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Short term earnings for unsold luxury property

20th February 2018 Print

With a housing market currently inclined to favour those purchasing property, sellers at each end of the market are looking for the best route to create the largest income from their property portfolio. Combining this with a drop in the high-end market, those who had been looking to sell, but now face the prospect of potentially substantial loses, have now turned their attention to a popular short-term option that had previously been aimed at the opposite end of the market.

In 2017, rental industry behemoth Airbnb made clear their intentions to break into the luxury rental market. Having made an incredible footprint in the standard rental industry in just over a decade there is no reason behind why this would not be a successful venture for the San Francisco based firm. Their new main audience is for those that have the luxuries that the top end hotels can offer such as concierge, security and private secure parking – a hard fought luxury in the centre of the worlds busiest and most popular cities.  The forward-thinking company are putting a lot of effort into branching out this part of their business, and those who are willing to get involved early on will be in line to benefit most from the influx of spending that Airbnb will be focus on this area, as well as capitalising on being a ‘big fish in a small pond’.

If these initial incentives weren’t encouraging enough here is some current information regarding the UK housing market.

The housing market is currently tilted towards buyers with analysis from Hometrack showing the decline in asking price to agreed sale has “grown from 0.5% in 2014 to 4% today, with discounts of up to 10% registered in inner London.” This divisive information, depending on if you are buying or selling, is also backed up with information covered by a national newspaper that foreign investors are beginning to be drawn away from the UK as political uncertainty casts a dark shadow over any predictions on ‘safe-bets’ due to the markets future direction. 

Findings that demonstrate a 55% reduction in the quantity of luxury homes sold in the exclusive districts of London are supported by a recent report on houses for sale in Mayfair. The recurring theme of “luxury homes with no on to live in them” had once seemed like a hyperbole, however, when paired with the facts that just in London this year, over 1,900 ultra-luxury apartments remain unsold a year after they were put on the market. Although this seems like small-fry when compared with the staggering information regarding The Shard, where all of its apartments covering the top few floors, remain unsold after 5 years on the market. This is at a combined total of £50m. 

Although these tidbits of information are at the top end of examples, most luxury homes are on the market for at least four months before a sale is agreed. It would be foolish not to entertain the idea of increasing your potential income from these properties for at least one third of the year. Although there are lots of areas to research and regulate still, it is clear to see that as far as ‘quick-gains’ come, short term renting with Airbnb is going to be hard to beat.