City holiday homes - the new hot list
By Zoe Dare Hall

Second homes used to mean a seaside bolthole or rural retreat – somewhere to get away from it all. But the holiday homes of the future are more likely to be in the city, according to a recent survey by Knight Frank which shows that 36% of wealthy investors would choose a city over a coastal or country location for their overseas holiday home.

Paris and New York are the favourites, but ‘newer’ alternatives are starting to appeal to holiday home buyers. “As developers look to international markets rather than relying on domestic markets, we’re seeing a higher level of city residential projects – whether new-build or restorations – attracting serious international buyers,” says James Price, Knight Frank’s Head of International Residential Developments.

For year-round rental returns, HolidayLettings.co.uk agree cities beat coastal resorts hands down, with flats in Barcelona, Rome or Paris likely to rent out for 40-45 weeks a year compared with 30 weeks in Marbella, Alghero or Antibes. Newer city destinations on the holiday home map, including Istanbul and Dubrovnik, see similar demand, with 40 weeks of annual bookings compared with around 25 in the Turkish beach resort of Bodrum or on the Croatian island of Brac.

So would you go for the old favourites or an up-and-coming hotspot? Here are some choices.

Follow the money: Paris v Istanbul

Which would you rather: some paltry bank interest or yo yo-ing stock market investment, or a dreamy Parisian pied a terre that will rent out for 45 weeks a year? Wealthy investors are opting for the latter, “with a lot of South Americans, Chinese, Indians and Russians investing in its ‘postcard’ districts,” says Alexander Kraft, Chairman of Sothebys Realty, citing the Left Bank’s Latin Quarter and the golden triangle around the Champs Elysees as the prime spots. “Paris has been a safe, stable market for 30 years and it’s still affordable compared with New York or London,” he adds.  
New-builds are rare and good properties don’t stay on the market for long, so it shouldn’t be hard to find buyers for the 73 Seine-side flats in a transformed old administrative building on Quai Henri IV, costing from £420,000-£2m through Knight Frank (0207 629 8171; www.knightfrank.com).
You can expect to rent out a decent holiday let flat in the 1st-8th districts for 95% of the year, with high demand from all nationalities, but especially Americans, says Salah Cherigui, the Paris-based agent for Sextant Properties (0207 428 4910; www.sextantproperties.com, “and the average price for a two-bed flat of 64m2 – such as one we are marketing in a Haussman building in Chatelet - is about £650,000,” she adds.

The wealthy aren’t just heading to Paris, though; they’re buying in what Arman Ozver, General Manager from Turkey’s Sotheby’s International Realty, calls the “marquee addresses” of Istanbul – notably Nisantasi and the banks of the Bosphorus.
Ozver thinks prime Istanbul offers similar safe haven status and luxury to Paris, with prices in prime areas up to £16,000/m2.  
For more down to earth holiday homes that will rent out reliably, look at ‘Old Istanbul’, around Taksim and Beyoglu. “These are by far the most appealing areas for tourists who want short lets. You can pay £120,000-£200,000 for a decent one or two-bed flat in a renovated old building and charge £100 a night,” says Cameron Deggin, director of Place Overseas, who is selling one-bed flats in Taksim from £150,000 and new-build two-bed flats in Sisli Istanbul Towers from £212,000 (020 8371 0059; www.propertyturkeyforsale.com).

Old town charm: Rome v Krakow

There’s nowhere like Rome for throwing up architectural gems at every turn. Property prices are similarly monumental, with your average two-bed flat in central areas such as Trevi and Campo Marzio likely to cost from around £1m, but you are pretty much guaranteed a piece of history, such as the one-bed flat that Chesterton International (0203 040 8210, www.chestertonhumberts.com) are selling near Piazza Navona for £604,000, set in the former chapel of a converted 14th century convent.
For holiday lets or short corporate lets, stay central – the Vigna Clara and Parioli areas of Prati are also good, says Linda Travella, director of Casa Travella, who suggests a one-bed flat located between the Piazza di Spagna and Piazza di Popolo would be an ideal holiday let bolthole, on sale for £940,000 (01322 660988; www.casatravellapremier.com). “A one-bed flat will rent from £120 a night or you can rent out for up to £2,500 a month to company execs who come to Rome for work for three to six months,” says Travella.

Also steeped in ancient history is Krakow’s marvellous medieval square, Rynek Glowny – the biggest in Europe. It’s the focus of all life in this charming Polish city, so you’ll want a bolthole within close walking distance (though ideally just out of earshot of the stag parties).  “Property prices fall as soon as you are a five to 10 minute walk from the square, but you are still close to the old town action. Or there’s the nearby Jewish district of Kazimierz - a destination in itself with cafes, galleries, bars and clubs,” says Andrew Balfour-Ogilvy, the manager of Hamilton May estate agency, who is marketing a small loft-style one-bed flat there for £92,000 (00 48 12 426 5126; www.property-krakow.com).
The corporate rental market in Krakow provides another good rental stream, he adds. “The expat employees of international companies want good-quality flats with lifts, porters and parking,” adds Balfour-Ogilvy, who says Krakow’s prices have fallen about 30% since their 2007 peak, and the Zloty has fallen in value by at least 15% against Sterling in recent months, making it a good time for British buyers. A two-bed flat to suit the corporate crowd in the new Sobieski Residence costs £142,000 through Hamilton May.

Urban chic: New York v Berlin

For the rich and aspiring, the Woody Allen and Seinfeld territory of the Upper West Side is what New York is all about. “It has the Central Park, the best museum, the cultural mecca that is the Lincoln Center – and the extension of Riverside Park along the Hudson has made it even more desirable,” says Alex Koch de Gooreynd, an associate from Knight Frank’s International Team, who says the average price for Manhattan flats is £7,800/m2. He’s marketing flats at the Trump Hotel in Soho from £836,000 for a 39m2 studio flat with designer furnishings from Fendi Casa.  Cheaper options are Brooklyn or Tribeca, where the Ground Zero development has attracted a lot of local investment.
For short lets, though, just about anywhere in New York goes, “even Brooklyn. About 45 weeks annual occupancy is the average, with rates of £180-£290 a night,” says Kate Stinchcombe-Gillies, Holiday Lettings’ head of communication.

For a cutting edge, urban vibe closer to home, trendy Berlin - whose property prices are still about 30% lower than other major European cities – is tempting buyers wanting a rentable bolthole in a buzzing city.
Berlin has seen the greatest increase in demand for holiday lets, according to Holiday-Rentals.com, with properties there receiving 175% more enquiries this year than last.
The central Mitte district, within easy reach of all tourist attractions and seeing capital growth of 14% last year, is where everyone wants to be, according to Tim Bogen, head of international sales for Berlin Capital Investments. “For owners, the best option for Berlin is to offer furnished apartments for short-term corporate rentals of three to six months. There are no restrictions and no licenses required. For tourist rentals, owners must pay VAT on the income,” says Bogen.
You can still buy centrally-located flats for £50,000, though they are often long-term tenanted. For tourist rentals, central, well-furnished apartments are essential. Berlin Capital Investments (00 49 30 52 00 97 00; www.berlin-capital.com) have just launched off-plan flats from £150,000, five minutes walk from Checkpoint Charlie, or there’s the 10-storey riverfront yoo berlin, with 87 Starck-designed flats from £326,000 (020 7584 3050; www.cluttonsresorts.com).

Canal-based romance: Venice v Amsterdam

As Italy’s most romantic city, Venice has long attracted the dewy-eyed to its canal-front palazzi. And like its water levels, Venice’s popularity is on the rise, with Holiday-Rentals seeing an 85% rise in enquiries this year. The ‘A’ location is San Marco, where Knight Frank are selling a 55m2 one-bed flat in an old building for £394,000. “The most favoured properties are those set in a quiet ‘calle’ set back from the main thoroughfare of tourists, within minutes of the Rialto Bridge and Academia,” says Claire Hazle, a negotiator for Knight Frank. The lesser-known Dorsoduro area, south of the Grand Canal, offers better value for money but good rental returns as it’s still central, or head away from the crowds altogether on Giudecca island, where a one-bed flat in a converted mill costs £293,000, also through Knight Frank.

Holiday homes on Amsterdam’s canals have seen a greater surge in demand than Venice, though, with enquiries up 160% this year, say Holiday-Rentals.co.uk.
Finding a flat to buy can be tricky as estate agents tend to be tucked away in townhouses or office blocks away from the centre, and For Sale signs are considered a sign of desperation (and you have to pay tax to display one), says Guy Williams, a bathroom designer from Newcastle who now lives in Amsterdam where he runs bathroom store Baiae. He rents out his spectacularly converted four-bedroom flat in a former diamond factory on the canal from £210 a night for 45 weeks a year through Holiday-Rentals.  
Property portal Funda.nl lists all properties for sale and the central canal area is the most sought-after location, followed by slightly cheaper Jordaan and De Pijp. “But there’s a potential minefield of rules and regulations for buyers, so find a Dutch estate agent who works with expats, such as Finsens,” says Williams.  
Property broker Parker and Williams (00 31 20 675 02 02; www.homeinamsterdam.com) have one-bed flats in the central canal district from around £220,000. And average prices are £4,000-£8,000/m2, according to Knight Frank, who have just started marketing properties in Amsterdam, including a three-bed designer apartment in a shuttered canal house on prestigious Prinsengracht for £832,000.

Cities by the sea: Barcelona v Dubrovnik

The Barcelonans have tended to turn up their noses at their beachfront Barceloneta district, preferring to head to the hills when they come into money. But the year-round tourists who flock to the city love being near the beach, as do British home-buyers in Barcelona. Well-renovated one-bed flats overlooking the sea are currently selling for around £290,000 and rent out from £100 a night. Make sure you buy somewhere with a tourist rental license though. They’re not handing out any more and it’s illegal to rent out a flat in the old town without one. The brilliantly buzzing, crumbling Born area, a short walk from the beach, is another hotspot for short lets. A licensed two-bed flat is on sale there for £240,000 through Lucas Fox (00 34 933 562 989; www.lucasfox.co.uk).

Its similar cocktail of history, culture and sea has made Dubrovnik one of Europe’s fastest-growing tourist destinations. Buyers wanting maximum rental potential will want to be within its red-roofed, UNESCO-protected old town – though properties are small and planning regulations are tight. Average prices are £3,700-£7,500/m2, “traditionally the highest values in Croatia, though many of the properties need renovation,” says Julian Houchin, Commercial Director of iO Adria, the developers behind the Dalmatian coast’s first managed five-star resort, Dubrovnik Sun Gardens, 11km from Dubrovnik’s old town, where waterfront flats cost from £175,000 (00 385 (0)20 361 650; www.dubrovniksungardens.com). Owners – who so far span 45 nationalities, showing Dubrvonik’s global appeal - must make their flats available for rental through the resort’s management company when not in use and they receive a share of the rental income.
Families might also like new-builds in the nearby beach areas of Cavtat or Zaton, or the car-free island of Lopud, where Savills are marketing a stone-built seaview villa divided into three flats with five bedrooms in total, for £419,000 (0207 016 3740; www.savills.com/abroad).  
“Before your property can be rented out, it must satisfy certain requirements. The minimum size for a studio flat is 32m2 and ceilings must be a certain height. The owner must also buy a property which is classified as a rental property and you must form a Croatian company to run the rental business,” says Jelena Cvjetkovic, head of Savills’ Croatian desk.