Airbnb powers up property market in the Coast

Short-term rentals are almost the ‘in thing’ now, clustering at certain locations across the coastal region especially in Mombasa, which has more than 676 active Airbnb listings alongside more serviced apartments.

Airbnb, a global concept where homeowners turn their houses into short-term rental facilities to vacationers and business travellers, has impacted housing as hosts turn the home-sharing marketplace into a lucrative business.

The growth of Airbnb has caused some landlords to switch their properties from long-term rentals, which are mostly aimed at local residents, to short-term rentals mainly for visitors.

Caroline Nzambu, a manager at Makwetu villas, says homeowners have begun to innovate and adapt in response.

She says vacation-home rentals via Airbnb and other sites are not only creating new lodging opportunities but also new markets.

PROFITS

Makwetu villas in Nyali - which comprises one and two bedroom apartments and studios apartments - have been listed on the online sites.

“We have both long term and short term, but we prefer short-term rentals. Of our six villas, only one is letting on a long-term basis,” she said.

The financial rewards of investing in serviced apartments and listing them outweigh the returns on long-term rentals for residents, which yield around Sh120,000 per month.

“An apartment will fetch Sh120,000 a month. If you take the amount and divide by 30 days, that translates to Sh4,000 a day while I could make Sh8,000 a night in the short-term rental,” says Nzambu.

Paul Kinoti, a director at ACL Real Estate Consultants, says the benefit stemming from the expansion of Airbnb and other platforms accrues to property owners who have units to rent.

He says owners have more opportunities to decrease vacancy and create additional income by renting out to leisure and business travellers.

DIRECT MARKET

When Kinoti sold two apartments to a woman living in Germany, they were to be used for long-term let.

That was until she noticed the profitability of letting out the same properties on short term basis. She has since listed one of her apartment as available for short-term letting and is hoping to change the other one to a vacation rental.

“She asked herself why she was accepting a lower monthly rent when she could make double the return on Airbnb and other platforms. She was getting Sh120,000 per month but with the daily rates, she is able to make Sh250,000 in a bad month,” observes Kinoti, noting that Airbnb has given an opportunity to homeowners to access the target market directly as opposed to sitting and waiting for people looking to let their properties on long term basis.

As Sakina Hassanali, the head of research and marketing at HassConsult puts it, Airbnb has made apartments more attractive, and not just for long stays, but more people are buying them with the sole purpose of renting them out short term.

"Investors who buy to rent out their houses are at 70 per cent, but it is difficult to ascertain the percentage that do it for Airbnb," Hassanali says.

CONVENIENCE

Currently, the real estate market is booming with serviced apartments which developers are rushing to invest in.

More holidaymakers and business travellers are opting for furnished apartments, which allow them freedom and privacy, and are cheaper for families and groups.

They describe it as ‘home away from home’. Some of these hotel apartments come with domestic servant quarters (DSQ) for families that travel with their helpers during vacations.

According to a 2019 report by realtor Vaal Real Estate, serviced apartments in Nairobi registered a three-year average occupancy of 72 per cent compared to a 52 per cent average for the traditional short-stay hotels.

Most apartments often have a kitchen, where guests can make their own food, further giving them a homely experience.

NEW BUYERS

Rafael Nyamai, the construction manager for Centum Investments in Vipingo Ridge, Kilifi County, says as much as there are various types of buyers for the luxurious apartments, most of them are buying second homes for rental purposes.

“Airbnb has definitely had a significant effect. We have always had buyers who want a home; those buying to rent in long term and then those that buy cheaply so that when the prices go up they sell. But, now we have a modern buyer who buys to service the unit and rent it out via Airbnb," he observes.

Consequently, some real estate agents have signed up for Airbnb in order to access a larger market for their properties.

Victor Maina, a manager at Properties Mine, a real estate agent based in Mombasa, said he joined Airbnb and has placed listings on the site even though the app is still less popular in Mtwapa, where he works.

REVIEWS

He says the commission charged by Airbnb as compared to other booking agents is less, making it less attractive in the area.

“Their commission charges go as low as three per cent compared to other sites whose charges are between 15 and 20 per cent,” he said.

Maina further says that reviews are an important aspect of the application, which every host must have in order to get more sales.

“You basically need a lot of positive reviews and a resume to attract many people to your apartment. This promotes trust between the visitor and the host. This is not very common in this area as we have had less visitors," he adds.

He terms the platform a unique way of doing business in real estate and likely to gain ground as more owners welcome visitors.

“I encourage homeowners who do not stay around and are rarely in their houses to list them on the platforms. And with the commissions charged, they can make an additional income,” says Maina.

GROWTH

Since its launch in 2008, the platform has amassed millions of rooms worldwide, hosting tens of millions of clients, which saw it post a revenue of Sh100 billion in the fourth quarter of last year.

Data from Airbnb shows that Kenya had more than 6,500 listings at the end of 2018, while AllTherooms, an accommodation search engine, puts 2,000 active listings in the Coast alone.

In the year to September 2017, hosts in Kenya earned Sh390 million. In a similar period last year, the Kenyan numbers had ballooned to Sh510 million.

Given this growth, it is hardly surprising that more and more houses in prime tourist’s destinations are being bought or repurposed for the sector.