Housing, especially rental housing, is very dynamic in nature as factors influencing the decision to rent an apartment depend on socio-economic dynamism, evolving job type and pattern, and psychological dynamism regarding home ownership. The world has seen how Airbnb revolutionized short-term housing rental, and something similar is now happening in the space of mid-term rental space, led by startups focused on offering well-designed, comfortable apartments for 1-month to 11-month periods. The ‘Home wherever you go’ is not a new concept. Still, the global pandemic amplified the tectonic shift as more and more people, especially digital nomads and remote workers, started looking for mid-term rental options for a longer stay in a city or location of their choice to explore new destinations.
The ongoing geopolitical crisis is leading to decade-high inflation across many developed economies. Economic resurgence in the post-pandemic triggered the rise in rental prices. Still, remote workers are not very affected by the current inflation. After a pandemic period, they are increasing more and more every day. When it comes to the rise in rent prices, it is a fact that less housing inventory drives up home prices, resulting in higher demand for mid-term rentals and an increase in rental prices. Amidst evolving geopolitical, economic, and job dynamics, the demand for the monthly apartment rental market is witnessing a consistent surge in demand, especially in urban and suburban business districts. There are several factors influencing the demand for mid-term renting properties. Some of the factors are:
A propitious regulation
There are two points on which regulation favors midterm rental. It’s been many years, and even before the COVID-19 recovery, that mass tourism is leading to some issues in touristic cities such as Venice, Barcelona and Amsterdam. Those cities have decided to fight mass tourism and locals’ desertion of their city center. In Barcelona, it is now illegal for an individual to rent a room for a period shorter than one month. In Berlin, short-term rentals must now be an owner’s primary residence, per state records in the main districts. Consequently, the offer is turning to midterm rental.
On the other hand, more and more countries such as Germany, Portugal, Greece and Croatia are offering digital nomad visas. These visas make it easier for travel lovers to live in a country for a limited period only while working. This is also an important factor to consider when understanding the growth of the monthly rental market.
Easy Access to Rental Properties
When it comes to relocating to a better apartment, people avoid changing because of factors like rent application fees, repetitive paper formalities like identity, employment and income proof, etc., and brokerage fees—which could be one-month rent or anything between 10-15% of the annual lease. Thanks to the arrival of online rental listing platforms, like Barcelona-based startup Ukio, which recently raised $9 million as per TechCrunch.These platforms simplify mid-term apartment renting by removing all the struggle of never-ending paperwork. Now, it is relatively easy for people to get what they want from the comfort of home.
For nomad workers and corporate travelers looking for a mid-term stay in destination cities, one of the biggest challenges was security deposit and adjustment after check-outs. Managing security deposits and one-month advance, especially for mid-term property rental, is a challenging task in a time of economic crisis. Although the need for security deposit cannot be avoided, online property rental platforms ensure strict enforceability of terms & conditions regarding security deposit return and maintenance expenses adjustments.
Despite inflationary pressures and liquidity measures adopted by Feds across the globe, the world economy is likely to expand at a modest pace in the short term before gaining high-growth momentum, led by emerging economies. As businesses worldwide are opening following ease in COVID-19 restrictions, the travel, tourism, hospitality, and allied sectors are likely to regain pre-pandemic growth level, leading to a jump in demand for short and medium-term rental properties for official and residential purposes. When it comes to suitability and feasibility, medium-term rental is the best fit considering all the factors.
In the post-pandemic world, people are more conscious about health and well-being, especially those working from home and corporate travelers. Coming out of over two years of look-down, people are looking for better-designed properties equipped with resources to live comfortably without compromising working productivity. If the hotel market can meet the demand for luxury in the short term, it cannot do so for medium-term accommodation. Online rental property platforms like Ukio, Airbnb, Zumper, and others serve the purpose well as they offer well-designed properties with the minimum possible hassle of tiresome paperwork. Home away from home is the future and medium-term rental platforms are helping people get what they want anywhere.
The contemporary world of neo-millennials, believing in the “living in the moment” philosophy, wants everything without sacrificing the freedom to do what they want. Since time is in short supply, they look for highly personalized things according to their needs. They want to explore the world, experience global diversity and meet different people. A hassle-free medium-term apartment rental best suits their purpose. Going by the evolving trend and changing work culture in favor of remote working, it could be easily said that demand for rental properties will expand more soon.
The vicious cycle of the property market is well known, but the pandemic has reset the cycle in favor of rental properties, especially medium-term rental properties. The supply-chain disruption might have created inflationary pressure on major economies, leading to liquidity control measures. Still, demand for rental properties is projected to remain high in the recent future. The pandemic has shown both employers and employees that work-life balance could be maintained without sacrificing productivity and added advantage of reduced cost and advantage of exploring new destinations while working remotely.