Short-term rentals
Short-term rentals remain a profitable niche
Herwig M. Peham MRICS Head of Investment EHL Investment Consulting
Legal regulations have put an end to touristic short- term rentals at many locations. However, this type of use has become even more attractive – in properties where it is still possible.
definitely become an obsolescent model. Its replacement involves entire properties (or at least well separated building sections or entire stories) that are used solely for short-term occupancy. The mixed use of investment properties had become increasingly problematic due to the frequently difficult interaction with tenants, who were rarely happy with the daily fluctuation in neighbours, and was further complicated by increasing govern- ment regulation. However, the sole focus on short-term rentals also has benefits from the viewpoint of the building owner. From the operator’s perspective, it allows for more efficient and professional management and, in turn, higher rents. The trend is also moving in favour of larger units. The times of steadily shrinking units that were barely larger than a hotel room has changed to more
space as a USP for the branch in competi- tion with hotels. Demand is concentrated on apartments between 24 and 45 sqm, by all means with a separate bedroom. Three-room apartments up to 60 sqm are becoming more popular. These sizes often reflect the apartments in investment properties and, consequently, the con- version to short-term rental requires little adaptation. The expected impact on the housing market has largely failed to materialise – and short-term rentals are no longer permit- ted in large parts of the central districts. On the other hand, this remains an attractive market and, in some cases, is more profitable than ever for the use of existing properties.
Short-term rentals regularly made head- lines as an apparent threat for the housing market in the past, but public opinion has since subsided with the enactment of new restrictions. The expected impact on the housing market has largely failed to materialise – and short-term rentals are no longer permitted in large parts of the central districts, especially in residential zones. On the other hand, short-term rentals remain an interesting market and are, in part, even more profitable than ever for the use of existing properties. Several market trends have emerged to the benefit of investment property owners who focus on hospitality (in other words, short-term rentals, serviced apartments for slightly longer stays and conventional hotels). The most important is that the colourful mix combining Airbnb apartments with next-door long-term rentals has
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