What’s more, they’re seeking to combine work with leisure. Provided they have their laptop and an internet connection they can work from anywhere. They can travel around experiencing new places and many, keen to put their work-life balance back into some form of equilibrium, are taking their families with them.
This change in the way we work and play throws up a huge opportunity for the short-term rental and Build to Rent sectors.
Flexible living and working in short-term rentals and purpose-built rental properties is a growing market that shows no sign of abating. But I would urge developers, investors and property managers to urgently review how they manage flex property to capitalise on the opportunities that abound. The demand for short-term rentals is enormous, with stays of two weeks or longer becoming more common, and we expect this to increase exponentially.
This opens up a huge opportunity in the Build to Rent sector, which has already seen a massive upturn in popularity among occupiers who do not want to be tied down to long leases in often poor quality buildings that are badly managed.
It is clear that there is a growing opportunity for investors in the BTR market, especially in the UK where Savills noted national average rental growth of more than 7% in 2021. Developers and investors are already piling in to take advantage of high yields. The challenge is that most of them would do way better if they partnered with innovators in property management.
All too often, they opt for traditional property managers who have little or no experience in the flex sector. And it is a very specialist area. When you consider that stays in short-term rentals
could be as short as two weeks, it takes a very agile property manager to flex their working practices to meet the needs of this fast-paced sector.
The real winners in the BTR sector will be those developers and investors that realise tenants in flex properties want everything to be done for them, with minimal contact with a management company. They want their queries answered instantly and the use of intelligent technology is the only way to do this.
Operational excellence is integral to successful property management and high-return investments. Successful property management, using smart technology, means happy investors, developers and property managers who will be well-placed to achieve a quick sale of their asset and move on to the next. Nowhere is this more the case than in the fast-paced and rapidly growing short-term and flexible rental markets. Technology is changing the nature of property management - driving innovative efficiencies to deliver a first-rate experience for occupiers at a lower operational cost for managers.
Provided BTR and short-term rentals operators embrace the technology that will attract tenants and help differentiate their inventory, the appeal of apartment investing and the commercial opportunity for rental and capital growth and a higher ROI is clear. Long-term leasing agreements can be replaced with more flexible leasing options meaning that investors can benefit financially whilst flexible renters could also sublet their contracted apartments (perhaps whilst working remotely), earning additional income as a result.
One of the main benefits of this type of property investment is a more diverse recurring rental stream from each unit with less exposure because of the breadth and diversity of your portfolio.
Another, often overlooked, advantage of diversifying a property investment portfolio to include BTR properties is that it should appreciate over time. Millennials and the older end of Gen Z are already moving away from the traditional idea that they must get a foot on the property ladder, preferring instead the flexibility of renting.
The knock-on effect of this is positive for the property industry, the developers, investors and managers, as well as the tenants because it helps level up the current mismatch between supply and demand.
