A new survey suggests that the hefty profit margins earned by Airbnb hosts could allow homeowners to repay their mortgages far more quickly than those opting for the traditional rental market.
London-based online estate agent, Nested, created the 2017 Property ROI Index to better understand global variations in real estate prices from an investment perspective.
The survey included thousands of properties, either recently sold or currently listed, across 75 global cities in order to calculate the average price of a three-bedroom property. The company then calculated how long it would take for an investor in each city to recoup the property value using Airbnb and the traditional rental market.
According to the index, investors in Durban can recoup the value of their property in 167 months using the traditional rental market and just 18 months via Airbnb – the shortest time period worldwide.
“Cape Town was ranked in 12th position – taking 205 months to recoup the property value using old school rental markets and 50 months using Airbnb.”
Lagos was ranked second (at 22 months via Airbnb), followed by Cairo (at 23 months). Johannesburg was ranked fifth, with a repayment period of 180 months in the traditional rental market and 33 months using Airbnb. Cape Town was ranked in 12th position – taking 205 months to recoup the property value using old school rental markets and 50 months using Airbnb.
Properties in Beijing, China required the longest time to recuperate their value via Airbnb rental, at 714 months on average.
The survey has prompted renewed discussions about the impact of Airbnb on the availability and cost of rental properties in many global cities.
Some analysts have cautioned that the methodology used by the Nested study is misleading since the study uses a city’s median house price, which reflects all properties in a metro area whereas Airbnb is often localised within a city. The survey also uses a high 80% occupancy rate, which is out of the ordinary in many markets.
Market analysts also note that the Airbnb market is likely to peak since there are only so many tourists wanting this type of experience and, with so many homeowners eager to join the market to provide accommodation, occupancy rates are likely to decline.
While global cities continue to grapple with Airbnb’s disruption to the housing market, cities like Berlin and Paris have placed restrictions on the types of properties and the length of time landlords can rent out their properties on such sharing platforms.
