Toronto is by far the largest city in Canada, and it attracts a lot of people both from within the country and from the rest of the world. More than 27 million visitors come here every year, and the number is constantly growing. There is no surprise the city also created a huge short-term rental market: at the time of writing, more than 10,000 different properties are actively rented out in Toronto.
Toronto vacation rental market overview read here.
Main Benefits Toronto Grants to Airbnb Investors
When considering investing in an Airbnb business, it is always important to compare advantages different locations grant. In these terms, Toronto is an especially interesting destination, as it grants several key benefits to entrepreneurs operating in the short-term vacation rental market.
Growth and Development
Toronto is a city that is constantly growing. More and more people visit it every year, more businesses open, and more opportunities are created for Airbnb investors. It is already the largest hub in Canada for people of all professions and interests, but it is modernized and developed all the time.
At the same time, the growth of the rental market is one of the lowest across all Canada here, as the quarterly metric only reaches 6%. It is only starting to recover from the downfall caused by the pandemic, and it might be the perfect time to enter the business here.
Discover the best cities to own Airbnb in Canada.
A Stable Environment
As it was already mentioned, there are 10,000 active properties operating in Toronto. On the one hand, it is an unprecedented level of competition which cannot be seen in any other city of Canada. But on the other hand, the amount of data that can be analyzed is also the largest here. And there are several interesting points from this data that should be kept in mind.
Even with such severe competition, the hosts in Toronto have an annual average Occupancy Rate of 77%. It implies that there is no oversupply in the market, even despite the huge number of active properties. The number of visitors coming to Toronto outweighs the number of active listings.
Lower Impact of Seasonality
Compared to other destinations in the country, Toronto has much better conditions in terms of seasonality of the business. In most Canadian cities, Airbnbs are only in demand in one specific season, while for the rest of the year, the Occupancy Rates may drop all the way down to 20%.
It would be unfair to say that entrepreneurs in Toronto do not face seasonal decreases in demand at all. However, this effect is a lot weaker than in most other places. The year’s lowest Occupancy Rates in Toronto are 50%, which happens in January.
Enough Room for More
Because of the pandemic, lots of Airbnbs in Toronto were shut down. Even though many businesses have managed to survive the tough times, the ones that did not have created an opportunity for new participants to enter the market. The city center is densely packed with properties, and it would perhaps be unwise to open a new vacation rental there.
However, when it comes to other parts of the city, there is enough room for more properties. North York, Scarborough, and several other districts are also very trending among tourists, but not as densely populated with existing enterprises.
Hosts in Toronto averagely receive $2,033 worth of monthly Revenue, which is significantly higher than what most other cities can offer. Of course, there are some developing and luxury areas that generate more profits, but none of them offer the stable environment that is available with Toronto.
However, when launching a rental business in this city, it is important to take into account the effect of seasonality on Revenues. For most Airbnbs, the lowest point throughout the year is in January, where the Revenues drop to $1,000 per month. From that point, they start growing steadily, reaching the highest point of $3,000 in September.
This is a benefit that can be applied to many cities in Canada, but it is still an important advantage compared to other locations. First of all, short-term rental businesses are legally permitted by the government, which is already a vital point for Airbnb entrepreneurs.
Secondly, the taxes here are relatively low: the hosts will only need to pay the Municipal Accommodation Tax (MAT) of four percent. It is automatically charged by Airbnb, making it even more convenient for the businessmen.
Room for a Competitive Advantage
In cities that have similar levels of competition, it is usually extremely difficult to find an advantage over other rentals. Surprisingly, it is not the case with Toronto. New entrepreneurs entering the market can easily get ahead of many active listings by selecting Moderate or Flexible cancellation policies. Almost 60% of properties in the city have the Strict policy, which is surely not favorable to tourists.
Summing up, Toronto is a great city for an investment. It has a unique market that still offers some opportunities to new entrants, which is extremely rare in such conditions. Entrepreneurs who are looking for a stable environment with a huge potential should definitely put the largest city of Canada on their lists.
Discover the best cities to own Airbnb in Canada.