The rise of technology and the internet of things have been identified as key disruptors in the real estate industry; where some industry players rise to the occasion, others fail to adapt.
The digital economy threatens to cut out the middle man- called ‘disintermediation’- and find the shortest route from A to B; and the market is demanding the same thing. To flourish in an industry in flux, the real estate industry and its developers must possess the agility to adapt or possess the foresight to pre-empt these changes. Perhaps the best solution is for industry stakeholders to embrace the change and take a leap of faith to pioneer a trend in the market.
What has emerged is a basic business model which turns the old model on its head. The need for a permanent office space, large staff compliment is virtually eliminated along with high overheads. Here the user now the product, seen through the likes of Uber, Amazon and Air BnB (with the latter only starting to gain ground in SA and KZN).
The real estate industry, and moreover the residential sector is currently undergoing a massive change and wit that, developers are finding creative ways to use technology to enhance their offerings. While some estates offer value-adds in the way of estate-based apps which include everything from venue bookings to in-estate location-based tracking; others are using technology to aid investors in squeezing as much as they can out of their property- translating into money in hand for owners.
The developers of Lush wanted to add clout to Lush by extending its investment potential beyond the bricks and mortar, and thus have introduced a short-term letting platform. Although not an entirely new concept, this platform is particular to Lush and its users. Unlike the global Air BnB model which effectively turns a property owner into a property manager just by virtue of using the service, the Lush model will differ in its user experience. In order to exercise greater control over who, what and how with a greater view to ultimately preserve the integrity of the estate and the value of the asset, the platform will be managed by a dedicated intermediary body.
“The market demand for short-term letting is high, especially on the North Coast, and people are looking for ways to maximise on this opportunity,” Clifton Smithers, Developer Representative, Lush (at Elaleni Coastal Forest Estate) explains, “to answer to this we have introduced a short-term rental scheme to Lush. Interestingly, we see 2 types of investors: those who invest in a property purely as an additional revenue stream and let it on an ongoing basis and others who invest to use as their primary residence for most of the year and then only let it out during the high season.”
With short-term letting on KZN’s North Coast is at an all-time high, more and more property owners using their property as a way to generate extra income. Air BnB reports in South Africa, a typical host earned R24 633 through renting their space to local and international travellers, and 66% of hosts nationally shared their primary residence with guests for an average 17 nights per annum. KZN hosts let their space for an average of 13 nights a year which fetched a typical income of R20 000 for the host.
Smithers continues, “The demand for short-term letting opportunities is unquestionable and, this demand is ever-growing. KZN’s North Coast is a top performing area when it comes to short-term letting for holidaymakers and out-of-towners coming to the coast during peak season. Lush was developed with this in mind thus giving owners at Lush the opportunity to realise a return on their investment relatively quickly.”
Available opportunities at Elaleni Coastal Forest Estate have seen an average 34% capital appreciation while purchased land at Elaleni is seeing between 30 and 50% capital growth. As a Sectional Title scheme within the greater Elaleni estate, Lush, is poised for the same success. With Phase 1 selling out in only 5 weeks, market demand for upscale Sectional Title homes in a secure estate is evident. Property values at Elaleni Coastal Forest Estate are only set to increase further once the Gatehouse and Clubhouses are complete, and once the first freestanding homes are established.”
“Lush has been developed with a specific price point in mind geared towards investors who want to benefit from these short-term rental models. These are interesting times and people are realising that owning a property is no longer an income-draining liability but rather, an asset which has the potential to generate an income if managed in the correct way.” Smithers ends.