Property ROI studies have now begun to factor in the Airbnb concept. In Australia, this is particularly the case owing to the enthusiastic uptake of Airbnb by homeowners and property developers. When homeowners take out mortgages they can rely on the revenues collected from home sharing to help them pay. Compared to ordinary renting, holiday letting recuperated investment costs up to four times faster.
The Nested.com 2017 ROI index for real estate compared four Australian cities with others selected from around the world. This included Sydney, Brisbane, Perth and Melbourne. When comparing how long it would take to pay off a three-bedroom property, Brisbane was ranked 57th in the world.
Over and above studying return on investment in the home sharing model, Nested.com examined the time it would take to recoup investment through regular rental income. The study considered the nature of the real estate market in all the cities analysed. Some cities have a far more established tradition of rental income and in such instances traditional rent methods are preferable. In such cities, the period it takes for a return on investment to be realized is much higher than in cities where property owners have more options.
In Sydney, where Airbnb is quite popular, traditional rent would take the average property owner 315 months to recoup their investment. Airbnb would take only 80 months to do the same. This duration places the city at number 23 in the world. In Brisbane, traditional renting takes an average of 262 months to pay off a home, while Airbnb in Brisbane takes 148 months. The reason why Airbnb takes much longer in Brisbane than Sydney and other Australian cities is because shared homes are occupied for fewer nights in Brisbane than in other places.
A comparison with traditional rent shows that traditional rent provides a return on investment faster in Brisbane than it does in Sydney. Ultimately it is an indication of the culture in the real estate industry in specific cities. Other Australian cities that were listed include Perth which was ranked 25 and Melbourne which was ranked 43rd.
And the Winner is… Africa!
African cities appeared to be leading in the return of investment area. Airbnb is not yet as popular in Africa as it is in the developed world. This means that virtually all income in real estate is from traditional rent or hotel occupancy. In Lagos, it takes 132 months to return investment through traditional renting, which is the fastest for any city. In Durban, South Africa, the recovery of investment from Airbnb would take only about 18 months. This is the fastest for any global city utilising this method. The quick return on investment in Durban is due to the high cost accommodation in hotels and limited supply of homes available on the market for short-term rent.
This study was very informative for people intending to invest in real estate as a long-term source of income. From the results they are able to make a determination of how long they are likely to be repaying bank loans and mortgages.
The Airbnb concept has been adopted quickly within Australia. It is for this reason that Australia Airbnb become the easiest way for investors to get a good return on their investments. The ease of maintaining the property when it is utilized under the Airbnb model is further enhanced by the fact that these properties require minimal extra care. Their maintenance is similar to any ordinary home rental property which helps reduce the ROI time.
Based on this data, even with Brisbane lagging behind other Australian cities in terms of Brisbane’s Airbnb investment potential, paying off a home via Airbnb is now possible.