Airbnb yields lower in Vancouver, study finds

Service ‘not as powerful a tool’ with only a 50 per cent premium on rent

The owner of a three-bedroom property in Vancouver could recoup their purchase price about 10 years faster if they do short-term rentals versus having a long-term tenant, according to a study released Tuesday.

However, the study also shows that services such as Airbnb are not as profitable for Vancouver landlords as they are in other cities.

The research was conducted by Nested, a British online real estate agency, and compared how long it would take to make back the value of a three-bedroom property using it as a traditional rental compared to a short-term rental through Airbnb in 75 countries around the world, including Vancouver, Toronto and Montreal.

“Vancouver has relatively high prices and low rental yields, which is a natural pairing,” Nested CEO Matt Robinson said. “What sticks out most is that Airbnb is not as powerful a tool for landlords as in other countries. In Vancouver, Airbnb yields are 50 per cent more than long-term rents, whereas in other major cities, Airbnb yields are typically three to five times the long-term rental yields.”

The study shows that the average price for a three-bedroom property in Vancouver is $1.14 million. Such a property rents for an average of $3,340 per month, meaning it would take 341 months to recoup the value.

Vancouver is in the middle of the pack with that time frame. The average monthly Airbnb rental income for similar properties is $5,310, meaning the value could be recuperated in 214 months. Only in seven other cities do landlords take longer to recoup their property value.

The study assumes properties would be rented at 80 per cent capacity each year. It does not take into account mortgage interest rates, Robinson said, because “they’re constantly changing.” Other costs associated with home ownership, such as strata fees or taxes, are also not included.

The city with the highest average cost for a three-bedroom property is Hong Kong, at $3.15 million, followed by London at $2.83 million and New York at $2.17 million. The least expensive average price was in Cairo, at $79,000.

San Francisco has the highest average monthly rent of $7,151, followed by London and New York City. Cairo had the lowest average monthly rent.

Vancouver, which has a chronic shortage of long-term rental units, is reviewing its short-term rental regulations.

Currently, zoning regulations don’t allow short-term rentals — renting your property for fewer than 30 days is only allowed in a licensed bed and breakfast.

Under the proposed regulations, owners and renters would be allowed to rent all or part of their principal residence nightly if they have a short-term rental business licence.

In Vancouver, Airbnb yields are 50 per cent more than longterm rents ... Airbnb yields are typically three to five times the longterm rental yields.