I have spoken often and at length about the current rental crisis and the impact it is having for both investors and tenants (prospective and actual). Worth bearing similarly in mind though, is the current state of accommodation assets (including holiday let, hotels and AirBnB).
I had the experience recently of needing urgent accommodation after an unexpected trip to Townsville. Easy enough right? That’s what Google is for. Well, not so much. An open-ended search of accommodation - anything and everything, any style and any price, yielded just one single result – a camping ground on Magnetic Island. Lovely I am sure, but not quite the desired outcome. A wider search took in AirBnB as well, and while exxy, it did at least provide an option.
Now that’s Townsville, yes, however a similar situation has been found more than once of late in Cairns, with school holidays in particular being a culprit. Now you expect accommodation to be more expensive during school holidays – its supply and demand after all. But you also expect to find SOMETHING available, however expensive. Particularly in a City so dependent on tourism.
When Crystalbrook launched its 3 hotels in Cairns, it was (rightly) a big deal – because new hotels are exceedingly costly to develop and this was a rare case of a new player willing to make an investment after a decade without a new hotel being built. With COVID (and its subsequent impact on tourism) hitting as their most recent came online, there have been refurbishments, but no-one else has pulled the trigger on joining the fray.
AirBnB, for all its maligned reputation, has been successful because it has provided an opportunity for homeowners to cater to a market that is otherwise under-served – be it a whole home for a family wanting to be self-sufficient, a cheap room in someone’s home close to public transport or indeed, just a place, any place, when you are in a tight spot. The difficulty is that unfortunately, to meet one market it means forsaking another – traditional rentals. But with rising interest rates and the chance to achieve stronger returns, the market will dictate the direction taken.
Tom Quaid is the REIQ Zone Chair for Cairns