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The Polish and world economy is trembling, the ubiquitous “bubble” is pierced by the COVID-19 pandemic, the tourist industry is in decline, and with it the successive pillars of the economic domino effect, which is always rebuilt from the last block that will fall. What does this mean for the short-term rental industry?
Necessary change of business model
“Invest in real estate! You can’t lose on that.” – have until recently been preached by ubiquitous advertisements from the short-term rental industry. Maybe you can’t, after all, what is loss? In the era of the market downturn, the possibility of exiting the investment is crucial; unfortunately, properties do not offer much comfort in this aspect. Owners who have invested their capital in recently popular rental apartments, especially short-term rentals, are waiting for a change in their business model, at least for the next year – believes Dawid Bambynek, property manager, president of TDB Nieruchomości.
New form of lease?
The fall in employment, which will result from the upcoming economic turbulence and the related slowdown, will automatically translate into the real estate market. There will be problems with rent payments, with obtaining long-term tenants, difficulties with selling the apartment, competition will be strong and potential buyers will expect prices to fall. It may happen more than once that investors will suffer from vacancy, and the lack of return on investment will force them to make heavy decisions.
This does not mean that one should panic. It is worth noting that the events that are currently taking place are unprecedented and will probably result in a new form of apartment leasing.
There is no guarantee that the market will return to its pre-pandemic condition. Negative sentiment will continue for some time and the effects of the economic crisis will be felt for another decade. I personally believe that flexible medium-term renting will be a sure solution for investors. Smaller properties as well as flats adapted for rooms like dormitories should enjoy considerable demand, believes the president of TDB Nieruchomości.
Loss not so painful?
The loosening of the monetary policy (QE) by central banks will have a significant impact on the situation on the financial markets and will have an equally strong impact on the real estate market. A large proportion of properties purchased for investment, whether for short or long term rent, have been leveraged by mortgages, whose profitability will be corrected by negative real interest rates. Considering the above, it may turn out that the loss that will result from investments in short-term leases will not be as painful as it may seem, all the more so as we will all pay for lowering interest rates with increasing inflation, adds Dawid Bambynek.