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Investment in the European serviced apartment sector reached approximately €1.2bn (£1.05bn) in 2025, representing 5% of total hospitality investment across the continent, according to new research from Savills.
The real estate advisor, which analysed 26 gateway cities, found that the sector is undergoing a structural repositioning. While serviced apartments currently account for 8% of existing accommodation, they make up 12% of the development pipeline.
Regulatory changes are reshaping the market as authorities aim to address housing affordability and sustainability. In light of this, stricter licensing and night caps in cities such as Amsterdam, Paris and Edinburgh are reducing the viability of informal short-term rentals.
In Amsterdam, guest nights in informal rentals fell by 44% between 2019 and 2024. New rules are expected to limit stays in central districts to 15 nights from 2026, which Savills suggests will redirect demand toward compliant serviced apartments.
Nevertheless, operational performance remained resilient throughout 2025. Data from CoStar shows the sector achieved 79% occupancy with an average daily rate of €136 (£118.52). Demand has grown at a compound annual rate of 5.9% since 2019.
The sector remains fragmented and is currently dominated by small, local operators. However, firms previously focused on single domestic markets are now pursuing cross-border expansion supported by institutional capital.
Richard Dawes, director of hotel capital markets at Savills, said: “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.”
Thomas Emanuel, head of hospitality thought leadership EMEA at Savills, added: “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.”
