It’s time to get back into the short-term property market
2
May

It’s time to get back into the short-term property market

The COVID epidemic has had a massive impact on most industries, providing obstacles for many and opportunities for a few: and this has been no different for the short-term executive property market.

Many investors left the short-term property market as the COVID epidemic closed borders and shut down tourism and business travel – but now national and international borders are opening, and business and tourism travellers are starting to move again.

Accommodate Canberra, Managing Director, Peter Maloney says they currently have 95 per cent occupancy of the 70 plus short-term properties they manage, and that demand is set to increase as COVID restrictions are removed and the Government focuses its attention on growing the economy. 

“Low vacancies and increased demand have created an excellent opportunity for investors to return to the short-term property market,” Peter explained.

Accommodate Canberra is the National Capital’s premier provider of luxury, fully furnished and serviced, executive, short-term accommodation.

Peter says that the combination of easing COVID restrictions, the desire from Government to invest in significant public infrastructure projects, and support for business to grow the economy, has created a unique opportunity to invest in the short-term property market.

Businesses, such as Accommodate Canberra are reporting a surge in demand for luxury short-term accommodation due to easing COVID restrictions. In addition to this there are signs that the Australian Government is shifting to ‘phase two’ in its response to the COVID epidemic, that will further boost business and leisure travel and demand for luxury short-term accommodation. 

So, how will the Government’s shift from ‘phase one’ to ‘phase two’ of its response to the COVID epidemic create more demand for, and an opportunity to invest in, the executive short-term accommodation market?

The Reserve Bank of Australia (RBA) views the global government response to the COVID epidemic as having two phases. The ‘acute phase’ and then the ‘recovery phase’.

The first phase, or ‘acute phase’, triggered in most countries the ‘largest economic contraction since at least the Second World War’ and that most governments responded to this with the ‘largest fiscal policy response in decades’.

The RBA says that this initial massive increase in global government spending was focused on:

  • supporting private incomes

  • preserving employment relationships, and 

  • shoring up health systems.

  The RBA says that this was mainly achieved through: 
  • direct transfers to households

  • enhanced unemployment benefits

  • wage subsidies and increased, and 

  • healthcare funding.

The 2020-21 Australian Government Budget papers show that its economic response to COVID-19 was an additional $82.5 billion, accounting for 12.3 per cent of the total budget and was substantially comprised of JobKeeper and JobMaker. 
 

The forward estimates forecast in the 2021-2022 budget the Australian Government’s Economic response to the COVID would drop from $82.5 billion to $2.9 billion as it pivots from ‘phase one’ to ‘phase two’ of its COVID response.

The RBA says that in ‘phase two’, or the ‘recovery phase’, governments will shift from income support and healthcare funding towards boosting investment in areas such as public infrastructure, ‘green’ and digital industries and private investment and consumption, and that this phase will last a lot longer than the ‘acute phase’.

“The removal of JobKeeper and JobMaker, the opening of national and international borders and the focus on significant public infrastructure spending and economic growth, indicate that the Australian Government has moved into what the RBA has termed the ‘second phase’ or ‘recovery phase’, in response to COVID,” Peter observed.

Some of the initial promises made by the Government including:

  • $2.26 billion to complete the final stage of Adelaide’s North-South Corridor

  • $1.6 billion program, Australia’s Economic Accelerator (AEA), as part of a $2.2 billion package to focus the commercialisation of six national manufacturing priority areas

  • $804.4 million over ten years for Australia’s strategic and scientific capabilities in the Antarctic region

  • $86 million grant program over five years to support the establishment of new timber plantations

Prime Minister, Scott Morrison, also outlined a way forward out of COVID at his Press Club address on the 1st of February this year. This plan emphasised a $110 billion pipeline of government infrastructure projects and a five-point national economic plan that he said would secure ‘our economic recovery from COVID and set Australia up for the future’. The five core elements were:
 
  1. Low taxes and cutting red tape to drive investment

  2. Investing in infrastructure and skills development

  3. Delivering affordable and reliable energy while achieving net zero emissions by 2050

  4. Making Australia a top ten data and digital economy by 2030

  5. Securing Australia’s sovereign manufacturing capability

 

Border and travel restrictions are being lifted. The RBA is forecasting massive global public spending on infrastructure and industry support, and ‘economic recovery from COVID’ is front and centre of Government policy.

Peter says that in addition to high occupancy rates and current and emerging economic circumstances, there are many other benefits to investing in executive short-term rental properties with Accommodate Canberra, including: 

  • Higher nightly rental rates for executive short-term apartments 

  • Occupants that are corporate and private sector professionals leads to less maintenance 

  • Ability to use yourself

  • Flexible stay duration to match market demand

  • Accommodate Canberra as your dedicated property management

  • There are standard tax deductions associated with every investment property, but short-term rental properties benefit from a higher asset depreciation rate on certain items

“Given our current 90 per cent occupancy rates, reduced COVID restriction on borders and travel and Government’s focus on economic growth, Accommodate Canberra is looking add to its existing properties and would like to speak to investors wanting to get into, or return to, the short-term property market, “Peter said.
 

(Disclaimer: Always ask for professional advice)

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