Picture: Jacqui Savage, national rentals manager Rawson Property Group; Adrian Goslett, regional director and CEO RE/MAX Southern Africa; Chelsea Viljoen, Just Property.
The future for tourism and the need for Airbnb remains uncertain as South Africa and many other countries continue to battle the coronavirus pandemic. Consequently, Airbnb owners had to adapt to survive.
The rental industry has been one of the hardest hit by the devastating economic impact from the pandemic and the lockdown. The PayProp Rental Index revealed disturbing figures in June – in March 2020 just over 20% of tenants were in arrears, this percentage increased to 24% in April. Of even greater concern were the jump in the average size of arrears – from 78% of monthly rent in March to 84% in April. Johette Smuts, head of data and analytics PayProp SA, says they expect May and June to be even worse.
Consequently, the forecast for rental growth for the rest of 2020 is dim as millions of South African are expected to lose their jobs and/or earn a lower income. Jacqui Savage, national rentals manager for the Rawson Property Group, says the lockdown of the tourism industry (and it looking unlikely to resume anytime soon) has contributed to making Airbnbs something of a white elephant for now. “As a result, many Airbnb owners are converting their properties to long-term rentals, competing with those already on the market. We started seeing Airbnbs converting to long-term rentals back in February this year and a lot more joined the trend when lockdown began, for obvious reasons,” she says.
The travel ban has also placed many travellers in precarious living situations, especially those who had plans to emigrate just before the lockdown started. This has led to new trends in the rental market, with fully-furnished, medium-term rentals becoming increasingly popular and Airbnb homes moving to the long-term rental market to avoid vacancies.
Regional director and CEO of RE/MAX of Southern Africa, Adrian Goslett, attributes the cause for these changes to a new type of temporary tenant that has emerged as a result of the travel ban; namely, the interrupted emigrant who needs a place to stay until he/she can begin their new life abroad. “This has increased the demand for fully-furnished, medium- to long-term rentals for the time being or until such a time when emigration plans can be realised,” Goslett notes.
Jenny de Necker, broker/owner of RE/MAX All Stars operating in Alberton and Germiston in Gauteng, says that there has been an increase in the fully furnished market in their areas. “Many of our clients who sold their properties to emigrate and had the sale registered just before or during the lockdown were left stranded. They had all the plans to travel abroad and these where placed on hold when flights were cancelled or postponed. Many who were renting their homes on Airbnb have switched over to long-term rentals to accommodate those that are stranded here, with all their belongings already shipped to their new homes. In fact, many bed and breakfast guesthouses are also giving their clients a cheaper rate if they sign for a longer period. Clients may get lucky with a breakfast included as well,” de Necker explains.
Even more popular than furnished rentals are unfurnished properties. Despite the flood of Airbnbs hitting the long-term rental market, Savage says unfurnished properties remain the most popular choice for tenants – so much so that many Airbnb owners are removing the furniture from their properties.
“Furnished apartments tend to attract much higher rentals than unfurnished, which is an issue when affordability is a concern, as it is at present. In unsettled times, tenants also like the comfort of having their own belongings with them in their homes, so I don’t foresee furnished rentals becoming more competitive or attractive to tenants in the short term.”
In the Northern Suburbs of Cape Town, Caron Leslie, broker/owner of RE/MAX Property Associates, explains that those who were renting their homes on Airbnb are now looking to get long-term tenants to occupy their properties rather than having the home stand vacant. “Landlords are also having to reduce monthly rental amounts considerably to attract and hold onto tenants. Things are quite erratic in the rental market at present and it’s far too early to predict what further impact COVID-19 will have on the rental market in our areas, so it remains to be seen what trends will emerge post-lockdown,” she explains.
Chelsea Viljoen of Just Property says they have seen that due to the oversupply on the rental market many landlords have had to reduce their rental asking price. They also see that landlords are hesitant to sign for longer than six months in hopes that the short-term rental market will improve.
“But there is an opportunity cost to offering 6-month leases. Moving is often expensive and always disruptive, so tenants may be disinterested in these shorter rental periods, leading to extended vacancies. There are other considerations too, making the shift from homestay to long-term rentals something to think long and hard about,” she adds.
Conversion considerations include the following:
- Storing or selling the furniture if the tenants want the premises unfurnished.
- TV channel subscriptions may attract tenants but should be cancelled if they don’t want them
- Keep rent reasonable – tenants do not search for properties above their budget
- Tailor the rental agreement to the needs of the property and the owner
- Use high-resolution pictures to market the property online
- Ensure the beds are made, cupboard doors closed, lights on and toilet seats down
- Include as much information as possible in the advert, including access to WiFi
- Follow an extensive vetting procedure before signing a new tenant – do a credit check, verify income, follow-up references and obtain copies of ID or passports
“Another good idea is to check out their profiles on social media,” says De Villiers. “You can tell a lot about a person by their online presence.”
Global surveys provide a glimmer of hope as some countries in the Northern hemisphere are slowly reopening their borders for travel. However, we are still far from seeing international tourism return. Infection rates are still alarmingly high in certain US states as well as the UK and Russia. Australia is also seeing second wave of infections in Melbourne.
Interprovincial travel in South Africa are also still very risky – Gauteng has just surpassed the Western Cape as the country’s new epicentre and there is rising concern about the increase in infections in the Eastern Cape.