What are the 25 best UK and Ireland cities for short-term rental investment opportunities in 2024?

Investing in the UK and Irish vacation rental market requires balancing significant risks and rewards. As this research will show, potential returns from short-term rentals can vary significantly. At the same time, popular tourist destinations often face constraints of limited supply and high property prices, especially around historic city centers.

Therefore, investors must carefully evaluate locations to identify the best opportunities for strong yields.

To help, we’ve highlighted the top-performing locations across the UK for short-term rental revenue, comparing both raw revenue figures and their alignment with affordability metrics.

What is RevPAR & why is it important for short-term rental investors?

Revenue Per Available Rental (RevPAR) represents the revenue generated by a property, averaged across all availability in a given period.

In other words, if a property is 50% occupied for an available month with a booked ADR of $100, the RevPAR would be $50.

The strength of this metric lies in its ability to serve as a combined barometer of rate and occupancy, helping hosts measure and forecast revenue performance, and adjust pricing accordingly. Additionally, this metric is invaluable for benchmarking performance against other properties or brands.

For DMOs and tourism bodies, RevPAR metrics offer valuable insights for various business tasks, such as assessing economic impact, gauging destination competitiveness, tracking performance, forecasting trends, attracting investment and encouraging partnerships - all of which contribute to the sustainable growth and success of the tourism sector.

Ultimately, RevPAR is arguably the most pivotal metric in understanding the ROI potential of any given property or market.

To ensure we focus on locations with a substantial pool of investment opportunities, we’ve excluded locations with less than 2,000 listings. All prices are in US dollars.

Best UK cities to invest in short-term rentals from a RevPAR perspective

When it comes to revenue generating, the British Isles’ most famous cities and capitals take the top three spots, with Edinburgh the clear leader and averaging $274 per night, followed by London ($206) and Dublin ($173).

These are easily the most visited locations, with London attracting nearly 10 times the overnight stays of the next city, Edinburgh - over 20 million in 2023, compared to Edinburgh’s 2.3 million. Dublin, meanwhile, welcomed more than 8 million visitors to the city before the pandemic.

South Wales also has a strong showing in the top 10, with Tenby recording a RevPAR of $166 and Newport $156, underscoring the region’s appeal as a tourism hotspot within the UK.

Two clear clusters of high value for short-term rental investors

RevPAR alone doesn’t tell the full investment story - property acquisition costs are also important in understanding the investment potential of a destination.

To provide deeper insights, we examined average property prices using price per square meter data from sources like Numbeo, HouseMetric and plumplot. We then divided the prices by the RevPAR to create a ratio that gives a rough estimate of potential returns in relation to purchasing costs.

Note, that due to small geographic sizes for some of these locations and availability of data, data varies between average price per square meter for a two-bedroom apartment in a city center and for all properties in a geographic area, which reduces direct comparability, so these are indicative ratios for information purposes only.

Down at the bottom of the list and the most expensive locations relative to property values is a selection of the most visited cities in the UK by overnight stays. Brighton, Bristol, Cambridge, and London all rank in the top 10, as would Dublin if included on that list.

While these locations have high inbound tourism levels and therefore command high rates, they are also major urban centers with varied economies and large populations, meaning they have high average property values.

Several of these also have extremely constrained housing inventory relative to demand. Oxford and Cambridge are two notable examples, driving property prices in both to the most expensive locations outside of London.

These cities all had city center apartment prices above $7,000 per square meter, compared to $1,653 per square meter for a property in Newport, Wales.

Flipping it over to the locations representing the most value for short-term rental investment and there are two clear clusters that represent major opportunities for savvy investors.

These are around the Lake District in the country’s north and in the UK’s southwest, in the counties of Devon and Cornwall.

Located in the former are the towns of Keswick, Penrith and Windermere, and in the latter case there are five towns – Bideford, Helston, Looe, St Austell, St Ives – all of which rank in the cheaper half of our top 25.

These two clusters show that the top opportunities for short-term rental returns are located not in the most visited cities, but in smaller destinations near significant natural beauty spots

If there is one area to focus on though, it is definitively the country’s southwest. This is the true vacation rental powerhouse and should be the number one location for investors.

Not only does this region dominate the top 25 locations by RevPAR, but it is also well-represented in the top 50, with towns like Falmouth, Newquay, Padstow, Plymouth Torquay and Truro included. This heavy presence underscores the region’s strong draw for domestic tourists.

It is notable that, after London, this region has the second highest share of visits to the region generated by vacations in official stats and has the second highest amount of its GDP generated by tourism spend.

Furthermore, hotel supply in this region is constrained, while the vacation rental sector is well developed, with a much higher proportion of holiday homes to hotels when compared to London. Therefore, more of those looking to stay in these regions are going to be open to vacation rentals as a stay option.

This all puts together a picture of a region geared towards travel and tourism and also to investment into vacation rentals.

Idyllic countryside appears to be the route to excellent short-term rental returns

Adding to their value, these cheaper locations noted above present excellent relative value for investors searching for vacation rental properties.

While Edinburgh was one of the top performers when we looked across the top 25 destinations in Europe as a whole, coming third in our square meter to revenue ratio, it is beaten by twelve other destinations for our UK-focused top 25.

Indeed, Alnwick, Bideford, Newport and Penrith are capable of generating almost twice the rental revenue per square meter when compared to Edinburgh.

Additionally, the difference between the cheapest relative destinations and the most expensive was much greater than when we looked at North America and across Europe.

Whereas in both of those latter cases the most expensive cities have RevPAR to square meter cost ratios five times greater than the cheapest, in the UK that difference was just nearly nine times as much.

That means that investors into the UK can get an awful lot of bang for their buck, but they need to be discerning when looking for opportunities, as not only are these lower cost per square meter but still high RevPAR locations good value within the context of the UK, but some of the very best opportunities in Europe.

If you would like more insights like these, then check out our page dedicated to dissecting data trends, follow us on LinkedIn or why not start a trial and access one of the industry’s most comprehensive datasets covering the short-term rental market?