Airbnb’s in Paris generate 2.6 times more than a standard buy-to-let28th April 2016
Airbnb continues to affect change on worldwide property markets, particularly in Paris. New figures from Le Journal de Net & Meilleurs Agents show that tourism rentals in Paris through Airbnb generate 2.6 times more than traditional long term rentals.
“Nine out of ten investors who walk into our Paris office ask about renting their properties on Airbnb,” comments Camille Letuve at Athena Advisers. “Price increases for long term rentals in Paris are capped so investors are naturally turning towards the lucrative short term market.”
The study was based on 8,000 Airbnb listings in Paris (available as of Sept 2015) and used an occupancy rate of 85%. The study demonstrated that studio and one-bedroom apartments of less than fifty square metres generated €763 per square meter per year on average, which is almost €23,000 euros per year for a 30 square metre apartment. This is compared to standard Parisian rentals which generated 'only' €294 per square meter per year (€8,820 per year for a property of the same size). This means that investors would only need to rent their property for 12 days through Airbnb to generate the equivalent of a month's rent through a standard rental arrangement.
Paris is Airbnb’s biggest city. Figures show that Paris listings have increased from 40,000 to 60,000 in just a year.
“Three years ago there were only a few thousand listings and now there are over 60,000,” adds Letuve. “The success of Airbnb and other similar short-let platforms is changing the way property investors look at buying and renting properties in Europe's capital cities. There are even companies being created which act as rental management providers, but investors thinking of using Airbnb need to be wary of the rules.”
Owners who are residents in France can let their property out up to 3 month’s of the year as a short-let, but for second-home owners i.e. investors the rules are different. “To do short-lets, second-home owners in Paris need to ask for authorisation from the local council of the arrondissement where the property is located,” adds Letuve.
"This pre-authorisation system is meant to appease lobbying hotel groups in Paris who are worried about Airbnb's swift rise and also counteract the lack of long term lets available on the Parisian market. In reality few actually request authorisation, which is why the government has recently carried out 'sting' operations targeting pockets of illegal short lets throughout the city. They're sending investors a message that they they must abide by the rules.”
New commercial property classification to fill this buy-to-let niche
With such lucrative returns attracting international investors, the demand for a viable legal solution is growing too.
"There are ways to navigate the issue of pre-authorisation, such as changing the nature of the asset into commercial property, where tax-optimised short term rentals are allowed," continues Letuve. "This is effectively creating a new property type on the market. Commercial property investment structures aren't for everyone, but at least there is a framework for owning and renting through Airbnb that is more likely to adhere to the local and national rules."