Rental Property Market Trends 2011

The Rental Property Market Trends 2011 report is the first in a series of detailed months reports produced exclusively by Campaya, the holiday rentals company offering rentals from private home owners and professional agents in one place.

Tourism Trends

Tourism has never been far away from the headlines throughout 2011, with a number of mixed stories fueling the confusion and uncertainty created by world events and the ongoing financial crisis.

Reports have as many as 600,000 Britons ‘sacrificing’ their summer holiday in 2011 in order to save money, a drop of 20% year on year compared with 2010, although Spain, for example, has reported one of the best summers ever for international visitors, with 21 million tourists during July, August and September, an increase of 8.5% compared to 2010. This increase resulted in a record level of spend over the summer, a total of 19.71€ billion, an increase of 8% on last year, with September showing a healthy growth of 5.8%.

Much of this growth has been attributed to the unrest in areas such as Egypt and Tunisia, who have seen a dramatic decline in their all inclusive packages, with Spain being the beneficiary and the fourth most visited country in 2011 after France, the USA and China.

Considering that tourism revenue in Spain accounts for 10% of the Gross Domestic Product, this has provided a much needed boost to the economy with foreign tourist expenditure at an all time high of 99€ per day and 925€ per holiday, although the indication is that this is declining post summer.

Why then are so many bars, cafes and restaurants along the Costa’s closing down? Why are so many hotels reporting lower occupancy levels with many reporting levels as low as 75% during the summer period, and forecasts predicting drops of as much as 38% by 2012.

One reason is that up to 40% of the cost of the average holiday spend is absorbed by the flight and flight related costs, much higher than in previous years. Another has been the boost for the worldwide holiday rental market as demand has soared, with many second property owners deciding to list their properties for rental. And as far as the traditional Costa’s are involved, they are losing out as more and more tourists look to the Balearics & Canaries for their holiday.

Top 5 Holiday Rental Destinations 2011

• Turkey: officially known as the Republic of Turkey, Turkey is one of the six independent Turkic states. The coastal areas of Turkey bordering the Aegean Sea and the Mediterranean Sea have a temperate Mediterranean climate, with hot, dry summers and mild to cool, wet winters. The coastal areas of Turkey bordering the Black Sea have a temperate Oceanic climate with warm, wet summers and cool to cold, wet winters.
• Balearics & Canaries: The Balearic Islands are an archipelago of Spain in the western Mediterranean Sea, near the eastern coast of the Iberian Peninsula, and the four largest islands are: Majorca, Minorca, Ibiza and Formentera. The Canaries are a Spanish archipelago located just off the northwest coast of mainland Africa, 100 km west of the border between Morocco and the Western Sahara. They are a Spanish autonomous community and an outermost region of the European Union. The islands include: Tenerife, Fuerteventura, Gran Canaria, Lanzarote, La Palma, La Gomera, El Hierro, La Graciosa, Alegranza, Montaña Clara, Roque del Este, Roque del Oeste and Isla de Lobos.
• Greek Islands: The Greek Islands are a collection of over 6,000[1] islands and islets that belong to Greece. Only 227 of the islands are inhabited, and only 78 of those have more than 100 inhabitants.
  The largest Greek island by area is Crete, located at the southern edge of the Aegean Sea. The second largest island is Euboea, which is separated from the mainland by the 60m-wide Euripus Strait, and is administered as part of the central Greece periphery. After the third and fourth largest Greek Islands, Lesbos and Rhodes
• Cyprus: Officially the Republic of Cyprus is a Eurasian island country in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea. Cyprus has a subtropical climate – Mediterranean and Semi-arid type with very mild winters on the coast, and warm to hot summers. Snow is possible only in the Troodos Mountains in the central part of island. Rain occurs mainly in winter, with summer being generally dry.
• Egypt: Officially the Arab Republic of Egypt is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world. Egypt is one of the most populous countries in Africa and the Middle East. The great majority of its estimated 80 million people live near the banks of the Nile River, in an area of about 40,000 square kilometers, where the only arable land is found. The large areas of the Sahara Desert are sparsely inhabited. About half of Egypt’s residents live in urban areas, with most spread across the densely populated centres of greater Cairo, Alexandria and other major cities in the Nile Delta.

The type of holiday seems to be changing as well, with more people opting to combine a luxury break with an activity based holiday, making luxury holiday villas, remote cottage rentals and well appointed holiday apartments the perfect base for these holidays.

The type of activity holiday hasn’t changed although the prominence of both Walking and Fishing could be seen as an indication that more people in the 45-64 age range are taking holidays these days, primarily it seems as they are the demographic with the highest disposable income during the current financial crisis, and in many cases are indulging in a long term interests that they have not had as much time for as they raised families, developed careers, and generally had less leisure time, with the Bureau of Labor Statistics reporting that the current average is less than 5 hours a day.

Top 5 Holiday Rental Activity Holidays

• Golf: Europe remains a favourite destination for golfing holidays with Spain, Portugal and France still the most popular destinations.
• Cycling: favourite cycling destinations include the Dolomites in Italy, Atlas Mountains in Morocco, the Dalmation Coast in Croatia, Cuba and of course the Pyrenees in France.
• Walking: Italy has emerged in recent years as one of the world’s favourite walking holiday destinations. Spain remains popular as do the Greek Islands, France Portugal and Morocco while those wanting to travel further tend to head to South Africa’s Garden Route beginning in Cape Town and traversing the famous Table Mountain, the Kirstenbosch Botanical Gardens and Robben Island, where Nelson Mandela was imprisoned.
• Skiing: Andorra, Austria, Bulgaria, Finland, France, Italy ….. take your pick! Recent years has seen the emergence of a whole new range of ski holidays i.e. snowboarding, short ski’s and Ski Weddings!
• Fishing: Fishing has grown into an extremely popular sport around the world. It has to be one of the most relaxing and satisfying sporting holidays to go on. Scotland has some of the best salmon fishing in the world and a top fishing holiday destination. Trout fishing is popular in England with fishermen trying their hand at fishing a local river and staying in a rental cottage. Carp fishing is a popular French fishing holiday and some fishermen now go fishing to France on long weekend breaks.

With respect to Christmas there are broadly two popular options, a break in the sun, or a skiing holiday, with a number of former Winter Olympic venues retaining their popularity.

As for a warm winter break, Dubai is the newest of the destinations, and has retained it’s popularity despite the recent economic crisis to effect the country.

Top 5 Holiday Rental Hot Christmas Destinations

• Dubai: is a city and emirate in the United Arab Emirates (UAE), located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi. Winters are warm with an average high of 23 °C and overnight lows of 14 °C. Precipitation, however, has been increasing in the last few decades with accumulated rain reaching 150 mm (5.91 in) per year.
• Tenerife: is the largest and most populous island of the seven Canary Islands, it is also the most populated island ofSpain, with a land area of 2,034.38 km² and 906,854 inhabitants, 43% of the total population of the Canary Islands.
• Madeira: a Portuguese archipelago just under 400 km north of Tenerife, Canary Islands, in the north Atlantic Ocean and an outermost region of the European Union, comprising the major part of one of the two Autonomous regions of Portugal (the other being the Azores located to the northwest), that includes the islands of Madeira, Porto Santo, and the Desertas
• Egypt: Officially the Arab Republic of Egypt is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world. Egypt is one of the most populous countries in Africa and the Middle East. The great majority of its estimated 80 million people live near the banks of the Nile River, in an area of about 40,000 square kilometers, where the only arable land is found. The large areas of the Sahara Desert are sparsely inhabited. About half of Egypt’s residents live in urban areas, with most spread across the densely populated centres of greater Cairo, Alexandria and other major cities in the Nile Delta.
• Caribbean: a region consisting of the Caribbean Sea, its islands, and the surrounding coasts. The region is located southeast of the Gulf of Mexico and North America, east of Central America, and to the north of South America.

Top 5 Holiday Rental Activity Christmas Destinations

• Whistler Blackcomb: consistently voted as one of the Worlds best Ski Reports by the Japanese, Whistler Blackcomb is in British Columbia and offers every facility required by snowboarders and skiers.
• Zermatt: not as well known as its neighbour Gstaad, or arguably as popular as St. Moritz but the Swiss resort offers a peaceful getaway in a car free village, and boasts the world’s second biggest lift-served vertical drop.
• Chamonix-Mont Blanc: host to the first Winter Olympics in 1924 this French resort consistent ranks in every list for the “Worlds Most Famous Ski Resort”, boasting the highest peak in the Alps and the second highest in Europe.
• Cortina: host to the 1956 Olympic Games this Italian ski resort is as good as any in the Alps, with many believing Cortina to be one of the most stylish places in Italy.
• Vail: the Colorado ski resort is the self proclaimed favourite for most American’s and deserves its position in any Top 5 list. With 5,300 acres of skiable terrain it is the largest single ski area in America, also offering the fastest high-speed detachable quads, as well as ballooning, dog sledding, ice skating, hockey, and snowmobiling
  
  • France
  • Denmark
  • Italy
  • Switzerland
  • Spain
     

Rental Property Profiles
As many as 40% of Britons who buy a second property in Spain rent out the property, and although France has overtaken Spain as the main destination for British second property purchases to retire to, Spain continues to be the more popular holiday destination, with the majority buying modern properties that don’t require renovations.
 

Top 5 Holiday Rental Location Requirements

Location, location, location remains the number one priority for self catering holidays in holiday rentals with closeness to the Airport being the most frequently stated requirement. The two main factors contributing to this: the cost of car hire and traveling with young children.

The focus on family holidays is evident overall in the Top 5 Holiday Rental Location Requirements list with the overall impression being that the families are spending more time in and around the rental property and less time visiting attractions and restaurants.

• Airport: ideally within 30 minutes with affordable taxis or local airport transport services.
• Supermarket: preferably within walking distance of the holiday rental property, well stocked with a mix of local and English produce.
• Beach: safe, clean and with events organised for the children are the main requirements.
• Activities for Children: not so much theme parks or attractions, more general ‘stuff’ for them to do for example play areas.
• Restaurants: family friendly, providing good quality food, again within walking distance from the holiday rental.

A well stocked local supermarket in second place, and restaurants in fifth place is a clear indication of the financial pressures facing many families throughout 2011, and just one of the reasons that there has been such an increase in demand for self catering villas.
 

Top 5 Holiday Rental Must Have’s

For many holiday makers over the years a holiday rental has been little more than a place to sleep and change in-between spending days on the beach and nights in the bars and restaurants, and as such owners of holiday homes could get away with providing sparsely furnished holiday rentals which were basic in the amenities that they offered.

This is no longer the case, and any second property owner looking to cover some of their holiday home costs is going to have to ensure that there rental homes offer much better and more modern facilities than in years gone by.

The overall message from the self catering market is that they expect the same levels of comfort and facilities as they have at home, again demonstrating that the holiday rental will be home for their holiday not a base for their holiday.

• Internet: with families traveling with Smartphones, Tablet PC’s and Notebooks access to social networks, email, and for many work is a ‘must have’
• Satellite/Cable: top of the wish list naturally are the ‘soaps’ and sport, with many happy for movies to be catered for by a DVD player and a good selection of DVD’s
• Pool: more for sunbathing and splashing around in than swimming, especially important if a local beach isn’t available.
• Quality Bedding: clean, crisp sheets, adequate blankets and a choice of pillows are important as is catering for any allergies to certain types of bedding
• Comfort: with families tending to spend more time in the holiday rental property comfort is more important than ever before: the ability to sit and watch TV together, enjoy a meal round a table in comfort, have enough space to feel that they aren’t living in each others pockets'.

Top 5 Holiday Rental Domestic Appliances

There is little that can be said about the actual appliances, with the real ‘message’ being in the entire list as it is a clear indication that people are planning on spending more time in their rental property, are bringing less luggage with them so will need to wash the clothes they bring with them, and are expecting to eat in more rather than eat out.

• Air Conditioning
• Washing Machine
• BBQ
• Dishwasher
• Heating

There is a downside to this for the local restaurants and service providers such as launderettes, but the messages clear: if you want to offer your property for rental holidays then you need to make sure that it offers the right level of facilities.

Top 5 Holiday Rental Luxury Items

This is possibly the sector of the holiday rentals property market that has seen the most change in recent years. The desire for ‘home from home’ amenities and appliances, the ‘five star’ approach as guests with high expectations of luxury demand amenities, comforts and service to the same level as the five star hotels.

These clients take it for read that the basic needs will be covered: travel adapters, soaps, toilet paper, beach towels and the like. What they are expecting are: CD and DVD Players, alarm clocks, coffee making facilities in bedroom, fans and heaters in all rooms.

• Kitchen Appliances
• Flat Screen TV and Games Consoles
• Office Facilities
• Luxury Linen and Towels (tip: include a variety of pillows as people have very specific preferences)
• Security

The Office Facilities requirement is an interesting one. Are you offering fast, reliable internet. Do you have WiFi so they can work in various parts of the rental property. Are you providing a phone that allows free local calls and reduced rate international calls: phone cards, printer ink, fax machine and scanners ….. the list is endless.

Are the kitchen appliances ‘chef standard’? A food processor, steamer, juicer, good quality sharp knives, expresso machine. Again think of what you would have in your dream kitchen, and provide it to your clients.

Top 5 Holiday Rental Holiday Gadgets

• Smartphone: the ‘never leave home without’ device is the number one gadget for pretty much all age ranges. Of course the phone functionality is the least used these days: social networking, emails, games, music and videos are the main uses.
• Tablet PC: long gone it seems are the days of carrying a Laptop of even a Notebook computer with you on your holidays. The future is the Tablet PC for movies, keeping in touch with work, and the day to day online existence that is the modern world we live in.
• Sat Nav: more and more these days it will be a application on the Smartphone, but the light, portable and inexpensive devices still find their way into the current Top 5
• eReader: long gone are the days of a ‘good book for the beach’ as the Kindle and iPad both find their way into more and more people’s luggage.
• 3G Dongle: for use at airports and rental properties the 3G Dongle is why every modern day scout should carry in order to Be Prepared!

The list is yet another example of the changing nature of how people approach their holidays: not so much an opportunity to switch off and get away from it all, but an opportunity to enjoy a holiday without getting stressed about what is happening at home.

Effect On The Property Market

An unexpected, but much welcomed, effect of this increase in the holiday property rental market, has been an increase in the demand for properties in what had been struggling holiday rental markets such as Portugal, Ireland, Greece and Dubai, with Dubai experiencing a receiver in their holiday rentals market, and Portugal, Ireland and Greece all seeing an unexpected growth in both supply and demand of properties.

Germany has benefitted too from the changes, becoming a top destination for self catering chalets as they are a new favourite for ski properties, and despite the political unrest in Egypt and Turkey they too have benefitted from growing markets. Germany is undoubtably benefiting from the country’s economic stability as more residential investors and buyers focus on the stable rental potential, and although it isn’t yet in the Top 5 Holiday Rental Christmas Activity Destinations, more and more tourists are renting self catering lodges for skiing in places like Garmisch-Partenkirchen in Bavaria, which ranked sixth recently in a ‘most popular ski destinations’ list.

Another country seeing an increase in the rental property market is the UK who are seeing the ‘Olympic Effect’ kick in as bookings for the 2012 London Olympics are starting. The trend was established at the 2010 Word Cup in South Africa, as more people elected for holiday rental properties over hotels, and the same has been seen in London, with rental incomes increasing by as much as 150%, yet still remaining cheaper overall than a hotel room when meals and services like laundry are taken into account.

Top 5 Holiday Rental Properties

The most popular rental properties for 2011 include:

• Self Catering Villas
• Self Catering Chalets
• Self Catering Apartments
• Self Catering Cottages
• Self Catering Lodges

All of which can be found on the Campaya site of course.

Looking ahead to 2012 a number of newer destinations dominate the Top 5. No doubt cost plays a significant part in these decisions, but it is fair to assume that people are being far more discerning and selective as to where they spend their money. The indication is that long gone are the days of two or more holidays a year to the ‘old favourites’ and people are putting more emphasis on where they go, what they see, and how much the pay. for their well earned holidays.

Top 5 Holiday Rental Enquiries 2012

• Montenegro: cheaper than Croatia the stunning beaches and beautiful coastlines make this an ideal location for self catering holidays for beach lovers.
• Istanbul: combine the climate of Turkey with the exotic location for the classic spy thriller “Tinker, Tailor, Soldier, Spy” this is an excellent location for those that fancy a luxury holiday vill to return from a days exploring. Don’t forget to look out for the classic Istiklal Caddesi tram.
• Maribor: Slovenia’s 2012 European Capital of Culture is an excellent location for short city break, with plenty to do including: the Old Vine Festival, Golden Fox and the Festival Lent in the oldest part of the city. Perfect all year round for a romantic break, or a get away from it luxury weekend.
• Murcia: one of Spain’s growing tourist destinations with a new international airport opening in 2012 and the Paramount Theme Park planned for a couple of years time. Perfect location for a beach holiday rental holiday, with a number of locates well worth a visit on a day trip including: the Cabo de Palos Lighthouse and the baroque Santa Maria Cathedral.
• Cambodia: the Far East remains popular and Cambodia is tipped to be the the next big beach destination in 2012 with a huge range of luxury holiday rental properties available.

The Future

The trend is pretty evident: people are still happy to ‘treat themselves’ to a holiday, but they have higher demands than in previous years. For second property owners looking to generate rental income this is both a challenge and an opportunity.

Long gone it seems are the days of furnishing your property with the ‘cheap and cheerful’ furniture package offerings that we have seen in recent years. Customers want individuality, thought, creativity and quality. They want to feel that they are living in a ‘home’, where they have the same, or ideally better facilities than at home, that the day to day tasks such as preparing food, keeping the apartment clean aren’t harder than at home, and that when they want to chill out whether it be by the pool or in front of the TV they can do so in comfort.

Undeniably this means spending more on furnishing your rental property than before, and in many cases it won’t mean that you get a higher rental as the supply still exceeds the demand, but it will improve your chances and the key to remember is that the market operates like most successful markets i.e. on word of mouth: satisfied clients tell their friends and families, holiday photos and videos get passed around and posted online showcasing your property.

Make it desirable, make it affordable and market it properly and you have a good chance of making some money out of your holiday home investment.