A few years ago, the math seemed foolproof: buy or rent a 1-bedroom apartment in Kilimani, furnish it nicely, list it on Airbnb, and watch the daily rates crush standard monthly rental yields. Today, social media groups are full of frustrated hosts asking, “Where did the bookings go?”
Is the short-term rental bubble bursting? Not exactly—but it is maturing, and the easy money is gone.
The Market Correction
The oversupply of identical, hastily furnished apartments in nodes like Kilimani, Roysambu, and Westlands has driven daily rates down. At the same time, service charges, internet, cleaning, and electricity costs have skyrocketed. When you factor in a lower occupancy rate (many hosts are now averaging below 40% monthly occupancy), the net returns are often equal to-or worse than-traditional long-term renting.
Where the Smart Money is Going Now
At Upscale Real Estate, we are advising our investors to pivot their rental strategies based on the new reality:
- Niche Short-Term Rentals: The Airbnbs that are still highly profitable are not standard apartments. They are unique experiences-A-frame cabins in Nanyuki, luxury villas in Diani, or highly specialized, boutique setups in quiet Nairobi suburbs like Karen or Ridgeways.
- The Return to Long-Term Yields: Many investors are liquidating their Airbnb furniture and returning to long-term unfurnished leases. While the monthly income is lower on paper, the zero-turnover cost, guaranteed monthly cash flow, and zero daily management headaches result in a better, stress-free return on investment.
Before buying an apartment purely for short-term letting, run the numbers assuming a 35% occupancy rate. If the math doesn’t work, stick to long-term traditional rentals.
