Holiday rentals – is the market shifting?

The Women’s Day long weekend was an inspiration to all in the Overberg and spirits are soaring amongst management and staff of hotels, guesthouses and all graded or accredited establishments. Whilst the traditional Airbnb host still fails to comprehend the stance of the Tourism Minister, and rightly so, that has not stopped people from accepting bookings and welcoming guests, albeit at a distance.

It is clear that the majority of citizens have reached the peak of their frustration with the regulations and, with a sense of camaraderie and mutual respect, all hosts are going out of their way to get back to business and provide accommodations while implementing the strictest of cleaning protocols.

The formal establishments are obviously not complaining and kudos to them for all they do to make the tourist experience a memorable one. The wide range of self-catering accommodations listed on the online portals like Airbnb, and the rest are all starting to gear up in the hope that there will be a surge in intra-provincial travel like we saw over the Women’s Day weekend.

A lot has been written about the cleaning protocols for self-catering accommodations and Airbnb is one of the companies that has released detailed instructions on the process to follow. Many people glibly think it is a ‘no-brainer’ but when one looks into the detail of what needs to be done, then the realisation hits that it takes time and thoroughness to ensure that accommodations are Covid-19 ready.

As part of the preparation for this new era of hosting, people need to ensure that their listings reflect the status of their compliance to hygiene regulations, as this is something which guests are now concerned about with most booking enquiries. Whilst the guidelines set out an endless string of the obvious, it is worthwhile for all hosts to familiarise themselves with these.

The question has been asked a number of times as to what the Hermanus holiday rental playing field will look like moving forward. Prior to the arrival of the Coronavirus, there was already an oversupply of holiday rentals as a result of the 2018 riots, compounded by the ever-increasing stranglehold on the economy of the country that we have become familiar with. We saw many new listings appear across all the portals but more and more the nightly rates were being driven down as holidaymakers found themselves spoilt for choice.

A quick research exercise on Property24 gives one an eye-opening picture of what has changed in the past number of months. There are a lot more properties listed for long-term rentals, many of which were traditionally holiday rentals. There is also a phenomenal number of properties for sale and some suburbs are showing a higher number of listings than six months ago.

These are all signs of the overall impact of both the economic crunch and the Coronavirus fall-out which has changed the face of the rental and sales market for the foreseeable future.

The interesting dynamic is that in both the long-term rental and sales markets, pricing hasn’t necessarily seen the decline one might have expected. Of the 171 rental listings across the broader Hermanus area, 62% are in the R 10 000 to R 20 000 per month rental bracket. Only 3% (five properties) fall below R 10 000 per month. If one then breaks this down further by suburb, the trend is very much the same.

Another interesting point to note is that there are over 800 listings of properties for sale in the area, from Arabella to Voëlklip. Sandbaai leads the pack with almost 180, followed by Westclliff with 153. The listings in Onrus (114), Vermont (103) & Voëlklip (102) also show that price flexibility does not appear to be the order of the day and, according to most of the local agents, only correctly priced properties are selling quickly.

The one factor that is clearly evident is that many people can, for a multitude of reasons, no longer hold onto their second properties and are not getting the expected return on investment from those that were purchased as income-generating holiday homes. The uncertainty of how long it will take to rebuild a revenue stream from these properties has also taken its toll on the desirability of owning a holiday home.

So the future remains a mystery, for now. Market dynamics change by the week and we can only continue to find ways to spread the word about what a perfect holiday destination the Overberg is – and to attract the South African public to our shores whilst waiting for the international borders to reopen.

The good news is that many of our fellow countrymen who have not been here before will realise what they have been missing and that will hopefully have an impact on rebuilding the local economy.