Melbourne apartment buyers chase a piece of Airbnb’s $95 million market
12 November 2016
Inner city apartment investors are cashing in on Melbourne’s $95
million Airbnb obsession and shunning the private rental market, with
the accommodation website poised to reach a new peak this
The first report quantifying the value of Melbourne’s Airbnb market has
shown just how large a chunk the website has taken out of the
traditional hotel market’s bottom line: everyday homeowners and renters
pocket up to $500,000 a night across the city on peak summer evenings.
The explosive heights of last summer—where up to $14 million was turned
over a month by hosts—are set to again be surpassed this year, the
University of Melbourne research found.
Nearly 60 per cent of Melbourne’s listings are apartments, concentrated
largely in the inner city, particularly within the CBD [Central
Business District] near Southern Cross station, St Kilda, South Yarra
and Port Melbourne, the report showed.
The vast majority of Melbourne’s 12,500 hosts have just one listing on
the website, but local agents and developers say there is a growing
trend of both mum and dad investors, who see bigger profit margins on
the platform, and opportunistic tenants, illegally subletting their
rentals, wanting to mine the golden age of Airbnb in Melbourne.
It is a rush to market that comes as the city continues to grapple with
the regulations of the mushrooming Airbnb phenomenon, including
legislative regulation that stalled in parliament this week and two
landmark Supreme Court rulings earlier this year.
Listing on the platform have grown from about 3,000 in October 2014 to
17,500, analysis by Andy Krause and Gideon Aschwanden, funded by
Chicago’s Real Estate Research Institute, revealed.
“It shows just how much it’s grown in just two years,” Dr Krause said.
“We knew it had grown but we weren’t expecting that big a jump.”
Though the research suggests the growth rate will slow, and has
seasonally slowed through winter, total summer reservations for
listings this coming summer are forecast to exceed this year.
Property pundits say buyers are attracted to the much larger rental
return compared to the private rental market. Wannabe hosts have rushed
into boutique projects in areas such as St Kilda, South Melbourne and
Prahran, according to Marshall White project director Leonard Teplin,
and interstate investors are even buying sight unseen.
“They’re making more money from leasing something out on the weekend
than they would all week,” Mr Teplin said. “One client in St Kilda told
us they were expecting $150 a day to lease it out [through Airbnb], and
the local agents told them they would be lucky to get $350 a week.”
A rise in illegal subletting by tenants, the subject of one landmark
court case this year, has led agents to trawl through Airbnb to find
those in breach of their lease agreements.
“We check all the time and it’s very easy to work it out,” said Hocking
Stuart Melbourne director Scott McElroy, whose agency has caught out
several people in the past.
A bill to regulate short stay accommodation, the first step by the
state government to do so, was referred to the environment and planning
committee by the upper house on Tuesday. One concern raised by the
opposition was the ongoing issue of apartment residents being subject
to unsavoury behaviour with little recourse to deal with the issue.
But Strata Community Australia’s general manager, Rob Beck, said the problem went even beyond the “party pad” scenario.
“Owners corporations and owner occupier residents are essentially
footing the bill for all the wear and tear on the building and taking
on an unreasonable fair share for the short stay operators who are
making lots of money from it.”
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