Good News for travellers looking for to live the high life while hopping around the globe. Thanks to an under performing and unpredictable housing market, the economic impact is being strongly felt in luxury property. With foreign investment decreasing and market uncertainty still hovering overhead, the wealthy are having a difficult time in shifting their high-end properties. With a large percentage of these properties being on the market for more than 3 months, many vendors are opening-up to the idea of luxury Airbnb rentals. It is an approach that has already begun to take shape in the UK.
The London property market is currently at an important point thanks to, for the first time in a decade, an unexpected fall in pricing. Analysis from Hometrack shows 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 trend of home owners heavily reducing the selling price of their properties has turned London into a buyer’s dream market.
While the ever-present shadow of political uncertainty continues to cloud the future of the UK housing market, information published by The Times and echoed in online property forums comments on the decreasing value of property in London and the south-east “as weaker demand and economic factors played into the pricing of homes”. This isn’t all good news however, as it has coincided with the loss of foreign investors after the recent high-end housing years who were the intended targets for newly built homes.
City AM covers the doubt over the impact this will have across the sector with findings published by Land Registry. Supporting the idea that foreign investors are “shying away from the capitals market” the findings show a 55% decrease in the number of high-end new build homes sold in London’s most select areas. It is clear to see that this effect is being seen across all markets of London, with a Mayfair Estate Agents discussing the likelihood that the capital will become “full of magnificent housing with no one able to live in them”.
This lull in the buoyancy of the luxury sales market has led many homeowners struggling to sell their expensive properties to now resort to renting these spaces out while waiting on an actual sale. This could be seen as a move that greatly benefits and promotes the forward-thinking nature of current rental market leader Airbnb. The San Francisco based company has continued to pursue the next step in its dominance of the industry, which began almost a decade ago. In the summer of 2017, the rental market giant announced its plans to involve itself with the luxury rental market in a plan to increase their reach into the upper end of the market to reach those customers who “prefer the amenities guaranteed by fancy hotels”.
Over 1,900 recently constructed ultra-luxury apartments did not sell within a year of being on the market, however, this is significantly over shadowed by London’s tallest building, The Shard, where all ten top floor apartments remain vacant and on the market at a combined total of £50m despite being on the market for 5 years. While these luxury homes that are waiting to be sold aren’t hotels, they almost all have the added luxuries that those looking for a hotel are waiting for, such as 24/7 concierge and security.
If you add to this the impetus that Airbnb gives to its hosts to “behave more like hoteliers” then you can see the potential for this corner of the market. This will not only offer those selling their home a lucrative way to earn money from a formerly ‘dead weight’ property, but it will also send chills up the leading luxury hotel chains such as Marriott and Hilton who have been able to maintain this corner of the market for so long.