€1.2B invested in Europe’s serviced apartment sector

The increase in investment activity is primarily attributed to the steady rise in demand for flexible accommodation formats, as this asset class continues to outperform the broader hospitality sector. According to Savills, demand for serviced apartments is growing at a faster pace than the traditional hotel industry, a trend that is attracting an increasing volume of investment capital.

The company analyzed 26 key European gateway cities and found that this subsector remains significantly underrepresented relative to the overall accommodation supply. Specifically, serviced apartments account for just 8% of the existing lodging stock, while their share in the development pipeline has already reached 12%, indicating a growing contribution to future supply.

Resilient Operating Performance
The sector’s operating fundamentals remain particularly resilient. According to data from Savills and CoStar, in 2025 serviced apartments recorded an occupancy rate of 79% and an average daily rate (ADR) of €136, underscoring their strong operating performance across the 26 markets analyzed. At the same time, underlying demand has been growing at a compound annual rate of 5.9% since 2019, compared to just 1% for the wider hotel sector.

As noted by Savills’ Head of Hospitality Thought Leadership EMEA, Thomas Emanuel, this growth is driven by longer travel durations, increased flexibility in working models, and Europe’s continued position as the world’s largest tourism region. In 2025, Europe welcomed an estimated 800 million international visitors, with indicators pointing to continued growth at a mid-single-digit pace in the coming years.

Savills also highlights that consolidation and professionalization within the sector are further enhancing its investment appeal. Operators that previously focused on individual domestic markets are now expanding across borders at a European level, supported by institutional capital and highly scalable operating models.

Regulatory Tailwinds
At the same time, stricter regulatory interventions in the short-term rental market are acting as an additional growth driver for the sector. The imposition of night caps, licensing regimes, and tighter controls in cities such as Amsterdam, Edinburgh, and Paris is constraining informal supply, redirecting demand toward more institutionalized and compliant accommodation models, such as serviced apartments.

According to Richard Dawes, Director of Hotel Capital Markets at Savills, the investment case for the sector is no longer based solely on demand growth but also on market structure. Europe’s fragmented landscape creates significant opportunities for scaling, consolidation, and further professionalization.

For investment funds seeking resilient income streams with growth potential, the serviced apartments sector is emerging as a strategically important segment of the European hospitality real estate market.