 393 million. Landlords could stand to make significant profits by listing their rental properties on the platform, but are there some cities that are better than others for investing in an Airbnb?
To find out, CIA Landlords Insurance has analyzed the capital cities of 45 OECD countries, ranking them based on a number of factors, including average occupancy rates, daily rates, and monthly revenues for Airbnbs in the city, as well as the average price to purchase property. The study has also explored whether there are any gaps in the market for landlords looking to buy to rent.
Top three best cities for investing in an Airbnb
- Reykjavik, Iceland
Taking the crown as the best destination to invest in an Airbnb is Iceland’s capital, Reykjavik. The number of Airbnb rentals in the city has increased by 31% over the last quarter, and occupancy rates of Airbnb are also relatively high, at 77% across the whole year. Landlords may also be able to make significant profits in Reykjavik, as average daily rates for Airbnbs are around $207, and monthly revenues average $3,020. In terms of a gap in the market, landlords might want to look at larger properties, as the city currently has a lot fewer three-beds (365) available to rent on Airbnb compared with one-beds (995).
- Dublin, Ireland
In second place is Dublin. The Irish city sees even higher Airbnb occupancy rates than in Reykjavik, at 81% throughout the year. Daily rates are also higher on average, at $227 per day, and Airbnb owners tend to make more revenue on a monthly basis, with averages around $3,195. However, it is more expensive to purchase property in Dublin than in Reykjavik, with an apartment in the city center averaging $7,517 per square meter.
- Amsterdam, The Netherlands
Boasting the highest average Airbnb daily rate of $259, Amsterdam, The Netherlands, is in third place. Landlords could stand to make quite a large profit here, especially given that the city has one of the highest occupancy rates, too, at 90% across the year. However, it is the most expensive place to buy property out of the whole of the top five, with an apartment in the city center averaging around $7,941 per square meter.
Edinburgh, Scotland, and Belfast, UK round off the top five best cities for investing in an Airbnb.
Top three worst cities for investing in an Airbnb
- Warsaw, Poland
Warsaw, Poland, has been revealed as the worst destination to invest in an Airbnb. Average daily Airbnb rates are the lowest here than in any other city analyzed, at $70, which is great for holidaymakers but not so good for landlords. Monthly revenue is also very low in the city, averaging around $1,063. Warsaw currently has the most two-bed (12,384) and three-bed (4,375) properties available on Airbnb than any other city, meaning landlords may find less demand here for their holiday rental property.
- San Jose, Costa Rica
In second place is San Jose, Costa Rica. The city has an even cheaper daily rate than Warsaw, at $59, and landlords only stand to make around $657 per month on average. Airbnbs in the city also tend to be full for only half of the year, with a 52% occupancy rate, and it’s one of the most expensive places to buy property, with an apartment in the city center averaging $14,124 per square meter.
- Bogota, Colombia
With the cheapest Airbnb daily rate of all cities analyzed, at $35, Bogota is in third place. Airbnb owners tend to make an average of only $366 in revenue every month, and there isn’t a large gap in the market for Airbnb in the Colombian capital either, particularly for one-beds, as there is already a huge 5,834 in the city.
Mexico City, Mexico, and Ankara, Turkey, round off the top five worst places to invest in an Airbnb.
On how to make a property stand out on Airbnb, Richard Wayman, Finance Director at CIA Landlord Insurance says, “Before investing in any property, it’s important to look for a gap in the market. You don’t want to spend significant funds on a buy-to-let only to find that you aren’t able to rent it out because of limited demand, so doing your research ahead of time is incredibly important.
“Once you have a property, making sure it attracts potential renters is key, especially on popular platforms like Airbnb. There are a few simple steps owners can take to make their property stand out, such as creating an attractive listing, using great photos, and ensuring their property is priced correctly.
“People also love a personalized experience, so if you can, offering more than just a welcome note can go a long way. If guests feel like they’ve had an unforgettable experience, this can lead to some great reviews and even more bookings in the long-term.”