Airbnb is part of our lifestyle change

By Ge­orge Stro­volides

Financial Mirror (Cyprus) - - PROPERTY -

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 or­gan­ised 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 Cyprus, since it re­duced the num­ber, es­pe­cially apart­ments, for longer-term rentals, in re­la­tion to 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. in of the Ge­orge Stro­volides is an econ­o­mist and Hon­orary Pres­i­dent of the Cyprus Prop­erty Own­ers’ As­so­ci­a­tion (KSIA). The views ex­pressed are his own.

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