Airbnb vs Rent: Which is more cost effective for digital nomads?

The post-pandemic world has led to an increase in hybrid and remote working, meaning many workers are now able to do their jobs from anywhere in the world.

Holiday rental service Airbnb has seen an uplift in longer-term bookings as these ‘digital nomads’ look to set up temporary residence abroad. But is Airbnb really the most cost-effective choice for remote workers in need of accommodation?

CIA Landlords Insurance decided to investigate by comparing the average monthly cost of renting a 1-bedroom flat with the average monthly cost of an Airbnb in cities around the world. We’ve revealed where landlords can make the most money from Airbnb and where remote workers can make the most savings by opting for a short-term rental.

Landlords can make the most money from long-term Airbnb lets in London, Amsterdam and Canberra

For landlords looking to take advantage of the rise in longer-term Airbnb stays, the most profitable locations are London, Amsterdam and Canberra.

In London, the average landlord could make up to £12,652 in just one month by letting out their property on Airbnb, or up to £75,912 by letting it out for an even longer-term stay of six months. This makes London the most profitable city to be an Airbnb owner – though this may only be the case for landlords who already own a property here, as the cost of purchasing property in London is also very high.

In Amsterdam, Airbnb could earn landlords between £8,367 for one month and £50,202 for six, depending on the length of stay. Potential profits are slightly lower in Canberra, but still impressive with average monthly earnings of £7,939, rising to £47,634 over six months.

Top 10 most profitable locations for Airbnb landlords 

Digital nomads in London could save nearly £11,000 by choosing a short-term let instead of an Airbnb 

Remote workers wanting to set up camp in the UK capital for a while may want to avoid Airbnb, as this was revealed as the city with the biggest price difference between an Airbnb and a short-term rental.

The average monthly cost of renting a 1-bedroom flat in the centre of London is £1,848. This may be quite pricey, but it’s actually £10,804 cheaper than the cost of an Airbnb, which sets guests back an average of £12,652 for one month. This racks up to £37,956 for three months and a very steep £75,912 for six months. Contrastingly, a six-month rental in London (£11,088) is actually over £1,000 cheaper on average than the cost of a single month in an Airbnb.

Amsterdam and Canberra follow London as the second and third cities where travellers can save the most money by renting short-term instead of staying in an Airbnb. In Amsterdam, the average monthly rental cost is £1,486, which adds up to £8,915 for a six-month period. This is only slightly more money than the cost of one month’s stay in an Airbnb (£8,367 on average). The situation is similar in Canberra, where the average monthly Airbnb cost (£7,939) is £6,769 more than the average monthly rent (£1,170).

Jerusalem, Israel and Wellington, New Zealand round out the top five, with digital nomads able to save over £6,500 on average by choosing to stay in a short-term rental instead of an Airbnb.

Top 15 cities with the biggest price difference between 1 month’s rent and 1 month in an Airbnb

Ankara, Turkey is the cheapest city for short-term renting 

Remote workers looking to cut costs as much as possible could consider a short-term stay in Ankara, Turkey, where one month’s rent costs just £217 on average. This works out as £651 for three months and £1,303 for six, which is cheaper than just one month’s rent in London.

A short-term stay in South America is also a very cost-effective option, with Bogota, Colombia and Santiago, Chile ranking as the second and third cheapest cities for rent. The average monthly rent is £303 in Bogota (£1,818 for six months), and £375 in Santiago (£2,248 for six months).

Top 10 cheapest cities for short-term renting (1-6 months)

Airbnb or renting: which is best for landlords?

With business booming on Airbnb, many landlords may be wondering whether they would benefit more from letting their property out there rather than renting it out through traditional methods. However, while Airbnb is a potentially lucrative business, renting out your property privately or through an estate agent remains a better long-term investment.

Benefits of short-term rentals over Airbnb

• Less time-consuming. Letting your property via Airbnb usually requires you to deal with guests directly, whereas renting it out through an estate agent means they will be able to deal with tenants and things like rent collection on your behalf. This saves a lot of time and effort – though it will also cost you more money due to estate agent fees.

• More stable income. Though longer-term stays are becoming more common on Airbnb, the norm is still shorter stays of a few weeks or less, with potentially long periods between stays. Short-term rentals (e.g. 1-6 months), on the other hand, usually attract longer-term stays of at least a few months.

• More control. Traditional renting gives landlords more control over who they choose to let the property to, allowing you to screen tenants and ask for things like workplace references and financial statements.

• Less wear and tear. Since Airbnb usually involves a higher turnover (i.e. more tenants over a shorter period of time), this will likely lead to more wear and tear and increased chances of property damage. Traditional renting means you’ll likely spend less on redecorating and repairs – though it’s still a good idea to invest in landlord insurance to safeguard your investment.

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Methodology

In this research, we wanted to reveal which locations around the world are more cost-effective for renters. The OECD capitals are taken for this piece of research in order to find the price for both long-term rental and Airbnb we look at “Avg. monthly rent for 1 bedroom in the city centre (£)” using numbeo and “Avg. monthly Airbnb rent for 1 bedroom (£)” using Airbnb.com for October 2022.

City names are searched on Airbnb with filters applied including “Date: 1-31 Oct, Rooms and beds: 1 bed, 1 room, Type of place: entire place, Number of guests: 2 guests” with the data being collected on 21/09/2022. The price for “1 bedroom apartment in the city centre” is scraped from numbeo to find the required metrics.

The data was then indexed using the weighted index formula from highest to lowest, the higher the price the lower the index. These figures were then multiplied by three or six in order to give a quarterly and bi-annual view. To find the difference between Airbnb rent and long-term rent the monthly Airbnb price was subtracted from the monthly Long-term rent price. The final index is an average of the weighted index of the two main metrics “Avg. monthly rent for 1 bedroom in the city centre (£)” and “Avg. monthly Airbnb rent for 1 bedroom (£)”.