MAIN IMAGE: Odette Maartens, Rentals Manager at Dogon Group Properties.
Since its launch in 2008 Airbnb has become a major, international player in the short to medium term rental market, with a current net worth of around $74 billion. For many Airbnb is a great alternative to hotels when vacationing or travelling for business, for others it’s an opportunity to generate income. However, a recent tweet asking whether the Airbnb bust is upon us, went viral with thousands of people replying with their less than positive experiences (both as guests and hosts). Is Airbnb still a real competitor in the short-term rentals market?
Cape Town enters deal with Airbnb
It would seem that the answer is yes, at least in Cape Town. Since the advent of Covid, many people are opting to work remotely, a change that seems unlikely to revert back to fulltime in the office. This trend has also seen a sharp increase in what is being referred to as global nomads – professionals choosing to work remotely as they travel around the world. Capitlising on this, Airbnb has formed partnership deals with twenty key destinations, such as Baja in California, Bali, Dubai and Cape Town, as part of their ‘work and live anywhere’ initiative.
As part of the deal the company has committed to working with Cape Town Tourism on a range of initiatives and educational campaigns to promote the city and to attract remote workers. We’ve covered this initiative in more detail in our New Visa regulations could benefit short-term rentals article.
Airbnb a source of inclusive tourism in South Africa?
A 2021 report entitled The Foundations of Inclusive Tourism issued by Genesis Analytics on behalf of the company states that Airbnb, and other, similar digital platforms are sizeable contributors to the growth of tourism in South Africa, specifically in terms of inclusive growth.
The report shares that, “In 2019, the platform contributed almost R11 billion to the gross domestic product (GDP) which, in turn, supported more than 28 000 economy-wide jobs. In 2020, in a crisis year for the tourism sector, Airbnb still contributed more than R8 billion to GDP, which supported approximately 22 000 economy-wide jobs”.
Listing price and convenience as key drivers for travellers, guest travel on Airbnb has seen a growth of 138% in the North-West, 137% in the Free State, 129% in Limpopo, 115% in the Northern Cape, 100% in KwaZulu-Natal, 93% in the Eastern Cape, 92% in Gauteng, 50% in Cape Town between 2016 and 2019.
Not only does Airbnb seem to have a positive impact on tourism growth in less popular provinces, but the report also indicates that the option of offering experiences opens up previously disadvantaged areas and, importantly that 46% of hosts on the portal are women.
The rental property market is growing
South Africa has been experiencing an interest rate increase cycle, with no immediate sight in end, which historically has led to a growing demand for residential rental properties. It would seem that the response to the current cycle is no different, with Makhosini Ndlovu, Product Head at FNB Commercial Property Finance, stating that, “…demand for rental properties recovered during the first half of 2022 as rising interest rates put landlords back in a favourable position. He predicts that demand for rentals will continue growing into 2023, particularly in the rent affordability ‘sweet spot’, which ranges between R6 000 and R12 000 per month, depending on the province”.
Odette Maartens, Rentals Manager at Dogon Group Properties, shares that a new development, The Station in Sea Point on the Atlantic Seaboard in Cape Town, which combines a hotel with privately owned sectional title units, is considering opening up more apartments for the rental pool in future, “We’re finding that the hotel is fully booked, there is so much demand, it would seem that the extra apartments will be needed!”
Not only is the rental market facing a favourable period, but it would seem that the remote working trend has resulted in what Ndlovu refers to as a “significant spike in demand for rental properties outside of major cities, particularly in coastal towns”. He is careful is to mention the spread of increased rental demand is across the country, even in towns that were previously unattractive to long-term tenants.
This trend, combined with the impact of short-term letting services like Airbnb seems to indicate that landlords and hosts will be in a good position in the coming months.
