Advice and Opinion

What effect does Airbnb have on the local rental market?


Airbnb was met with skepticism when the company launched in the US in 2008 but after it generated R2.4 billion in South Africa’s economic activity in 2016, Airbnb quickly transformed into a widely used platform for everyone looking to make some extra money. 

The question on everyone’s lips is what effect Airbnb might have had on the local real estate industry. RE/MAX’s Regional Director and CEO, Adrian Goslett says that whilst the novelty of the app drew a few rental owners over to the Airbnb model over the traditional long-term renting model, many have decided to return to long-term renting.

Goslett explains;

We did notice a slight dip in the rental market when Airbnb reached its peak in terms of its popularity, particularly in tourist hot spots such as Cape Town. But, the hype has since died down as many are coming to realise the frustrations of short-term tenants.

Being an Airbnb host is a huge time commitment. You have to constantly adapt your listing and price to the ever-changing market and the taste of the guests. If you choose not to work with a third-party manager, you have to check guests in and out, do all the cleaning, restocking, respond to guest enquiries, lock-outs, handle complaints, as well as possible grievances from the neighbours” commented Michael Hauser, estate agent at RE/MAX Living who operates in the Cape Town area. He has often dealt with landlords who were previous Airbnb hosts.

Time commitment is not the only issue with the Airbnb model. Owing to its popularity, the oversupply of properties available to rent through Airbnb has caused the prices to decrease. Quite a number of clients are not satisfied with the Airbnb rental returns and are now putting their properties up for long-term rent or even up for sale,” elaborated Hauser.

Airbnb is also seasonal – the summer months are high earning; but, during the winter months your property could be standing empty for large portions of time. One of the most important things to take into consideration is the location of your property. If your property is located on the Atlantic Seaboard or within the CBD, the demand will be much higher and will be more likely to generate income year-round than if, for instance, your property is located in the suburbs.”

It is for this reason that Hauser believes that the Airbnb model is not a true threat to the traditional rental industry.:

With long term rentals, you are guaranteed a stable income with less hassle. While I do believe Airbnb has its place – it is for the independent traveller who likes to interact with his or her host – I do not think that Airbnb will take over the rental market. Because the income of Airbnb is only sporadic, the demand for long term/corporate rentals through an estate agent will always exist.”

The key lesson that can be taken from this is that property matters – in terms of both renting and buying – are better dealt with through a reputable agent who can do all of the time-consuming ground work on your behalf. Airbnb might seem like a good way to earn extra income without incurring expenses. But, nothing in life is truly free. Airbnb might not cost you cash, but it will cost you your time,” Goslett concludes.