Are Airbnb Properties a Worthwhile Investment in New Zealand?

Are Airbnb Properties a Worthwhile Investment in New Zealand?
Airbnb Advice
June 4, 2018

Airbnb in New Zealand

Airbnb is rapidly growing in popularity each year. As of April 2018, there are over 20,000 Airbnb listings in New Zealand and it’s showing no signs of slowing down. With tourism booming across the country, a hotel shortage and a demand for economical and high-quality accommodation, many investors are now turning to Airbnb to make money from their properties. As an Airbnb host, property owners are finding the flexibility and greater income too attractive to ignore with short-term rentals. Popular tourist areas such as Auckland, Queenstown and Wellington are full of Airbnb listings being rented thousands of times each month. The sudden growth and popularity have left many wondering whether these levels are sustainable. Can property owners trust that Airbnb is a good investment in the long-term?

Factors Affecting Airbnb in New Zealand

New Zealand’s short-term rental market is powered by tourism. Both domestic and international travellers are using Airbnb to find accommodation in the areas they’re visiting. Airbnb offers a cheaper and personal alternative to staying in hotels. This home-sharing service has made it extremely simple to search for somewhere to stay and to compare options. Airbnb is directly impacted by tourism rates. Seasonal changes make a big difference to pricing and availability in almost every location around the world. Large events will usually draw in the numbers, while quiet periods can sometimes leave hosts without any guests, or having to resort to lowering prices. With the numbers of hosts on Airbnb increasing in New Zealand, there is going to be more and more competition when appealing to guests on the platform.

Tourism in New Zealand is Growing

2017 was reported as having the highest number of short-term visitors on record, according to Stats NZ. With 513,300 arrivals recorded in December (peak travel time), and 3.73 million visitors over the entire year, tourism is thriving and the numbers are predicted to continue surging in the future. Holidays are the most common reason people visit New Zealand – this indicates towards short-term accommodation being the most in-demand for tourists. Not only is it the most popular reason for travel, but it has also seen an 8% growth in 2017, an outstanding result for the travel industry and the economy. The Ministry of Business, Innovation and Employment forecasts that tourism in New Zealand is going to increase by 4.8 percent each year. This rise is seen as a response to airlines offering more flights at lower costs, allowing international visitors to see what New Zealand is all about. New Zealand entices international visitors looking to experience our antipodean lifestyle. Tourists visit Aotearoa to experience the stunning outdoors, engage with local M?ori culture and experience the exciting adventures on offer in the North and South Island.

More International Tourists than Ever are Visiting New Zealand

International tourism is booming in New Zealand with the greatest number of visitors hailing from Australia and China, and this is expected to continue with MBIE predicting visitor arrivals to reach 4.9 million by 2023. Foreign visitors make up a large percentage of Airbnb guests in New Zealand. The demand for accommodation in all areas, and in particular Auckland and Queenstown, will mirror this growth. Currently, most areas across the country are not equipped to handle these numbers. More short-term accommodation is necessary. This is good news for property investors. Becoming an Airbnb host can help you take advantage of this fast-growing industry in the years to come.

Domestic Travel is Growing Across the Country

Kiwi’s love to visit other regions of New Zealand whenever they get the chance. A strong economy and an array of enticing events means domestic tourism is also at its highest right now. Seasonal travel and travel driven by major events accounts for a large contribution to these numbers and, as much as international tourists require short-term accommodation, so do domestic tourists. Airbnb is a popular go-to service for finding this type of accommodation. It’s worth noting that although travel to some areas of the country by locals may be restricted to certain times of the year, Auckland draws domestic visitors consistently throughout all seasons. Whether domestic tourists are visiting family and friends, vacationing or travelling for work, Auckland is a constant hub for domestic guests. New Zealand has a lot to offer domestic travellers in terms of experience while on holiday. As a relatively small country, it’s easy for residents to travel between cities and locations. Weekend trips are growing in popularity with decreasing air fares and as New Zealand becomes host to an increasing number of international events, a wider reach of demographics are now travelling locally.

Some Locations are More Popular for Tourists than Others

Popular places for tourism in New Zealand include Auckland, Queenstown, Milford Sound and Rotorua. Each of these regions offers a unique slice of New Zealand culture and attract tourists from all over the world. New Zealand’s beautiful landscape, friendly locals and ease of travel make it a hotspot for those seeking outdoor adventure and memorable experiences. When considering a property for Airbnb it’s important to think about whether you’re wanting to host guests all year round, or not. If you’re looking for a permanent income, you need to think hard about the location you choose and whether tourists are frequent enough for your needs. If you can’t afford to have your property periodically empty, you should avoid areas where tourism is seasonally dependent.

Auckland Attracts the Most Short-Term Visitors

As the most popular and consistent place for visitors to New Zealand, Auckland currently gathers 30% of the market share from tourism. This means most tourists are spending their time and money in our largest city. Auckland has the most listings on Airbnb, reflecting the amount of guests looking for accommodation. Investors considering purchasing a property for short-term rental opportunities should have Auckland as their first choice for the most profitable venture. New Zealand’s largest and most multicultural city has a lot to offer visitors. This city attracts visitors on holiday, business travellers, families and event attendees. Whether guests are engaging in the local food scene, checking out the beautiful coastline or just passing through - there is something for here for everyone. From the stunning Waiheke Island, to the sprawling beauty of the suburbs, Auckland offers a truly diverse taste of New Zealand.

The Future of Short-Term Rentals in New Zealand

As a result of skyrocketing tourist numbers, the future of short-term rentals in New Zealand is positive. As mentioned, the Ministry of Business, Innovation and Employment are expecting and planning for exponential tourism growth. This indicates to investors that the demand for great short-term accommodation is high and is going to stay that way. It’s never been a better time to start hosting on Airbnb.

Why Choose Airbnb Hosting Over Long-Term Rentals?

Sure, Tourism is increasing in New Zealand, but so is the general population and the demand for housing. Why not choose to engage in long-term tenancies, rather than going through the effort to continually attract short-term visitors? What makes Airbnb a better choice?Airbnb is the preferred choice for a growing number of property owners for a few key reasons. While it may not be the appropriate decision for all, Airbnb offers some unique benefits where long-term tenancies fall short. One of the biggest draw cards of Airbnb is in its earning potential. Airbnb offers the opportunity to earn more for one simple reason: people are willing to spend more money per night in the short-term on their temporary lodgings, as they are on their long-term rent. The beautiful thing about Airbnb is that it usually ends up being substantially cheaper than any hotel room. This allows guests to find comfortable accommodation to their liking, without the hefty price tag. Short-term accommodation can also free-up property owners from the locked-in contract of a tenancy agreement. This is particularly useful if use of a home is required periodically, as it allows you to utilise it when it’s empty and move back in when you need it again. This arrangement also enables property owners to avoid the risk of getting trapped in situations with undesirable tenants, which can end up costing landlords a lot of money. Airbnb also has a number of social benefits. With the opportunity to meet many people from different walks of life, short-term rentals can offer a unique experience that enriches day-to-day routine. Many Airbnb hosts find themselves with friends across the globe and places to stay when they decide to travel.

Airbnb and Short-Term Rentals Opportunities

With this strong growth in tourism, both from domestic and international guests, short-term rental property opportunities are also rife. Airbnb properties are and will be in high demand, with a particular focus on Auckland city and other popular locations getting the most opportunity. For many, Airbnb investments are a wise decision. There is rarely a shortage of guests, property owners have control over when they want to rent out their property, it’s a fast way to make money and in most cases, there’s much less labor involved. As tourists are mostly searching for short-term accommodation, Airbnb will thrive. It’s clear to see that with the number of tourists hitting our shores each month, possibilities for property owners to access the short-term rental market are inviting. As our tourism industry remains strong, so does the ability to profit from short-term rentals like Airbnb.

With More Tourists, Comes More Competition

With this growth in the short term accommodation market and the tourism industry come more investors attempting to get their slice of the pie. Increasing competition on Airbnb makes it harder to get bookings and more importantly, to get bookings from the right guests. As tourism rates continue to spike, we can expect the competition to become more and more fierce as time goes by. Investors considering Airbnb should begin planning their strategy now to do well later.

How to Get Ahead From the Start

Airbnb is very much a community. Trust is a huge part of participating as a guest and a host. This is shown in their review system – the better a host is and the better the ratings, the more guests are going to stay with them. To get ahead of the competition, Airbnb hosts need to ensure they have great reviews and an exceptional standing on their profile. Guests will always choose a well-rated host over a newcomer with no backing. Gaining a good reputation takes time so it’s better to start earlier than later. Building your profile, listings and good reviews will help you stand out as the competition grows and keep you receiving the desired return on your investment. Check out our beginner’s guide to successful Airbnb hosting to find out more about getting started on the right track.

Airbnb Investment Advice

If you have any more questions about investing in an Airbnb property, feel free to get in touch with our expert team at Zodiak Management. As well as advising you on the best properties to search for to succeed on Airbnb, we offer comprehensive Airbnb services to ensure you make the most out of your investment, provide your guests with the best accommodation experience possible, and succeed on this exciting platform.

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