How has the pandemic affected the cost of rental housing in tourism locations in Europe?

The pandemic has made certain adjustments to the global real estate market. Europe has also felt the change in trends. This situation affected not only the sale and purchase of houses and apartments, but also their rental terms.

Demand for housing rentals in the suburbs and small towns has increased significantly. More and more people are showing their interest in switching to remote work. Therefore, they began to look for living space in those regions where the strict quarantine conditions are not as noticeable as in large metropolitan areas. In addition, many foreign investors are now choosing such housing in Europe precisely for the purpose of its subsequent lease. All this has a positive effect on the development of the market.

However, this trend is not seen in tourist areas. This is due to a decrease in tourism activity due to the closure of borders.

Situation in February 2021

Due to the decrease in tourist activity in resort areas, the cost of rental housing has decreased by 15%. In February of this year, an average of 21.9% fewer people booked overnight stays in the 50 largest tourist cities in Europe than before the start of the pandemic.

For example, in Venice, where in the same period last year it was extremely difficult to find vacant housing for rent at an average cost, now the number of proposals significantly exceeds demand. As a result, prices fell by almost 70%.

Such a sharp drop in demand, and as a result - a significant decrease in the profitability of properties, forced many owners of rental housing to get rid of their business. While some owners were able to sell houses or other types of housing on time, the rest did not find anyone willing to acquire such properties due to their low current profitability.

What are the predictions?

According to the forecasts of experts from the World Tourism Organization, the stability of the European tourism market will be restored only if the following conditions are met:

• after the opening of borders and restoration of transport connections with tourist cities;
• process of vaccinations and providing "covid passports" that allow you to control the entry of tourists (only allow those who have been vaccinated are allowed to pass);
• in the event of a decrease in quarantine restrictions in tourist countries.

The exact date when the situation is expected to recover is unknown. At the same time, European countries are gradually starting to open their borders, albeit with some restrictions, which is a positive signal.