Booking.com and Airbnb have made it possible to run a short-term rental from a thousand miles away, earn more per night than a long-term landlord earns per week, and serve guests from a dozen countries without ever meeting any of them. The question is which European cities actually make the numbers work once you factor in platform fees, off-season gaps, and the cost of the property itself.

This article looks at seven European cities where the short-term rental case is genuinely strong in 2026, based on occupancy rates, average nightly rates, and estimated annual revenue from AirDNA, Airbtics, and AirROI's market trackers. Six are the cities you might expect: Kraków, Dubrovnik, Athens, Seville, Tirana, and Antalya. The seventh is an Atlantic island that almost nobody puts on a European property shortlist, and it has the highest average nightly rate of any city in this article. We have also included what the headline numbers do not show: the seasonality swings, the regulatory climate, and what a realistic net return looks like after costs.

Quick Summary

Key Statistics

City Country Occupancy Avg nightly rate Est. annual revenue Active listings Approx. 1-bed price
Dubrovnik Croatia 84% €131 ~€40,000 4,481 €200,000 to 400,000
Kraków Poland 77% $126 ~€23,000 5,750 €120,000 to 200,000
Athens Greece 71% €81 ~€22,000 12,626 €100,000 to 160,000
Seville Spain 63% $171 ~$29,300 10,187 €130,000 to 220,000
Tirana Albania 62% $49 ~$10,000 3,500 €60,000 to 120,000
Antalya Turkey 54% $66 ~$13,000 22,700 $80,000 to 150,000
Funchal Portugal 57% $267 ~$31,000 2,426 €150,000 to 250,000

Sources: AirDNA, Airbtics, AirROI (trailing twelve months to mid-2026). Revenue figures are gross before platform fees and operating costs.

City by City

Dubrovnik: the highest revenue numbers in the dataset

If you are looking at raw annual revenue, Dubrovnik sits at the top of European short-term rental markets. Median annual revenue per listing runs to approximately €40,000, with 84% occupancy and an average nightly rate of €131. For context, that occupancy figure is among the highest of any major European city.

The reason is straightforward: Dubrovnik has extreme demand concentration. The historic walled city draws millions of visitors per year to a coastline with physically limited supply. Game of Thrones filming locations, the Adriatic coastline, and Croatia's EU membership all feed the same funnel. There is no off-season in any meaningful sense, just a shoulder season where rates step down rather than collapse.

The challenge is entry price. Dubrovnik property averages €5,000 to 7,000/m² in the city center, and anything with sea views commands a premium above that. At €40,000 in gross annual revenue on a €500,000 property, the gross yield is around 8% before costs. That is still attractive, but it is not the same story as Kraków's math. The Dubrovnik case is more about capital preservation and strong nominal revenue than about high yield on a low base.

Croatia also has a formal STR registration and licensing system with strict standards around safety certification, guest registration, and tax compliance. This is manageable but requires setup and ongoing administration.

Kraków: the tourist city that keeps going year-round

Most people who know Kraków know it as a stag-do destination and a budget city break. What they often miss is how deep the demand actually runs. The Old Town, Kazimierz, and Wawel Castle draw visitors for cultural weekends, Jewish heritage tours, university events, and the steady flow of travelers using Kraków as a base for Auschwitz and the Wieliczka Salt Mine. That breadth means the calendar does not hollow out the way a pure beach market does: 5,750 active listings, 77% median occupancy, $126 average nightly rate, and roughly €23,000 in annual gross revenue per listing. Supply grew 46% over the past twelve months, which sounds alarming until you check that revenue and nightly rates trended up over the same period.

The entry price is what makes the yield math particularly interesting. Apartments in central Kraków and Kazimierz typically range from €3,000 to 4,500/m², meaning a well-located one-bedroom can be acquired for €120,000 to 200,000. At €23,000 in gross annual revenue, that is a gross return of 12 to 19% before costs. Poland has no national STR licensing requirement as of 2026, though Kraków is beginning to discuss registration rules.

Athens: twelve months of tourists instead of three

Athens is not a beach market, and that distinction matters enormously for short-term rental economics. A coastal market with excellent summer demand often collapses to near-zero in winter; Athens runs consistently because the Acropolis, the National Archaeological Museum, and the city's food and nightlife scene draw visitors from October through April with only a modest dip. The result is 71% occupancy across 12,626 active listings, roughly €22,000 in median annual gross revenue, and an average nightly rate of €81.

What seals the case is what you pay to get in. Apartments in central Athens and neighborhoods like Koukaki, Monastiraki, and Exarchia typically range from €2,000 to 3,500/m², well below comparable tourist-city pricing in Western Europe. A well-placed one-bedroom at €100,000 to 160,000 against €22,000 in gross annual revenue is a 14 to 22% gross return before costs. Greece has had a functioning STR registry since 2021, which has filtered out the most casual operators and actually reduced low-quality competition.

Seville: Spain's best STR city right now

The short answer to why Seville appears in this list is Barcelona. Spain's Constitutional Court upheld Barcelona's plan to phase out all short-term rental licences by 2028, with no new licences being issued. Demand that can no longer go to Barcelona has to go somewhere, and a significant share is reshuffling toward Seville, which has the architecture, the flamenco culture, the Feria and Semana Santa processions, and the hotel infrastructure to absorb it. The average nightly rate of $171 across 10,187 active listings reflects that: one of the highest in this article, with 63% annual occupancy producing roughly $29,300 in gross annual revenue.

Entry prices in Seville's tourist-facing neighbourhoods run €2,500 to 4,000/m², well below Barcelona and lower than Madrid. The main risk is regulatory trajectory. Seville is not Barcelona today, but any Spanish city running 10,000+ active listings is a candidate for tighter rules, and the direction of travel across Spain is clear.

Tirana: the early-stage case

The revenue figure for Tirana (around $10,000 per year at $49 per night and 62% occupancy) looks unimpressive next to Dubrovnik. It reads differently when you factor in what the property cost. Central Tirana apartments, particularly in the Blloku district where STR demand concentrates, trade at €1,500 to 2,500/m², meaning a one-bedroom in a good location for €60,000 to 120,000. Against $10,000 in gross annual revenue, the gross yield on purchase lands between 8 and 17% depending on what you paid, numbers that hold up against any city in this article once you normalise for property cost.

The underlying drivers are real: Tirana is growing as a budget city-break destination, Albania's visa-free access for EU citizens removes friction, and international arrivals hit record levels in 2025. The risks are also real. Property management infrastructure is thinner than in more established markets, remote management is more operationally demanding, and with a smaller listed market the city-level data is less reliable. Albania has no national STR registration requirement as of 2026, which is an advantage for entering quickly but means the regulatory floor could move in either direction.

Antalya: how to think about a seasonal market

With 22,700 active Airbnb listings, Antalya is by far the largest short-term rental market in this article and one of the largest on the Mediterranean. Russian, German, British, and GCC visitors all arrive in significant numbers, giving the market a resilience that single-nationality destinations lack. The catch is how unevenly that demand is distributed: $800 to 1,400 in monthly revenue during winter (November through March), rising to $2,700 to 4,800 at summer peak. Annual occupancy of 54% looks reasonable until you see that breakdown. A buyer who models the winter gap and can carry it tends to do well; a buyer expecting Athens-style year-round steadiness will be unpleasantly surprised by February.

At $66 average nightly rate and roughly $13,000 in annual gross revenue, the yield case depends heavily on entry price: well-located apartments in tourist-facing neighbourhoods run $80,000 to 150,000. Two specific risks to weigh: the lira has depreciated significantly against the euro and dollar in recent years (check whether your listing will price in hard currency, which many do), and at 22,700 listings this is the most competitive market in this article, placing significant weight on listing quality and reviews.

Funchal, Madeira: the city nobody puts on the list

Madeira is a Portuguese island in the Atlantic Ocean, roughly 900 kilometres southwest of Lisbon and closer to the coast of Morocco than to mainland Europe. It is not the first place that comes to mind when someone says "European property investment." That gap between perception and reality is exactly what makes it interesting.

Funchal, Madeira's capital, averages $267 per night across its active Airbnb listing pool, the highest average nightly rate of any city in this article. The median sits at $151, with premium properties (ocean view apartments, villas) pulling the average significantly higher. At 57% occupancy across 2,426 active listings, estimated annual gross revenue runs to approximately $31,000 for a typical listing, with well-positioned properties doing considerably more.

The structural differentiator is the climate. Madeira's average temperature varies from around 17 degrees Celsius in winter to 24 degrees in summer: a range so narrow it has earned the island the nickname "the island of eternal spring." That means there is no real off-season. A coastal market in Croatia empties out in November; Funchal does not. The demand sources are also genuinely diverse: British and German retirees visiting in winter, European families in summer, digital nomads taking advantage of Madeira's dedicated remote-worker infrastructure year-round, and wellness and hiking tourists drawn to the island's volcanic terrain and levada walking trails.

The listing count tells you something important about competition. Funchal has 2,426 active listings. Athens has 12,626. Antalya has 22,700. For a city that regularly draws international visitors in every month of the year, Funchal's supply is remarkably thin, and that scarcity is reflected in the nightly rates.

Apartments in Funchal run €2,500 to 4,500/m², with new-build ocean-view properties pushing higher. A one-bedroom in the €150,000 to 250,000 range generating $31,000 in gross annual revenue puts you at a 12 to 21% gross return before costs. The upper end of that range belongs to properties that genuinely compete for the premium nightly rates the market supports, and with an average across all listings sitting at $267, the ceiling is higher here than almost anywhere else in this article.

The regulatory environment is the one genuine complication. Portugal's short-term rental framework requires registration (an Alojamento Local licence), and Funchal has introduced some restrictions in recent years, particularly on new licences in the most congested parts of the city centre. Confirm current licensing availability with a local lawyer before purchasing; this is a step worth taking before any Portuguese STR acquisition, not just in Madeira.

What the numbers do not show

Before you build a spreadsheet around any of the figures above, a few things that do not appear in city-level averages:

Management fees are the expense most buyers underestimate. Airbnb takes roughly 3% from hosts directly, which is the small part. The real cost for most remote buyers is a local property management company: 15 to 30% of revenue in exchange for handling check-ins, cleaning, maintenance calls, and 2am guest emergencies. A listing grossing €22,000 a year can realistically net €13,000 to 16,000 after platform and management fees, before maintenance and insurance. That is still a strong return. Just make sure it is the number you are comparing against alternatives, not the gross figure.

Short-term does not always beat long-term by as much as it looks. Long-term rental yields in most of these cities run 5 to 8% gross (see Highest Rental Yields in Europe in 2026). A short-term rental grossing 15% before costs might net 8 to 10% after them. That is a better outcome, but the gap is narrower than headline figures suggest, and you have taken on significantly more operational work to earn it. For some buyers, a well-let long-term tenant in Kraków is simply a better fit than managing a revolving calendar of weekend guests.

Barcelona is the clearest warning on regulation. Spain's Constitutional Court upheld Barcelona's plan to phase out all short-term rental licences by 2028. Amsterdam limits most operators to 30 nights per year. Vienna caps holiday letting at 90 days. Any city combining a housing shortage with high tourist volumes is a regulatory candidate, and the list is growing. Kraków, Athens, and Seville look manageable today; a buyer with a ten-year hold should treat that as something to monitor, not a guarantee.

Tax authorities are no longer looking the other way. EU data-sharing rules that came into force in 2025 require Airbnb, Booking.com, and Vrbo to report host identities, booking volumes, and revenue directly to tax authorities across the bloc. Undeclared short-term rental income is now routinely flagged. All seven cities in this article require proper registration; local income tax on rental earnings belongs in any return calculation from the start.

The city average is just the starting point. A well-reviewed studio on the right street in Kraków's Kazimierz neighbourhood can earn well above the city median. An apartment two kilometres out in a residential block will earn well below it. City-level data tells you whether a market is worth exploring; what you actually buy, and where exactly it sits, is what determines the result.

Conclusion

Short-term rental investment in Europe is not one thing. Dubrovnik is a high-revenue, high-entry-price market where the walled-city geography has permanently limited supply. Kraków and Athens are the cities that surprise people most when they run the numbers: low purchase prices, established tourist demand, and gross yields that make Western European investors do a double take. Seville is where some of Barcelona's displaced demand is landing, with nightly rates to show for it. Funchal is the one almost nobody has priced in yet, an island with no meaningful winter, fewer than 2,500 competitors in the entire listing pool, and average nightly rates that beat most of the cities on this list. Tirana is maximum yield potential for buyers willing to do the operational groundwork in a younger market. Antalya is a volume play with dramatic seasonal swings: enormous in summer, quiet in winter, and one of the most competitive listing environments in Europe.

Which of these belongs on your shortlist depends on what you are optimising for: raw annual revenue, yield relative to purchase price, how hands-on you want to be, and how much regulatory uncertainty you are comfortable holding over a decade. No city ranking settles those questions. But the cities in this article are a better starting point than Paris, London, or Barcelona, and the data is the reason why.

Heimsel does not provide investment advice; the figures above are a starting point for your own research and should be verified against current local data before making any decision.

Sources

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