Airbnb is not new to the Kenyan short-term rental market, yet the platform continues to change the real estate game from Nairobi to Watamu, Kisumu to Maasi Mara, and everywhere in between. Airbnb was launched amidst the 2008 US housing crisis after the company’s founders struggled to find a solution to find adequate roommates and homestays in the San Francisco Bay Area. Today, Airbnb has become the go-to platform for short-term rentals globally, generating $8.4B USD in revenue in 2022.
Since the rental company’s entry into the Kenyan market, thousands of apartments, homes, treehouses, and camping sites have gone live on Airbnb. A quick search for Airbnb’s in Kenya gives you options from as low as a few dollars each night for a room near Nairobi’s CBD to over $1,000 per night for a private villa on the coast.
Cunning real estate investors across Kenya are leveraging Airbnb to tap into the market of short-term stays. For over 100 years, hotels and hostels controlled the short-term accommodations market, but that is no longer the case because Airbnb democratized who can rent out short stays. Hotels and hostels have even begun recognizing the value of Airbnb and many are now even cross listing their vacancies on the app to grow their potential client base.
It is always the intention of an investor to generate a return on their investment; without the prospect of returns, there would be little to no reason to invest in anything. Purchasing real estate is a big decision for anyone, so it is paramount that potential buyers consider all the potential revenue streams available to them in helping make their investment worthwhile.
Airbnb as a source of revenue
Investors have recognized that Airbnb can be a potential source of revenue for their real estate. What makes these investors so cunning? They recognize the glaring difference between an Airbnb’s per night average revenue and a traditional annual lease’s average revenue.
For example, a nice 2-bedroom unit without a DSQ at Mi Vida’s Garden City development with strong security, beautiful landscape and luxury amenities may rent out for 80,000 shillings each month. That same apartment on Airbnb, could go for $72 USD (~10,000 Ksh) per night. Given an estimated exchange rate of 140 Shillings to the US Dollar, the apartment has the potential to generate the same amount of money in monthly rent, as it can on Airbnb for only 8 nights.
Expanding upon this hypothetical example, imagine the investor purchases the apartment and has a mortgage payment of 170,000 Ksh each month for 7 years. If the investor can rent out their Airbnb for more than 8 nights per month, the investor can start realizing returns years earlier than if they were simply renting the apartment out on an annual basis.
Mi Vida Homes CEO, Samuel Kariuki stated in a conversation with Kenyan Wall Street, “we have seen a healthy number of real estate investors electing to rent out their units with Airbnb. When people visit Nairobi, they want to be able to quickly access the city, restaurants, parks, and nightlife. Units in our Garden City and Amaiya developments have had a high-level of interest particularly for Airbnb investors due to their luxury amenities, proximity to key nodes in Nairobi, and access to downtown Nairobi.”
Not every apartment or house in Nairobi can be an Airbnb – simple supply and demand. However, many leveraging Airbnb have found a variety of ways to stand out and ensure that a profitable number of nights each month are rented out. One way for your unit to stand out to potential stays is through social media. Some real estate investors have gone so far as to make websites for their units and offer a variety of payment options to make it as easy as possible for potential clients.
When it comes to real estate investment, the cunning investor recognizes that there are more ways than monthly rent to generate their return on investment.