While Airbnb has been offering a subletting service since 2011 with monthly rentals in over 5000 cities, it has never appeared on their homepage. The focus has always been on short-term holiday rentals. Until now. Last week, Bloomberg reported that the app-based home-sharing service is conducting research with McKinsey & Co in preparation for expansion into the long-term rental market.
What does this mean for the real estate industry?
According to Inside Airbnb data, 61.9% of Airbnb listings in the city of Sydney are entire homes and apartments. Concerns have arisen amongst body corporates, property managers and owners amidst Airbnb’s rapid expansion in Australia, affecting traditional rentals and leading to properties being rented out illegally or undesirably.
Damien Tudehope, Member for Epping reinforced these concerns last week, telling NSW Parliament “there are now residential properties being built in Sydney’s most sought-after suburbs solely for the purpose of servicing tourists through the Airbnb market rather than being offered as a home.”
Malcolm Gunning, president of the Real Estate Institute of Australia told news.com.au that Airbnb’s potential expansion into the long-term rental market “will be a disrupter” and “will have an effect on the residential agencies”.
However, Gunning also said that the industry would not be opposed to Airbnb’s next move, as long as they were playing by the rules, and that the industry would “stand up to them”.
This sentiment ripples through the real estate industry with John Cunningham, president of the Real Estate Institute of New South Wales saying that leasing a property is only the start of a tenant and landlord relationship.
Cunningham pointed out that Airbnb lacks the means for the screening and vetting of tenants and inspection management. These differences would make it difficult for Airbnb to compete in the long-term rental market.
Not only that, but Australia has strict tenancy laws that may form hurdles for the home-sharing service. However, Airbnb has been known to push the boundaries of body corporate by-laws and regulations, so it may not be a matter of if but when Airbnb will disrupt into the long-term rental market.
McKinsey is expected to present its findings to Airbnb’s senior leadership next month so be sure to check back for updates.
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