The rise of short-term rentals, propelled by platforms such as Airbnb, has revolutionised the hospitality industry and transformed the way people travel.
As travellers, whether for business or tourism, increasingly seek unique and personalised experiences, the proliferation of short-term rentals has had a profound impact on local communities, property markets and traditional hotels.
No doubt, short-term rentals have gained popularity over the past decade, offering homeowners the opportunity to monetise their spare rooms or vacant properties. These platforms enable travellers to find unique, affordable accommodations, a home away from home if you will while giving hosts an additional income stream. That said, the growing presence of short-term rentals has raised concerns and sparked wide-ranging discussions among stakeholders.
Nairobi City County, the most prominent real estate market in Kenya, is currently experiencing a significant surge in short-term rentals. The county government's data reveals that the targeted annual housing development in the city ranges from 150,000 to 200,000 units. According to Patrick Mongera, the Chief Operations Officer of Metrocosmo Limited, a valuation and real estate consultancy firm, there has been an increase in the popularity of short-term rentals among Kenyans.
Mongera explains that this growing trend has been widely embraced by the local community, with recognition given to the notable impact foreigners have had on the growth of this business, particularly individuals from West African countries, in fueling the adoption of this concept.
“In previous years, the number of Airbnb accommodations was not as extensive as it is now. Looking ahead, it is anticipated that the quantity of these rentals will triple over the next three years, if ongoing construction projects across the country, and in Nairobi, are anything to go by. While there are advantages and disadvantages of short-term rentals, they provide a source of income, particularly for individuals with mortgages, easing their financial burden. All a homeowner needs to do is to tastefully furnish their apartment well and aggressively market it, Mongera explains.
Chief Operations Officer of Metrocosmo Limited Patrick Mwongera in Nairobi on June 7, 2023. Photo by
Photo credit: Kennedy Amungo | Nation Media Group
With the cost of furnishing units ranging from Sh200, 000 to Sh500, 000 for a one-bedroom apartment and up to Sh2 million shillings for larger units, Mongera points out that investors are capitalising on the growing demand for unique accommodation, which is not only affordable but also offers a sense of privacy too. With this in mind, a number of investors are turning this venture into a full-time job. And one does not even have to own a flat, savvy investors are renting flats and converting them into short-term rentals, a business that makes enough to cover the rent and leave the investor with a tidy profit.
“Currently, Airbnb rates vary between Sh3, 500 to Sh15, 000 shillings a night, with monthly rates ranging from Sh80, 000 to Sh450, 000. Some investors make a good income, the key is to rent out the unit for at least 15 days a month,” says Mongera, adding that many Airbnb units in areas such as Kilimani, Kileleshwa and Westlands are rented on a sublet basis.
The exponential growth of short-term rentals, particularly through platforms such as Airbnb and Booking.com, has undoubtedly contributed to the growth of the property sector in Kenya. However, this flourishing industry has not come without its fair share of challenges, as concerns about security have taken centre stage.
For instance, short-term accommodation, especially in Nairobi, has attracted a surge in illegal immigrants. With limited regulations in place and the ease of booking these kinds of rentals, it has become quite easy for individuals seeking temporary shelter, in this case, individuals circumventing detection from immigration. This influx of unauthorised residents poses significant security risks and puts a strain on law enforcement agencies expected to keep residents safe.
“While short-term rentals have no doubt had a positive impact on Kenya's economy, the various security concerns cannot be ignored,” says Mongera, adding that besides the danger of housing illegal immigrants, in some cases, criminals rent short-term accommodation and use them to scam people. There are also investors that convert them into brothels, a factor that drives out other tenants, especially those with families.
With the law of supply and demand in mind, another challenge has to do with dwindling income, due to an increase in supply of such housing units, a factor that has resulted in a decrease in rental income. In Kenya, there are over 10,000 listings on Airbnb according to Money254, a financial services marketplace. The growth of Airbnbs has come amid declining rental prices in uptown estates in Nairobi, prompting some landlords to use the vacant units as short-term rentals. According to the HassConsult Property Index for Quarter 1, 2023, the average rent for residential space decreased by 1.2 per cent in March 2023, the sharpest decline since 2018, when the prices fell by 2.5 per cent.
Short-term rentals have gained popularity over the past decade, offering homeowners the opportunity to monetise their spare rooms or vacant properties.
Photo credit: Shutterstock
“The demand for short-term rentals is expected to rise, with a noticeable abundance of listed vacant units. However, the availability of properties for Airbnb rentals remains scarce. Today, there are no vacant units available for Airbnb listings, and in the past week, rental prices in Kilimani have increased from Sh80, 000 to Sh100, 000. The surge in the popularity of short-term rentals has led to a decline in long-term rental demand in Kilimani and Kileleshwa. Currently, there are no available units in these areas, which is a positive indicator for the market,” comments Mongera.
As Nairobi's rental market experiences a significant surge in demand as more short-term clientele show a strong preference for the neighbourhoods of Kilimani and Ruaka, Kilimani, known for its combination of high-end housing options, has become a sought-after location among both local and international travellers.
Meanwhile, Ruaka is emerging as a popular choice due to its attractive pricing and quality housing offerings. Additionally, Westlands remains a popular choice among foreigners, as it offers a city-within-a-city experience with a wide range of amenities. The availability and proximity to key malls, such as Yaya Centre and The Junction, play a crucial role in attracting guests. Consequently, preference for these areas is fueling the development of real estate in these areas. Mongera is of the opinion that clients are shifting their focus towards factors beyond amenities.
“Rather than focusing on extravagant facilities, guests are placing greater emphasis on the overall quality and aesthetic appeal of the accommodation. The level of apartment finish has become a critical consideration in their decision-making process, leading them to gravitate towards areas renowned for their well-finished housing options,” said Mr Mongera.
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Lydia, however, says that one of the remarkable aspects of Airbnb is that individuals can participate in the platform without necessarily owning a property.“It’s important to have clear communication with the landlord if you plan to run an Airbnb business,” she says, drawing from her experience.
She also spoke of the challenges that those mulling over going into the business need to bear in mind.
Realtors emphasise the importance of being well-informed about local regulations, having a solid understanding of the short-term rental market dynamics, and providing comprehensive guidance to clients interested in venturing into this space.
Photo credit: Shutterstock
“Hosting strangers means there is a level of uncertainty, such as the risk of renting to unwanted individuals or the potential of having your property damaged. To mitigate these risks, I have implemented certain rules, such as not renting a one-bedroom unit to more than two people or young individuals. I also prioritise security measures by installing CCTV from the gate, and the whole compound and I also have a cleaning lady who checks on my property often while cleaning the house, and also a watchman who keeps watch over the property besides monitoring guests. When hosting long-term clients, I arrange for regular property inspections to ensure no damage occurs,” says the businesswoman.
Despite the challenges, realtors acknowledge that short-term rentals have become an integral part of the real estate landscape. They suggest that policymakers and industry stakeholders work together to establish regulations that ensure fair competition, protect long-term rental availability and address community concerns such as crime and noise pollution.
As the popularity of short-term rentals continues to grow, real estate professionals are adapting their strategies to meet the changing demands of the market. Realtors emphasise the importance of being well-informed about local regulations, having a solid understanding of the short-term rental market dynamics, and providing comprehensive guidance to clients interested in venturing into this space.
Types of short-term rentals
Short-term rentals refer to furnished accommodation which is let for a short duration, typically ranging from a few days to a few weeks. This form of lodging has gained immense popularity in recent years due to its flexibility, affordability and unique experiences it offers to travellers. Short-term rentals come in various types, each catering to different preferences and needs.
Vacation Homes: Vacation homes are standalone properties such as houses, cottages or villas specifically designed and furnished for short-term stays. These properties are mostly located in popular tourist destinations and offer amenities and features similar to a private home.
Apartments: Short-term apartment rentals are an excellent choice for travellers seeking a more urban experience. These apartments can be found in residential buildings or complexes within cities or tourist hotspots. They are usually fully furnished and equipped with essential amenities. They offer convenience, and privacy, and are often a more affordable option compared to hotels, particularly for longer stays.
Bed and Breakfasts (B&Bs): Bed and breakfast establishments are small accommodations typically operated by the owners themselves. They offer a limited number of rooms or suites within a private residence, with breakfast included in the stay. B&Bs provide a more personalised experience, with hosts often sharing local knowledge and recommendations with guests. These accommodations are popular in rural or scenic areas, offering a cosy and intimate atmosphere.
Homestays: They offer a unique cultural experience by allowing travellers to stay in a local host’s home. The host may provide a private room or a shared space within their residence, and guests often have the opportunity to interact with the host and gain insights into the local culture and way of life. Homestays are ideal for travellers seeking an immersive and authentic experience in their chosen destination.
