Investing in Airbnb rentals: Why you're better off investing in the coastal hotspots

You might be thinking of buying a holiday home that you’d like to rent out when you’re not using it, or intend to list permanently on a short-term rental platform such as Airbnb or Stayz to maximise yields.

Pre-covid, the market was buzzing.

Active holiday rental listings rose by 45.2 per cent in Australia in the 12 months to January 2019 and total revenue 49.5 per cent to $2.9 billion, according to vacation rental data company AirDNA.

Then COVID-19’s constraints on travel hit the market for six.

Now, however, a new survey by property management platform Guesty found 35 per cent of hosts and management companies around the world are reporting a sharp rise in 2021 reservations following announcements about the efficacy of vaccines. 

“In Australia now, we’re seeing particularly regional and countryside business booming,” said Yoav Tourel, managing director of APAC Guesty. 

“For the more urban properties in capital cities, we think it’ll be 2022 before they recover.”

“But for the time being it’s areas like Nelson Bay, Byron Bay or the south coast of NSW that are doing well, Victoria’s Mornington Peninsula, the Fleurieu Peninsula in South Australia and the Gold Coast and Sunshine Coast in Queensland. They’re often offering great yields.”

At Australian Short Term Rental Accommodation (ASTRA), chair Robert Jeffress adds “special” destinations such as the Kimberley, Margaret River and Tasmania. 

“And, although we’ve lost our international tourists, usually NSW tourists will spend a lot more on holidays here, on balance, than overseas visitors did,” said Mr Jeffress. 

“But in all those prime destinations, you have to remember that there’s now a lot of competition, so you want to buy something special, that’s different to what else is on offer, or buy it and then invest in it to make it more appealing. You want to make sure it stands out.”

Also, study carefully any planned improvements in infrastructure.

Many people like to drive no longer than three hours for a weekend away but, with so many roads across the nation now being upgraded, travel times are being cut, and that loop around cities is growing bigger. 

It might mean areas you wouldn’t have thought about before are back in the short-stay orbit.

Reece Coleman, of Maker Advisory buyers agency, says the top buys are freestanding houses with three or four bedrooms, within walking distance to the beach or the area’s major attraction.

“We’re finding siblings are choosing to holiday together, bringing both their families,” he said. 

In addition, make sure you, or your management company, offer flexibility.

With borders opening and closing, guests need the certainty that they won’t lose their money if they’re suddenly shut out.

“We’re also seeing more people now offering both long-term and short-term rentals in order to provide the best yield,” said Mr Tourel.

On the Mornington Peninsula, a Sorrento home with an $8.5 million-$9.35 million price guide is one that has had a successful track record as a luxury short-term rental, says selling agent Liz Jensen of Kay & Burton Portsea.

“In securing this property the buyer has the privilege of enjoying it now with the COVID-19 international travel restrictions, while it is highly sought-after as a holiday rental property at any time now and, when travel restrictions lift, allowing the buyer to travel overseas and generate good income from their much-loved investment,” she says.

SOLD - $9,100,000

8 Constitution Hill Road, Sorrento VIC 3943

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