Property Trend: Sharing Economy

Sep 12, 2017 | News

The sharing economy is still in its infancy in South Africa, but services such as Uber and Airbnb have shown phenomenal growth, with the potential to impact the property market

The sharing economy focuses on sharing possessions and services, rather than owning fixed assets. So how does it impact property? There has been a lot of discussion lately about how the success of Airbnb has negatively affected long-term tenants being able to find suitable space, particularly in popular areas such as Cape Town’s City Bowl and Atlantic Seaboard. Private Property reports an increase in “Airbnb potential” being used to market apartments in Cape Town and notes that buyers often ask whether the building’s body corporate allows short-term rentals.

Cape Town is perhaps a unique example: it is the biggest Airbnb destination in Africa and home to more than half the total listings in South Africa. Landlords could make two to three times more on Airbnb compared with a long-term rental. This results in less stock for renters and prices being driven up further.

But investing in a property purely for Airbnb purposes isn’t as simple as buying an apartment and watching the income roll in. Potential investors need to take into account area-specific Airbnb data such as occupancy rates, number of rentals in the area, average prices and seasonal price shifts. It is also important to be aware of all the legalities and expenses involved, and the necessity to be more hands-on due to the constant turnover of guests.

Says Simon Bray, CEO of Private Property: “Another important factor to consider is city regulation. Airbnb may become less attractive for hosts in South Africa if there is a pushback against the platform like we’ve seen internationally. Many cities have started regulating short-term rentals due to the way it has adversely affected supply and prices.” As for other sharing economy businesses and how they might affect property, ride-sharing company Uber has already started to impact where people choose to live because parking, commutes and poor public transport links are no longer as absolute an issue. It is a trend worth watching.

Words: Bridget McNulty