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By George Strovolides
In today’s world which full of uncertainties, there are technological, and other advancements that play a catalytic role in our lives. There are many examples. Smart mobile phones are one, Uber is another and Airbnb is a third. With the latter we will be dealing with in this article.
For one to comprehend the scale of the issue we are talking about, Airbnb currently offers near 4.5 million rental properties worldwide, with ever-growing numbers.
In Cyprus, it has entered our lives for good, whether we are owners of property for rent, or travelling abroad and using it for accommodation.
The idea of Airbnb (a company founded in California in 2009 with an impressive growth rate) is very simple. It offers apartments and houses, fully furnished and equipped, for day-to-day rental.
The properties are not owned by the company, but by several owners, in various countries around the world. Like most subversive business ideas these days, it is fully based on internet platforms and smart phones.
Locations of properties vary, with some located in central areas of the cities and some in tourist areas and the countryside.
Airbnb basically offers the framework within which these properties are rented out, trying to provide a degree of protection of interests and security to both landlords and tenants.
How does this phenomenon affect the real estate market? This is exactly what we are to examine in the article.
The immediate affect was that Airbnb has put a lot of properties on the market for day-to-day renting, creating intense competition for hotels and organised tourist accommodation units.
This is a result of the fact that prices are usually much lower and are available even in times when their occupancy is close to 100%.
Naturally, such a cosmogenic change raises various issues to reflect upon.
• Firstly, the tax implications, which have to do with the fact that it is more difficult for tax authorities to audit the owners' incomes from this activity.
• Secondly, the legal framework to deal with accidents and / or disasters, e.g. fires in such properties.
• Third, the practical problems that arise with the arrival and departure of the occupant. These concern the issue of key delivery, the use of heating and air conditioning, electrical appliances, etc.
Regarding the economic impacts resulting from the application of this model, the following can be mentioned:
• To begin with, owners are given the opportunity to exploit their real estate, which was partially or completely unexploited.
• Secondly, although, as we have explained above, these properties are competing with hotels and organized tourist accommodation units, yet it gives many people the opportunity to travel, which they could not do before. This is either because they could not find accommodation during the time they were visiting, or, if they were able to find, this was not at affordable prices for them. This can be seen in the case of the large number of Cypriots visiting Athens, where their stay was particularly problematic in recent years, without early bookings, due to the dramatic increase in the tourist flow and various conferences and events taking place in the city.
• Thirdly, it has contributed to the increase in rents in Cyprus, since it reduced the number, especially of apartments, for longer-term rentals, in relation to the increased demand.
Due to the extent which the phenomenon has taken hold in Cyprus, the matter has recently been raised in Parliament. The House had discussed the various aspects of the phenomenon mentioned above.
In conclusion, no one can claim that the Airbnb model or a similar one is to dominate in the distant future. What is certain though, is that we have entered a new era and our way of life has radically changed.
The writer is an economist and Honorary President of the Cyprus Property Owners’ Association (KSIA). The views expressed are his own
