areas (no revenue!) must be created and the apartments must be equipped with kitchens and completely furnished. The risks from the investor side must also be considered. Commercial rental is connected with long-term lease/ rental agreements but generally carries sudden risks with a higher probability of cancellation and default than apartments rentals – and this fact, among others, can be reflected in financing conditions. Another facet is a potential change in legal regulations that make short-term rentals as a business model more difficult, even when the basic approval for tourism rentals is covered by a previously issued operating permit. One international trend that is enjoying greater importance involves branded residences, meaning units that are linked with the name and service level of a hotel brand and are generally sold instead of rented. This model opens numerous possibilities for project developers who want to distinguish themselves from the competition with clear quality promises. Short-term rentals will certainly remain a niche market with limited quantitative potential for these many reasons. The niche is, however, profitable and should, in any event, be seriously considered by investors when the legal and operating requirements are met.
A future conversion back to normal apart- ment use at 30 sqm or more is then also possible without great expense. Nearly all sizes are interesting for potential operators when legal regulations permit short-term rentals at a particular location (and this aspect must be verified due to the high penalties and consequent pursuit of violations). On the one hand, properties with several thousand square metres of rentable space that accommodate 200 to 300 apartments are interesting but, on the other hand, other operators are managing buildings at locations with roughly 15 to 60 apartments. Profitability considerations suggest that short-term rentals should be considered at suitable locations (above all in central districts, near tourism hotspots or with very good public transport connections) which are already characterised by high vacancies or are unencumbered. The rental of complete building units to professional operators should generate a net rent of 40 to 45 Euros/sqm – which is several time higher than the standard apartment rent, even considering the higher investment costs related to the location, quality and size of the apartments. This is contrasted, however, by a number of challenges: Substantial investments in fire prevention and emergency exits are required to receive the necessary operating permit (>30 beds). Common
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