Beijing among least profitable Airbnb destinations, as owners would need a paying customer for 3,771 nights to break even, UK insurer says
- UK-based CIA Landlords tracked more than 50 destinations across the globe as part of a study
- Landlords planning to buy any property in Beijing should be wary of getting into the Airbnb space, says insurer’s finance director
Rugby, England-based CIA Landlords tracked more than 50 destinations across the globe as part of a study and based its findings on the average price of a one-bed flat divided by the average Airbnb price per night. In Beijing, the average price of a one-bed flat is £648,595 (US$805,000) while the average cost to stay in an Airbnb is £172, the firm said.
“The reason why Beijing is one of the least profitable [Airbnb destinations] at the moment is because of the average property price that is too high compared to the Airbnb’s night costs. So, landlords who are planning to buy any property in Beijing should be wary of getting into the Airbnb space at the moment if they want to earn their money back and make profits,” said Richard Wayman, CIA Landlords’s finance director.
The study aims to let property owners who are looking to a make profit know that if they are planning to venture into the Airbnb space, then they should be wary of the location, as it plays a crucial role.
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Only homeowners in Cuzco, the city closest to the famed historical ruins of Machu Picchu in Peru, have it worse. It would take 4,810 nights, or more than 13 years, for them to get their money back under an Airbnb scheme.
“As an investor who wants to run a property profitably on Airbnb, you have to understand your local regulations, your market demand and target end-user, management costs and taxes, any seasonality, potential pricing and cash flow. It can be profitable if the property is marketed the right way and staged correctly, but it can take time to ramp up,” said Shaman Chellaram, senior director of valuation and advisory services at Colliers Asia.
“Given the revenue from an Airbnb or any short-term rental can be unpredictable, it is important to fully understand the cash flow and any risks, before entering the space,” Chellaram said. “Markets across Asia have different laws and regulations covering short-term tenancies, so it is important investors understand these in detail before diving in.”
Elsewhere in Asia, Singaporean landlords will need 2,514 nights, the sixth-longest period, to break even. In Taipei, it would take them 2,332 nights, the eighth most nights.
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Landlords in tourist favourites Paris and Rome would also need an equivalent of about five years to recover their property investments.
On the opposite end, landlords in Dubai will only need 121 nights to earn their investment back, the shortest period, if they put their flat on Airbnb. Investors in Hanoi will need 288 nights, the third-shortest period, to regain their investment.
