Last week, we spoke about affordable housing in Paris. Today, let's talk about tourist rentals in the city. The city of Paris and Greater Paris (i.e. la Ville de Paris and la Métropole du Grand Paris) recently commissioned Apur (which is a non-profit that I regularly follow) to do two studies on this topic. The first was for Paris proper and the second was for Greater Paris. What they found is super interesting:
In August 2024, Greater Paris had 149,936 tourist rentals, of which 124,988 were available for immediate booking. This represents an 84% increase compared to August 2023, which is a massive number, but maybe not entirely surprising given that Paris hosted the Olympics last summer.
Paris proper had 97,975 listings in August 2024 and 90,299 in December 2024. Overall, the city sees fairly muted seasonality. It's also worth noting that 31% of these listings belong to hosts that own multiple properties (that is, at least two).
But let's put these figures into context. Here's a map showing the density of Airbnb listings:
Spain is a beautiful country and lots of people want to visit and/or buy property there. But here's what Prime Minister Pedro Sánchez recently had to say about this:
Just to give an idea, in 2023 alone non-European Union residents bought around 27,000 houses and flats in Spain. And they didn't do it to live in them, they didn't do it for their families to have a place to live, they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow.
And by cannot allow, he means that Spain is preparing to implement a 100% tax on property purchases made by buyers of non-EU countries, such as the UK. It's not quite a foreign buyer ban, but it's certainly a punitive tax that should, in theory, dissuade the majority of buyers.
I am, however, unclear as to how this will interact with Spain's golden visa program. For over 10 years, Spain has been encouraging foreigners to buy real estate in the country (minimum value of €500,000) in exchange for permanent residency.
Our growing desire -- and ability -- to live, work, and/or play in other places is, in my opinion, a powerful macro trend. We spoke about that here, here, and here. And one of the things that has obviously empowered this trend is the growth of short-term rentals.
But right now, the winds are not in favor of this model.
In September 2023, nearly a year ago, New York City enacted one of the strictest short-term rental laws to date, requiring hosts to be physically present while a dwelling is being rented. Yeah, that eliminates the majority of use cases.
Then in June of this year,
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Here's a map showing the number of Airbnb listings compared to the number of principal residences:
And here's a map showing the percentage of unoccupied homes in the city, which totalled 268,500 as of 2021:
The report defines an "unoccupied home" to be any home that is not used as a household's primary residence. So in addition to flat out empty homes, it includes homes that are used sporadically throughout the year for pleasure and/or for work. And as you can see, there are large sections of the center of the city where "unoccupied" and second homes make up over 28% of the total housing stock.
These areas also closely mirror the areas where tourist rentals are most popular, and where Airbnb listings make up over 20% of the housing stock. (See the second chart above.) And as far as I can tell, these are mutually exclusive classifications, meaning there are sections of the city where a large percentage of the housing stock (perhaps up to half?) is either a short-term rental or a second home.
This tells you a lot about the housing market in Paris, especially when you compare it to other global cities:
NYC, for example, is shown here as having 8.8 million people, compared to 7.1 million people in Greater Paris. And yet Greater Paris has about 4x the total number of short-term rental listings. The number of available listings (where the property was available for at least one day of the year) also increased by 84% from August 2023 to August 2024 in Greater Paris; whereas it dropped by 16% in NYC, likely because the city basically banned short-term rentals.
The two reports can be found here and here (note they're in French). And they're rich in data if you'd like to learn more about some of the dynamics impacting Paris' housing market.
Will this program remain, and will these foreign buyers now be taxed at 100%? Or will permanent residency also exempt you? I don't know.
Whatever the case, it is yet another example of government trying to appear as if they're doing something meaningful about housing affordability. You might also remember that, last year, Barcelona came out with a complete ban of short-term rentals starting in November 2028.
But once again, I think it's important to remember that economics is the study of choice and that there are always tradeoffs. A decision in one place, will create second-order consequences somewhere else.
Barcelona mayor Jaume Collboni announced
a
complete ban
of short-term rentals starting November 2028. This is expected to return some 10,000 apartments to the long-term housing market.
Regardless of whether it will be effective, it is obvious why this is being done: housing unaffordability and too many annoying tourists. (We are flying to Barcelona next week and will endeavor to not be annoying.)
But at the end of the day, this is not going to extinguish our underlying desire to live, work, and play around the world. So I think these restrictions will create new opportunities to service this demand. It also strengthens the bull case for the tried-and-true formula of purpose-built hotels.
