
Real Estate Investors Across Kenya are leveraging Airbnb to Tap Into the Market of Short-term Stays
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Airbnb has made a significant impact on the Kenyan rental market, revolutionizing the way people find short-term accommodations from Nairobi to Watamu, Kisumu to Maasi Mara, and everywhere in between.
In response to the housing crisis in 2008, the founders of Airbnb encountered difficulties in finding suitable accommodations and roommates in the San Francisco Bay Area. This led to the birth of Airbnb which has now evolved into the ultimate global platform for short-term rentals, generating an astonishing USD 8.4 billion in revenue in 2022. Since its establishment in Kenya, a myriad of apartments, homes, treehouses, and camping sites have become readily available for rent on the Airbnb platform. A simple search for Airbnb options in Kenya presents a wide array of choices, ranging from affordable rooms near Nairobi's CBD for a few dollars per night to opulent private villas along the coast that cost over $1,000 per night.
The burgeoning market for short-term stays in Kenya has captured the attention of savvy real estate investors who recognize the potential gains to be made from participating in Airbnb. Hotels and hostels had monopolized this sector for decades, but the app has upended this sway, releasing innumerable possibilities for proprietors to rent out their properties. Joining the bandwagon, investors are expanding their client base by listing their vacancies on the app.
The primary goal of any investor is to generate a return on their investment. Without the possibility of returns, there would be little incentive to invest in anything. When it comes to purchasing real estate, potential buyers must carefully consider all the potential revenue streams available to them to make their investment worthwhile. Astute investors have identified the potential for Airbnb to generate income for their real estate ventures. What distinguishes these investors is their aptitude for discerning the significant disparity between the average nightly revenue generated by an Airbnb rental and the average revenue generated by a conventional year-long lease.
For example, let's examine a magnificent two-bedroom unit without a servant's quarter at Mi Vida's Garden City development. This unit offers robust security, breathtaking scenery, and opulent amenities. It could be rented out for 80,000 shillings per month. However, if the same apartment were listed on Airbnb, it could potentially fetch $72 (equivalent to around 10,000 Ksh) per night. With an estimated exchange rate of 140 Shillings to the US Dollar, this apartment has the potential to generate the same monthly rent amount in just 8 nights on Airbnb.
Imagine a situation where an individual decides to invest in an apartment. They secure a mortgage with a monthly payment of 170,000 Ksh for 7 years. However, instead of renting out the apartment on an annual basis, they choose to list it on Airbnb. By exceeding 8 nights of bookings each month, the investor can start generating profits at a faster rate. It's important to acknowledge that not all properties in Nairobi are suitable for listing on Airbnb due to supply and demand. Nevertheless, those who have successfully utilized this platform have discovered various strategies to ensure a consistently high occupancy rate. One effective method involves leveraging social media to make their property stand out and attract potential guests.
In the world of real estate investment, some investors aren't satisfied with basic ownership and basic monthly income. To lure in potential clients, a handful of brilliant investors have established websites for their properties with efficient payment solutions included. The most enlightened real estate investors understand that there are multiple pathways to reap a healthy return on investment, beyond the monthly rent.
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