The Airbnb wave sweeps through Beirut

The online rental platform is driving up housing prices in Beirut, with several hundred apartments listed.

The Airbnb wave sweeps through Beirut

The Gemmayzeh neighborhood in Beirut. (Credit: João Sousa/L'Orient-Le Jour/File photo)

Around 1,000 furnished apartments in Beirut are currently listed on Airbnb, the international internet rental platform, with multiple consequences: rising rents, a shortage of apartments available for long-term rent, rising sales prices and gentrification of popular tourist neighborhoods.

“Between Gemmayzeh and Badawi alone, there are more than 350 furnished apartments for rent,” said Layal Chahine, real estate consultant and co-owner of Masharii Properties, a real estate management company.

Rents vary from $40 to $200 per day. But the average is around $95. “Listing your apartment on Airbnb is advantageous when the owner doesn’t use it or live in Lebanon. He can rent it whenever he wants and for as long as he likes. As soon as he comes back for vacation, he can use it,” she said.

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The apartments listed on Airbnb are furnished ones only. “70 percent of furnished apartments in Beirut are on Airbnb,” said Christian Baz, owner of Baz Real Estate, which manages some buildings in Beirut.

Destroyed by the Beirut port explosion in August 2020, the neighborhoods along the harbor have nevertheless been increasingly appealing to tourists visiting the capital since 2022. These destinations are the most sought-after on Airbnb, which was founded in 2008. Among those neighborhoods, Gemmayzeh and Mar Mikhael are not new attractions. For more than 20 years, these neighborhoods have offered a seductive urban setting with old heritage properties, alleyway staircases, boutique hotels and restaurants.

A lifeline

Zeina* owns two apartments in Achrafieh, one at 90 square meters and the other at 120 square meters. She leased them long-term until 2019.

“Following banking restrictions, it has become a problem to be paid in fresh dollars. Once the apartments were renovated after August 2020, I decided to stop long-term rentals and put them on Airbnb in 2021. Now I have a better income and get paid in fresh dollars abroad,” she said.

“For example, my 90-square-meter studio apartment earns me around $2,250 a month with Airbnb. If I’d rented it out all year round, I wouldn’t have earned more than $1,250,” said Zeina.

Generator fees and building charges are paid by the owner if their apartment is leased on Airbnb, and by the tenant if the property is rented on a long-term basis.

“These rentals evade all taxation. No municipal tax or declaration to the Finance Ministry is required. The income is net,” Zeina said.

“The Airbnb phenomenon gained momentum with the economic crisis of 2019. It’s been a lifeline and a helping hand for some families,” said Baz.

According to Zeina, her occupancy rate needs to be between 60 and 65 percent for her rentals via Airbnb to be more advantageous than long-term rentals. Anything above that is a bonus.

“It is simple to manage these two apartments. I welcome visitors. It helps to get good reviews. I look at the competition’s rents to adapt my prices. Some of the tenants are backpackers on tight budgets. Depending on the availability of my apartments, I change my rent by a few dollars to attract a tenant,” said Zeina, who has seen an increase in the number of apartments on Airbnb since the start of 2023.

Obstructing access to housing

The income generated by the international platform is changing landlords’ strategies, although some are still reluctant to join this niche. By earning twice as much as a traditional rental, many of them no longer favor long-term rentals. This is helping to reduce the number of apartments available for rent to tenants looking for accommodation for one to three years.

In addition, companies or individuals are renting apartments for long periods in order to then sublet them on Airbnb, usually with the prior agreement of the owner. Some manage more than a dozen listings. Renting via this platform is no longer a supplementary income, but is becoming a business in itself.

“These companies pay several years in advance. If the rent is $12,000 a year, once on the rental platform, they can expect an income of $24,000 a year. Ultimately, these homes will never be accessible to conventional tenants,” said a real estate agent.

As a result, a large number of properties are being taken out of the traditional rental stock and made available to tourists. Short-term rentals put tourists with high purchasing power and local residents in competition for access to housing.

Added value for the apartment

Gradually, the profitability of leasing via Airbnb is disrupting rental and selling prices. “Some owners want the same rent whether it’s for a long or short period. The current trend is upward. Like this one-bedroom apartment that was $600 a month in 2022, and is now $900,” said Chahine.

The same applies to sales. The latest transactions show real inflation in the price per square meter, especially for small areas of around 100 square meters.

The Airbnb effect has less to do with luxury apartments and large surface areas. For example, two 90-square-meter studios recently sold in Mar Mikhael for $3,000 per square meter. A furnished apartment makes a better impression as soon as it’s clean, well-maintained and perfectly equipped. Buyers can easily imagine themselves in the apartment when they visit it.

Zeina is looking to sell one of her apartments. The profitability of her apartment encourages her to ask for higher than the market price.

“My first selling point when addressing a potential buyer is to announce my annual income via Airbnb. Currently and according to my occupancy rate, rents represent six percent of the apartment’s value. This makes my apartment ideal for an investor looking for an investment,” said Zeina.

This argument allows her to ask for $2,000 per square meter, or 75 to 80 percent of its value in 2019. It is a lesser evil compared to the 40-50 percent drop in apartment prices in Beirut between 2019 and 2022.

“Airbnb rentals add value to apartments. The impact can be 30 to 40 percent,” noted Chahine, citing the example of an apartment in Mar Mikhael whose asking price rose from $140,000 to $180,000 in a space of three months. “Yet it has no parking, but brings in $1,200 a month with Airbnb,” she added.

Also in Mar Mikhael,one new building includes some 30 furnished apartments ranging from 65 to 100 square meters. Almost all of them are rented out on Airbnb. Two of them are for sale for $3,050 per square meter.

Most of the added value comes from perfectly renovated apartments in older buildings. If they have good ceiling heights, traditional tiling and impeccable decoration, their value is boosted by their presence on Airbnb.

“As soon as the market bustles, owners look to take advantage of it. This time, it’s the Airbnb effect that’s pushing them to raise their prices. But when there is a serious customer, they become flexible,” said Baz.

Fewer Lebanese in Gemmayzeh and Mar Mikhael

As in many cities worldwide, Airbnb is gradually driving locals out of some trendy Beirut neighborhoods, such as Gemmayzeh and Mar Mikhael. The increase in construction since 2000 had forced lower-income families to leave. Today, short-term rentals between individuals are highlighting social mutations.

Progressively, Gemmayzeh and Mar Mikhael are less and less inhabited by Lebanese. Many landlords own several apartments in the area, which they rent out to tourists to earn a steady income.

While the growing number of apartments on Airbnb is having a negative effect on prices, it has also encouraged owners to renovate their buildings instead of seeking to demolish them to sell the empty plot.

“This situation has enabled the preservation of many unique buildings,” said Chahine, who has just taken over the management of two buildings in the Qobeiyat and Mar Mikhael neighborhoods, where some 30 apartments will be furnished and given a makeover to be leased for short stays.

*First name has been changed at this person’s request.

Guillaume Boudisseau is the Director of Research and Consultancy at RAMCO, a real estate advisory firm in Lebanon.

This article was originally published in French in L’Orient-Le Jour. Translation by Joelle El Khoury.

Around 1,000 furnished apartments in Beirut are currently listed on Airbnb, the international internet rental platform, with multiple consequences: rising rents, a shortage of apartments available for long-term rent, rising sales prices and gentrification of popular tourist neighborhoods.“Between Gemmayzeh and Badawi alone, there are more than 350 furnished apartments for rent,” said Layal...