Europe Serviced Apartment Investment Hits €1.2 Billion

Europe’s serviced apartment sector — combining residential living with hotel-style services — has seen a surge in investment activity. Total investment reached €1.2 billion in 2025, accounting for around 5% of overall hospitality investment, according to Savills research.

Demand driven by longer stays

The sector is benefiting from structural changes in travel behavior. Demand for serviced apartments has grown at a compound annual rate of 5.9% since 2019, significantly outperforming traditional hotels at 1%.

This growth is supported by hybrid working patterns, longer travel durations and Europe’s position as the world’s leading tourism destination, with around 800 million international arrivals in 2025.

Regulation reshapes accommodation demand

Stricter short-term rental regulations across European cities are a key catalyst. Measures such as caps, licensing regimes and enforcement have reduced informal supply. In Amsterdam, short-term rental nights declined by 44% between 2019 and 2024.

Rather than reducing demand, these policies are redirecting it toward regulated formats like serviced apartments.

Under-supply supports growth potential

Despite rising investment, the sector remains underrepresented. Serviced apartments account for only 8% of total accommodation supply across 26 major European cities but represent 12% of development pipelines.

This imbalance signals strong expansion potential.

Strong operational performance

Operational metrics remain robust. In 2025, occupancy reached 79% and the average daily rate stood at €136, indicating resilience compared with traditional hotel formats.

The model benefits from longer stays, lower turnover costs and consistent demand across both leisure and corporate segments.

Institutional capital drives consolidation

The sector is undergoing consolidation, with operators expanding cross-border under institutional backing. This shift reflects growing investor confidence and the scalability of the model.

Fragmentation across European markets creates opportunities for large-scale platforms and portfolio investments.

Investment outlook remains positive

Serviced apartments are increasingly seen as a defensive and scalable asset class within hospitality, benefiting from regulatory alignment and evolving consumer preferences.

As reported by International Investment experts, the sector’s rapid growth reflects a structural transition in European real estate, where regulation and changing travel patterns are redefining accommodation demand. The main medium-term risk lies in supply concentration in specific markets, but overall fundamentals remain supportive for continued investment expansion.

FAQ

What are serviced apartments?

They are hybrid accommodation combining residential features with hotel services.

Why is investment increasing?

Due to longer stays, regulatory shifts and strong demand.

How large is the market?

Around €1.2 billion in 2025, representing about 5% of hospitality investment.

Is there growth potential?

Yes, the sector remains under-supplied relative to demand.