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Where to Stay in Reykjavik: Best Areas & Neighborhoods

Reykjavik is a small but lively city, with a combination of natural beauty and charming city streets. A vacation in Reykjavik can take you from witnessing the northern lights in the countryside, to bar hopping along a busy street downtown. With such a range of activities in Iceland, it can be tricky to figure out the best area to stay in. Which is why we’re here with this guide to where to stay in Reykjavik!

Pro-Tip: For more Reykjavik details, be sure to head over to our Transportation Guide and list of 10 Essential Things to do in Reykjavik.

Before you keep reading, there are two things to keep in mind: Reykjavik isn’t super big (so a very walkable city) and it can be pricey. In fact, Reykjavik is one of Europe’s most expensive cities. You’ll want to note this when it comes to choosing the neighborhood to stay in and your accommodations. Reykjavik is divided into 10 neighborhoods and districts are numbered (e.g. 101 district, 107 district), that denote how far out they are from the city center.

Where to Stay in Reykjavik: Best Areas & Neighborhoods

We’re highlighting five Reykjavik neighborhoods that we think are the best options when figuring out where to stay and providing affordable, mid-range, and luxury accommodation options:


Midborg is central, downtown Reykjavik and is the ‘101’ district. This is the most popular area to stay in Reykjavik for tourists. If you’re heading to Reykjavik for the first time, you’ll most likely want to investigate accommodations in this area; it’s close to attractions and public transportation is easily accessed from this neighborhood.

This area is known for major attractions like the National Museum of Iceland, Volcano House, and the Church of Hallgrímur. Laugavegur shopping street is also located in this district; on this street you’ll find numerous bars, restaurants and you can shop ‘til you drop. The neighborhood is pedestrian-friendly, so if you’re hoping to save some cash, you may want to stay in this area, in walkable distance to landmarks, restos, and more.

Where to Stay in Reykjavik: Best Areas & Neighborhoods

Pros: Central location, close to nightlife, shopping and attractions; pedestrian-friendly

Cons: As with any downtown location, you may find higher prices, more tourists, busier area

Best for: Newbie travelers and Reykjavik first-timers

Accommodations recommendations:

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by Marco Bellucci via flickr

$ – Affordable accommodations

Loft HI Hostel: Find yourself at Hallgrímskirkja, or Reykjavik’s shopping street within 5 minutes from Loft HI Hostel. This is a typical hostel featuring dorm-style accommodations but also boasts a bustling social scene, and stunning views from its rooftop balcony. In winter, you may even catch sight of the northern lights!

Address: Bankastræti 7, 101 Reykjavík, Iceland


$$ – Mid-range accommodations

Reykjavik Residence Hotel: This welcoming residence-hotel has a comforting, yet modern feel. Relax inside a contemporary and tastefully-decorated apartment with a kitchenette and sitting area.

Address: Hverfisgata 45, 101 Reykjavík, Iceland


$$$ – Luxury accommodations

Kvosin Downtown Hotel: Spend a night inside this 1900s structure that’s within walking distance of some of Reykjavik’s most popular tourist destinations. Inside, the hotel has apartment-style lodging with kitchenettes. At the end of the day, head back to your hotel for a drink in the wine bar.

Address: Kirkjutorg, 101 Reykjavík, Iceland



Being close to the harbor, the neighborhood of Vesturbær was once populated by members of the fishing industry. However, nowadays, this charming, west-end neighborhood is more residential. It’s an up-and-coming area, getting more popular with visitors. The neighborhood is in the 107 district so it’s a little more lowkey. You won’t find a ton of hotels, but it’s a good area to look in for Airbnb options or guesthouses.

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by Inga Vitola via flickr

At the end of a long day of sightseeing with the crowds, make your way to this little getaway and enjoy chic cafes, hip bars, and breweries. The area is quite close to the sea, but you’re never really more than a 30-minute walk away from major landmarks in downtown Reykjavik. The area is actually one of the more expensive neighborhoods for Reykjavik locals to reside in.

Pros: Great area to find Airbnb options, get a glimpse of local life

Cons: Limited hotel options and not a huge price range available

Best for: Trendy travelers, couples

Accommodations recommendations:

Most accommodation options in this area are around the same price per night, so we’ve included three suggestions

Where to Stay in Reykjavik: Best Areas & Neighborhoods

Reykjavik 107 Guesthouse: Check into this small but lovely guesthouse in Vesturbær. Explore the Western Reykjavik or hop on a bus to be in the downtown core in minutes. Enjoy your cozy surroundings including sitting area and kitchenette.

Address: Grenimelur 36, Vesturbær, 107 Reykjavík, Iceland


Radisson Blu Saga Hotel: Close to the city center but with enough distance for a relaxed vibe, Radisson Blu Saga Hotel is modern and comfortable, and delights guests with its panoramic views of the city.

Address: Hagatorg, 107 Reykjavík, Iceland


Metropolitan Hotel: Head over to Metropolitan Hotel, in the heart of Reykjavik. Located on a peaceful sidestreet, you can take a quick jaunt over to numerous bars, hotels, and galleries. The hotel isn’t super fancy, but it’s friendly, restful, and convenient.

Address: Ranargata 4A, Vesturbær, 101 Reykjavík, Iceland



The area of Hlíðar is further out from the city center on the east end, while still being close enough to be convenient, which means it’s great for travelers on a budget. The 105 district of Hlíðar is popular with students and younger people.

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by CGP Grey via flickr

There aren’t as many restaurants and bars here, but areas full of restos and spots to grab a drink are very accessible. This neighborhood also counts the quirky Icelandic Phallological Museum as an inhabitant.

Pros: Less expensive than other areas

Cons: Further out from the center

Best for: Budget travelers

Accommodations recommendations:

Where to Stay in Reykjavik: Best Areas & Neighborhoods

$ – Affordable accommodations

Bus Hostel Reykjavik: Situated on the floors above Reykjavik Terminal, the location of Bus Hostel Reykjavik is great for travelers heading to/from the airport or Blue Lagoon Spa. Book a dorm-style or private room at this fun spot.

Address: Skógarhlíð 10, 105 Reykjavík, Iceland


$$ – Mid-range accommodations

Galaxy Pod Hostel: Book a night at Galaxy Pod Hostel and launch yourself into outer space! These luxury pods have a full futuristic theme. Feel like you’re stepping to a spaceship at this funky hostel.

Address: Laugavegur 172, Reykjavík, Iceland


$$$ – Luxury accommodations

Fosshotel Reykjavik: Find bright, minimalist rooms in this chic hotel that also features a restaurant and a beer garden. It’s polished and hip, but still won’t break the bank!

Address: Þórunnartún 1, 105 Reykjavík, Iceland



A very residential neighborhood, Laugardalur boasts cozy cafes, local swimming pools, gardens, and the nearby Blue Lagoon Spa. While staying in the 104 district, pay a visit to the Reykjavik Zoo, archaeological site, or museum.

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by Shadowgate via flickr

This area is great for families as it has a nice, slow pace to it, but you can jump on the bus to be downtown in 30 minutes. If you’re looking to get out of the city for a while, you can even make your way to Reykjavik Campsite. Both kids and adults alike will enjoy this enchanting Reykjavik neighborhood.

Pros: Easy access to campsites, Blue Lagoon, quiet neighborhood

Cons: Not a great area for partying, a little further out from downtown

Best for: Families, nature lovers

Accommodations recommendations:

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by brookpeterson via flickr

$ – Affordable accommodations

Reykjavik City HI Hostel: This hostel is cheap and cheerful! If you’re looking for an inexpensive, no frills style option, this might be the spot for you. It’s very walkable to Reykjavik attractions, close to a picturesque park.

Address: Sundlaugavegur 34, 105 Reykjavík, Iceland


$$ – Mid-range accommodations

B14 Hostel: Basic and budget, it’s a little pricier than Reykjavik City HI Hostel, but still great on the wallet. There’s a communal kitchen and shared areas to unwind in and inviting rooms.

Address: Faxafen 11, Reykjavík, Iceland


$$$ – Luxury accommodations

Hilton Reykjavik Nordica: The Hilton Reykjavik Nordica in the Laugardalur region, is stylish and contemporary in true Nordic fashion. Feel immediately at home surrounded by the clean, current, and luxurious setting.

Address: Suðurlandsbraut 2, 108 Reykjavík, Iceland



Seltjarnarnes is in the 170 district of Iceland, so not quite in the Reykjavik city but this small town on the peninsula is an easy trek to downtown Reykjavik and features a stunning natural landscape.

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by Ron Kroetz via flickr

Check out coastal views all year round, the northern lights in winter, and the midnight sun in summer. Seltjarnarnes is known for spectacular bird watching opportunities and the Grótta Island Lighthouse. You can book a beach house apartment in this area, or check out Airbnb to book rooms or houses for a cottagey vacay.

Pros: A delightful getaway in the Icelandic countryside

Cons: Outside Reykjavik

Best for: Seasoned travelers

Accommodations recommendations:

Where to Stay in Reykjavik: Best Areas & Neighborhoods
Photo by Ajay Suresh via flickr

$ – Affordable accommodations

Blue House B&B Iceland: This B&B has apartment-style rooms within a few minutes walk to the beach. Enjoy a variety of activities in the area like hiking, cycling, and bird watching.

Address: Valhúsabraut 19, Seltjarnarnes, Iceland


$$ – Mid-range accommodations

Nes Residence: Another beach house locale, rest your head at Nes Residence. These apartments are in a quiet neighborhood but a quick drive to downtown Reykjavik. The apartments are fully equipped (which can help you save money on meals) and close to shopping, grocery stores, and more.

Address: Látraströnd, 170 Seltjarnarnes, Iceland


Whether you’re staying in Midbord, 101 in Reykjavik, or choosing to escape the hustle of the city and unwind in Seltjarnarnes, sightseeing around the city of Reykjavik is easy-peasy!  While you should be prepared to kiss some of your moolah goodbye on your Reykjavik trip, check out less expensive neighborhoods or wallet-friendly accommodations. Remember- with such an accessible transportation system, you can make your way about quickly and efficiently. Once your bags are packed, be sure to head over to our itinerary guide for inspo on how to plan your Reykjavik vacation.