A short-stay ‘‘apocalypse’’

By Meg Hill

The rental market in Docklands is flooded due to the coronavirus (COVID-19) pandemic collapsing the short-stay market, according to real estate agents and short-stay operators.

Glenn Donnelly, a managing director at Docklands real estate agency City Residential, said the flow of properties into the rental market was “totally unprecedented”.

“It’s 100 per cent completely unprecedented, we’ve never experienced anything like this at all,” he said.

“What we’re finding is we’ve got three times the amount of furnished properties on the market at the moment and with the limited enquiries we’re getting, people are dropping rent by $100 to $150 a week to get them filled,” he said.

“All the short-stay operators are handing back the keys and they’re getting rented out at a lower price than what they normally would.”

“With the borders locked up we’re not getting moves from interstate or overseas either, so the only people filling them are those that are moving for cheaper rent of because their rental property is for sale.”

A similar situation has unfolded across the city.

Belle Property’s Carlton and Melbourne business development and leasing manager Suzie Inglis said the CBD market was “absolutely flooded mostly with furnished properties that would usually be on Airbnb and other short term stay platforms”.

Ms Inglis said on April 21 there were more than 2200 apartments online in the CBD alone.

“In our busiest period this number will usually never exceed 1200, so you can clearly see the huge and rapid increase happening,” she said.

“The 1000 extra properties are all furnished and have all come online in the last two to three weeks which is simply unheard of.”

“This heavy competition teamed with the fact there are hardly any prospective tenants in the market anyway has forced owners to significantly drop prices in order to be competitive.”

Rus Littleson, a representative of property owners and long-term resident advocacy group We Live Here, said COVID-19 was an “apocalypse for the whole short-stay industry”.

“We have residents telling us that short-stay operators are collapsing throughout the city,” he said.

“Short-stay companies that have been around for more than a decade have not been immune - they’re crumbling under the pressure of paying above-market rents with near-zero income.”

“We Live Here is hearing that short-stay operators are invoking the small print in their rental agreements and bailing out, abandoning their apartment owners in the long-term rental market.”

Lyn and Peter Kelly, who operate short-stays through Docklands Private Collection of Apartments, said they were stuck with 40 empty apartments when the crisis hit, but had moved them into the rental market.

“Docklands Private Collection of Apartments was created many years ago to work directly with owners under a management arrangement and not rent an apartment and then on-sell as a short-term option,” they told Docklands News.

“As such, when tourism crashed and the borders were closed, we put in a plan with the blessing of our owners to put out their apartments for longer periods.  To date we have successfully entered this market with over 40 apartments booked out for three-plus months.”

“When borders, restaurants, theatres and sports arenas re-open, we will return to our very successful short-stay program – perhaps because of going through this current experience, the model of the business may be a little different moving forward.”

“However, as always, our number one clients are our owners and that will continue to be so. We look forward down the track welcoming back the many guests who have stayed with us over the years.”