Short-term rent increases the cost of housing for Albanians, 25 million euros were earned from Airbnb in 6 months

2024-08-17 08:35:00, Ekonomi CNA

Short-term rent increases the cost of housing for Albanians, 25 million euros

The influx of foreign tourists has boosted the number of daily rental structures.

But even this year, real estate agents raise concerns that the expansion of this market is being done at the expense of long-term rental stock.

Dwindling stock continues to drive up the cost of housing for many families.

According to joinery agents, the addition of structures for daily rent, after the pandemic period, every year has increased the prices of long-term rentals by 15 to 20% on average in Tirana.

According to data from AirDna, a special structure that maintains market data for daily rentals on the international Airbnb platform, in June 21,447 apartments, villas or houses were listed in Albania.

Compared to June 2023, their number increased by 39%, while compared to June 2022, listings increased by 73%. For agents, familiar with the real estate market, the increase in the number of units for daily rent came from the expectations for a positive continuation of tourism, after a successful year, where 10.2 million foreign tourists came to Albania, with the aim of increasing generated income.

"In addition to the increase in the number of foreign tourists, the increase in the stock of short-term rental housing was also influenced by the public perception of daily rental as a quick way to secure income, putting as much real estate to work as possible ", says Stela Dhami from "Colliers International Albania".

For this reason, many individuals and businesses invested in offering new structures, such as: apartments, villas or houses for daily rent, a type of accommodation very preferred by foreign tourists, due to the cheaper price than hotels.

"Like any business with increased demand, the business of daily rental houses has also increased during 2024. This is because the demand of tourists or foreign visitors for this type of accommodation has increased.

In addition to the demand, even the simplicity or little commitment that this business requires to manage has brought about the increase in supply in this sector", says Mr. Dritan Leka, head of the "CPM" real estate agency.

In Saranda, due to expectations for a high flow of tourists and increased profits, even unsuitable residential units have been turned into houses for daily rent, according to Eron Çumani, head of the real estate agency, "Saranda Property".

"Expectations for an increase in the number of tourists this year increased investments for the purchase of apartments, with the aim of providing them for short-term rent. Consequently, there was a higher bid.

It was even invested in inappropriate units that the owners owned, such as warehouses or warehouses, only a few years later this business turned out to be profitable due to the increase in the number of tourists".

The lack of alternatives to diversify investments is considered by real estate agents as another factor that is expanding the daily rental market.

"The daily rent remains a very good way of ensuring the return of the investment in a property, while in Albania there are still no opportunities to participate in investment funds, the stock market, etc.

Our mentality is also based on the fact that real estate is a property, which will remain anyway, while other investments are somehow felt as intangible for the majority of Albanian investors", emphasizes Stela Dhami.

The rapid expansion of the sector is not only increasing long-term rental prices, but is also "hitting" the coastal hotel industry. Among other things, experts claim that this market risks becoming worthless, since due to the high supply, daily rents are falling significantly. In January-June 2024, the revenue from Airbnb reaches a record of 25 mln USD

Data on overnight stays show that foreign tourists are more numerous this year. The increase in net-stays and prices has significantly increased the income from apartments, houses or villas that are rented out daily on the international Airbnb platform.

The revenue from the short-term rental market in Albania in the months of January-June 2024 is about 25 million USD (calculated according to the average daily rate ADR multiplied by the demand for the net-stay, based on the data made available by AirDNA for the Airbnb platform only ).

Compared to the same period of 2023, the income generated by apartments and houses rented out on Airbnb increased to 1.2 times. In the period January-June 2022, daily rental income for apartments on Airbnb is estimated at USD 7.1 million. The revenues generated in the first 6 months of 2024, compared to the same period of 2022, have increased by about 2.5 times.

The revenue generated in the month of June peaked in 2024 at USD 10 million respectively. Compared to years, the income for the month of June increased by 1.3 times.

In June 2023, revenues reached 4.3 million USD, about 72% more than in 2022. Net stays have also increased this year, data that directly shows the flow of foreign tourists.

In total, in the first 6 months of 2024, 412,000 nights were booked in Airbnb structures, with an increase of 97% compared to the same period a year ago.

Compared to the first 6 months of 2022, net-stays have almost tripled.

In June, 140,000 nights were booked through Airbnb platforms. Net-stays is the indicator that directly measures the performance of foreign tourists in the country in accommodation structures, including those with daily rent.

Compared to the month of June 2023, net-stays have increased by 91%, while compared to 2022, they have doubled.

The growth of net positions in the first 6 months of 2024 started in the first months of the year. In January, net-stays have increased by 50% compared to January 2023.

The progress of the growth of net positions continued in the following months. For each month, such as February, March and April, overnight stays increased by 100% compared to the same period of the previous year.

Daily rental rates per night, on the other hand, have increased. For the month of June, the average daily price for houses, apartments or villas on Airbnb is $67, compared to $59.65 last year.

The increase is almost 20%. There was a significant price increase in the months of April and May.

This year, namely in the month of April, the average rental price in these structures is USD 56.66 per night. The increase is 19%. While in May, the price reached 58.18 USD per night. Compared to last year, it increased by 9%.

The length of stay marked a 9% decrease in June 2024 compared to 2023.

In the first 6 months, the length of stay varies from 2.9 nights to 3.1 nights from 3.1 to 3.3 last year.

On average, the nights of stay of a foreign tourist who has visited Albania are less than years.

While the occupancy of the structure with reservations has increased by 7% in June 2024. Specifically, in the month of June 2024, according to AirDNA data, the occupancy of the structure by tenants is 51.2%.

This means that out of the 30 days of June occupied by tenants, the structures were for 15.3 nights, compared to the 14.3 nights reserved which was the average for the month of June 2023./ Monitor Magazine