Brookfield Property Partners is to invest up to USD200m in a joint venture with Niido, the multifamily development partner of Airbnb.
The move sees Airbnb target the hospitality sector with the help of the residential property sector, as it moves towards its IPO, anticipated this year.
USD20m of the investment has already been deployed at a 423-unit building in Florida, which will be under the Niido Powered by Airbnb brand. As previously reported by Hotel Analyst, the apartments will be built by Newgard Development Group, which will own the finished product.
Silverpeak Real Estate Partners is also see to invest in the project, committing USD20m.
Jaja Jackson, director, global multifamily housing partnerships, Airbnb, said: “This partnership shows how landlords, developers and Airbnb can work together to create value for everyone and better serve tenants. The team at Newgard is leading the way and we’re thrilled to work with them. Together, we’re making it easier for more hosts to share their space, and giving guests access to more affordable options when they travel.”
Newgard CEO Harvey Hernandez, said: “The Niido model will provide additional income to landlords and tenants while enhancing the experience for Airbnb guests. Niido eliminates barriers by encouraging home sharing and creating solutions that work for everyone.”
Tenants will have permission to rent their homes on Airbnb for up to 180 days per year, giving their landlord a portion of the earnings. The apartments have been designed with the sharing economy in mind, with keyless entry, shared common spaces and a “master host” at each property who can assist with checking guests in and cleaning.
“Brookfield is eager to partner with Niido to grow and diversify our multifamily real estate investments. Brookfield is well-positioned to apply its investment capital and experience to help Niido take home-sharing to major cities in the US,” said Jonathan Moore, managing director of Brookfield’s apartment business.
The venture plans to open at least three more units by the end of 2018, targeting communities in the Southeastern US.
Chris Lehane, Airbnb’s global head of policy and public affairs, said: “This is going to be part of the future of housing, not only in Florida, but also across the country.”
Lehane drew attention to “rent-burdened” Millennials, with 46% spending more than 30% of their income on rent. He said: “Many millennials struggle to afford the high cost of housing. Airbnb is not the solution, but I do think we’re part of a broader solution. This is going to be part of the future of housing, not only in Florida, but also across the country.
“We’re … seeing growing support from the housing industry, who see home-sharing as a powerful way to attract new tenants.”
At the end of 2017 Airbnb launched a pilot programme in San Francisco which saw tenants in five buildings owned by Veritas Investments able to rent their apartments out, with a percentage going to the landlord.
Airbnb now has 13,000 units eligible for short-term rentals as part of its Airbnb Friendly Buildings initiative, which was launched in September 2016 and sees tenants and landlords share the income from Airbnb rentals.
The company has followed other avenues to drive supply, partnering with the Association of Independent Hospitality Professionals and B&B reservation management system, ThinkReservations to encourage bed and breakfast operators onto Airbnb.
Cameron Houser, Airbnb programme manager, said: “We’ve seen how these small, independent businesses can deliver the kind of experiences Airbnb guests expect and deserve. We’re dedicated to giving guests unique, local experiences and excited to continue our work with small business owners who share our commitment to creating a world where anyone can belong anywhere. Airbnb is thrilled to have AIHP as the industry’s leading inn-keeping association as a partner and we look forward to continuing to work with them.”
While Airbnb was expanding its base, its rivals were falling by the wayside, as 2018 began with the news that RentalsCombined, which focused on the professional market. RentalsCombined said it had partnered with the “largest blue-chip travel management companies” in the world, “allowing travellers to put the booking process back in the hands of the professionals in an age of digital oversaturation”. The company had not responded to enquiries at the time of writing.
HA Perspective [by Katherine Doggrell]: As Airbnb enters the year in which it expected to open itself up to the judgement of the public markets, it is putting out fires all over its portfolio. It has been brokering deals across a number of jurisdictions which see promises over tax takes and now it is addressing the angry landlords who object to subletting.
It is also providing accommodation, after accusations by many big cities that it was taking housing stock out of the market. There are a number of questions around the practicalities of the offering – is there going to be a basement bunk room where tenants can live during those 180 days? How much are they handing over to landlords? It takes a special type of tenant to rent out their property for a large chunk of the year. It’s not clear when certain political parties rant about issues in the rental market that this was the solution they had in mind.
But the appeal for landlords is clear – rent with a dollop on top. And for Airbnb, this is yet more supply at a time when observers suspect that those who were going to rent their properties out would have done so by now. By taking this route, Airbnb has gone around the angry landlords – and the angry neighbours.
So the public purse is making money from Airbnb. Landlords are making money from Airbnb. Hotels?