Which are the best cities for investing in a holiday home let?

If you’re thinking of ways to make money from property investment, buying a holiday home abroad may well be on your radar.

But to ensure a good return on your investment, it’s crucial to buy in the right place, even if you’re looking for the best places to buy a holiday home in the UK.  

A new study by online insurance provider CIA Landlord Insurance has calculated which cities are the most profitable for landlords, based on how long it would take to earn back the property’s purchase price, and how much could be made from holiday rentals through Airbnb.

Its findings reveal the top 10 city locations where a landlord can make the most money every month from letting a holiday home.

Let’s find out more.

Buying a holiday home to let out on Airbnb is becoming increasingly popular.

Popular destinations for holiday homes around the world

The study involved research to find the best cities in the world to buy in for return from holiday home lettings. CIA Landlord Insurance analysed 50 cities and compared them in terms of tourist popularity, house prices per m2, and various other criteria. All the cities analysed had good tourist facilities and attractions.

The most profitable city in the world to buy a holiday home let is Las Vegas, where potentially a landlord can earn £17k per month from letting it on Airbnb. With the average price for a 2-bedroom house there being £16,888, an investment will take, on average, just one month to pay back.

Yet overall, Istanbul is the best city in the world to buy a holiday rental in, taking into account more factors such as average temperatures, sunshine hours, nightlife, and predictions for the growth of the investment: 10-year projections show that properties in Turkey will acquire more value than in other countries. Other popular destinations for buying a holiday rental include Dubai, Miami, and Dublin.

The least attractive city for holiday home owners to buy a property in is Hong Kong, where the investment would take almost 23 years to pay off due to the high purchase cost.

A holiday home in Las Vegas offers an attractive return on investment.

The most profitable Airbnb cities in the world

PositionCityCountryAverage monthly price for 2-bed AirbnbPurchase price of house per m2Average price for 2-bed house (74.32m2)
1Las VegasUnited States£16,920£227.24£16,888.48
2Los AngelesUnited States£15,806£770.69£57,277.68
3DubaiUnited Arab Emirates£15,587£312.75£23,243.58
4MiamiUnited States£10,021£559.37£41,572.38
5ShenzhenChina£8,715£1,405.57£104,461.96
6New YorkUnited States£8,007£1,210.41£89,957.67
7DublinIreland£7,662£581.2£43,194.78
8PhuketThailand£7,276£218.92£16,270.13
9ParisFrance£7,325£995.79£74,007.11
10LondonUK£11,397£12,212.13£907,605.50

While Las Vegas tops the chart, it’s one of four US cities in the top ten. In Las Vegas, holiday homeowners can earn an average of £16,920 per month from Airbnb holiday rentals, according to the research. A two-bedroom property there can be bought for £16,888 which means the investment could pay off in just one month’s time.

London takes 10th place: here earnings from Airbnb holiday rentals average £11,397 per month, however, a two-bedroom house costs an average of £907,605, which makes London the most expensive place in the top 10 to buy a property. It would take over 6.5 years for the investment to pay off.

The least profitable places to buy a holiday home

PositionCityCountryAverage monthly price for 2-bed AirbnbPurchase price of house per m2Average price for a 2-bed (74.32m2)Number of months to pay off a 2-bed home
1Hong KongChina£7,660£28,281.87£2,101,908.58274.40
2AgraIndia£702£1,189.44£88,399.18125.92
3SingaporeSingapore£1,693£1,669.41£124,070.5573.28
4Johor BahruMalaysia£1,595£1,257.86£93,484.1658.61
5VeniceItaly£4,528£3,680.93£273,566.7260.42

At the other extreme, the study found that an investor buying a property and letting it out in Hong Kong could wait up to 23 years to pay off the purchase price, based on the average monthly income from a two-bedroom Airbnb property being £7,660 and the purchase price averaging £2,101,908.

Istanbul tops the chart for the best city overall to buy a holiday home in.

The best city to buy and let a holiday home overall

PositionCityCountryTourist arrivals 2019Average monthly price for 2-bed AirbnbSunshine hoursAverage temperatureNumber of restaurantsNumber of barsPurchase price of house per m2Predicted house price trends over 1 yearPredicted house price trends over 5 yearsPredicted house price trends over 10 yearsUtility costs
1IstanbulTurkey14715.9£3,0536.0811.1015205438£195.67160.57%368.35%758.40%£195.67
2AntalyaTurkey13332.1£2,973n/a11.10155551£962.54160.75%368.35%758.40%£62.15
3RiyadhSaudi Arabia5451.9£6,0148.8424.6513671£139.92n/an/an/a£139.92
4DubaiUnited Arab Emirates16328.3£15,5879.6127.001224889£312.75n/an/an/a£312.75
5TokyoJapan10443.1£3,8745.1411.151022991000£702.3012.76%35.05%77.53%£702.30

According to this table, Istanbul is the best overall holiday rental option, with house prices averaging £195.67 per square metre and the potential to earn £3,053 each month from a two-bedroom property with Airbnb. Istanbul is a hugely popular tourist destination, and property prices across Turkey are predicted to rise by 161% in just one year, and by 758% over the next ten years.

Focus on tourist hotspots

Data from the study clearly shows that popular destinations for tourists are the best cities to buy a holiday rental in, where Airbnb earnings outweigh house prices by a considerable extent. If you are considering investing in holiday lettings, it’s worth remembering that when looking for holiday inspiration, people search for properties with sea views, they want to be able to book directly and easily find the best deals.

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