After quite some time as the disruptor in the holiday letting market and a viable alternative to long term rentals for many residential property owners, AirBnB is quickly falling out of favour in the current COVID-19 conscious environment.
Offering higher than usual returns and a sometimes lucrative payoff, AirBnB has up to now been an attractive option for property investors in tourism focused cities like Cairns, filling a niche between hotel style accommodation and traditional leases but with international travel off the cards, domestic travel extremely limited and even local holidays frowned upon (or outright impossible with the closure of parks, attractions and more), owners are either staying at home themselves or looking at other options to keep their investment productive.
After flowing in one direction for the past couple of years, we are now seeing a reversal of fortune as AirBnB “hosts” move their properties back into long term rentals, offering more certainty of income as travel dollars dry up. While the headline figures might not be quite as attractive as before, with interest rates at sustained lows and residential vacancy rates still tight, the Cairns market does still offer investors a comparatively high return (especially when considered against some of our capital cities). Anecdotally, long term rentals are still seeing strong interest from tenants and absent any significant volume of new supply we would expect this to remain the case for the moment.
Given the uncertainty that still sits around when we are likely to see restrictions on travel and social distancing ease, owners can look at either a 6 month lease to then review the situation at that point, or take a longer view and seek a tenant looking for a 12 month term. Should travel take off sooner, then owners can prepare for a transition back to short term accommodation, if it still fits their needs.
For those that might have only been renting out a portion of their home, either a room or granny flat whilst still having the use of the rest, there may also be opportunities in the current market to consider longer term accommodation arrangements. This may be somewhat impacted by social distancing however, both through the application of rules and an abundance of caution on behalf of resident owners.
While there is a need to pivot in this changing market, its good to know there are still opportunities in Cairns property, they might just look a little different for a while.