European serviced apartment investment soars to €1.2b

Investment in European serviced apartments reached €1.2 bn in 2025, accounting for about 5% of all hospitality investments, according to Savills research.

Savills

This growth is driven by stricter regulations on short-term rentals, increasing demand for longer stays, and opportunities for large-scale institutional investment.

Despite this growth, serviced apartments are still underrepresented, making up only 8% of current accommodation in 26 major European cities, though they account for 12% of new developments.

Operationally, the sector is performing well, with 79% occupancy and an average daily rate of €136 in 2025 according to CoStar. Demand for serviced apartments has grown at a CAGR of 5.9% compared to 1.0% for hotels since 2019.

The sector is also seeing more consolidation and professionalisation, with operators expanding across borders with institutional backing. This indicates a move towards larger, more organised operations in a previously fragmented market.

Savills also notes that tighter regulations on short-term rentals in many European cities, aimed at improving housing affordability and liveability, are shifting demand towards compliant options like serviced apartments. For example, Amsterdam has seen a 44% drop in short-term rental nights between 2019 and 2024 due to new rules. These regulations are expected to boost occupancy and average daily rates for serviced apartments as travellers seek regulated accommodations.

Thomas Emanuel, head of Hospitality Thought Leadership EMEA at Savills, said: “This growth in demand is being driven by a combination of longer travel durations, increased flexibility in working patterns and Europe’s continued position as the world’s largest tourism region. In 2025, Europe welcomed an estimated 800 million international visitors, with forward indicators suggesting sustained mid‑single‑digit growth supported by intra‑European mobility, improving Asia‑Pacific connectivity and continued prioritisation of travel expenditure by consumers.”

Richard Dawes, director, Hotel Capital Markets, Savills, added: “The investment case for serviced apartments is no longer solely about demand growth; it is increasingly about market structure. Regulation is accelerating a shift away from informal supply, while fragmentation across Europe creates clear opportunities for scale, consolidation and professionalisation. For capital seeking resilient income with growth potential, serviced apartments are becoming a strategically important segment within European hospitality.”