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Why Airbnb disruption could hit local rental market

Dining etiquette
 Studio apartment. [iStockphoto]

As the Airbnb wave continues to spread across the country, especially in cities and major towns, the next big question is how this eventually affects the cost of housing.

While Airbnb opened a new frontier in the real estate business when it comes to rental spaces, there is a possibility tenants could end up being deprived of the same spaces.

It has happened in the hotel industry, which is now in direct competition with Airbnb in the business of providing accommodation for those on holiday or in need of a short stay.

Airbnb charges are less compared to hotels. The app offers a variety of add-ons, and one does not have to be subjected to 'expensive' meals but instead has an option of cooking for themselves.

Basically, they get to be home when they are away.

Concern about rental prices is already being recorded in some countries with one of them being Australia.

The Guardian reported early in September that rental prices were increasing by up to 20 per cent annually a situation that is linked to many apartments being listed on Airbnb.

A 2019 report by the Economic Policy Institute titled The Economic Costs and Benefits of Airbnb acknowledges rising housing costs as a key problem for American families.

It adds that there is evidence suggesting that the presence of Airbnb raises local housing costs.

"The largest and best-documented potential cost of Airbnb expansion is the reduced supply of housing as properties shift from serving local residents to serving Airbnb travellers, which hurts local residents by raising housing costs," says the report.

In Kenya, such is still to be experienced. Or if it is happening, it is at a small scale that is yet to cause a housing crisis like what is being experienced in developed countries.

Hannibal Simba, a real estate consultant, notes that in the country, those affected by Airbnb are individuals who invested in serviced apartments.

"These are people who had their apartments fully furnished and they were renting them out to corporates, especially international corporates. These are the ones who have been affected," explains Simba.

"Let's say the apartment was going for Sh250,000 or Sh300,000 a month - now you can get a similarly sized apartment for Sh150,000 a month."

Simba adds that Airbnb has not really affected regular rentals. This, he says, is because of the cost implications to the landlords if one was to invest in the business.

"For example, if the landlord has three units, they have to buy furniture and furnish all the units," he says. "Then the hard part comes which is managing an Airbnb client. It is not easy. Then of course sharing income with the company itself."

As Gimco Ltd explains, Airbnb is a hospitality business. As such, running it requires focus and attention noting that it is possible to have frequent new guests making its management tedious.

"There will be a lot of work to do, including cleaning, communicating with Airbnb guests, laundry, occasional repairs, calendar management, hence might not be a good passive investment," the Nairobi-based property firm explains on its website on

In Canada, this was fairly easy.

A 2020 article titled The Airbnb effect on Affordable Housing by The McGill International review citing a report by Fairbnb, a coalition of homeowners, tenants, and tourism businesses, says Airbnb alone accounted for about 6,500 Toronto homes being pulled from the traditional housing market in favour of short-term rentals.

"Worldwide, this trend is also being accelerated by the commercialisation and professionalisation of Airbnb hosts," says the report.

"The profitability of short-term rentals caused both property companies and small-time landlords to vacate the long-term rental market, resulting in a depleting supply of long-term housing," further revealed the report.

According to the earlier quoted report, titled The Economic Costs and Benefits of Airbnb, even small changes in housing supply (like those caused by converting long-term rental properties to Airbnb units) can cause significant price increases.

"High-quality studies indicate that Airbnb introduction and expansion in New York City, for example, may have raised average rents by nearly Sh48,000 ($400) annually for city residents," the report reads.

Maurice Ochieng, proprietor of Property & Discounts, a real estate firm that deals with short-term rentals and distressed properties, is of the opinion that the Airbnb business has not reached a point where it can affect rent prices.

"What a landlord needs at the end of the day is basically a tenant," he explains. "What it has affected is cases where the landlord is of the opinion his unit is of a family set-up so they choose not to take any Airbnb."

A sign that Airbnb has become prevalent, he says, is if the landlord asks for what purposes the prospective tenant seeks to rent the unit. "Then there might be a slight review on the rental price given that this is another business," says Mr Ochieng.

"But as it stands, it has not reached that level yet. If it has, then, there are very few specific areas."

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