New Lifestyles, Flexibility, and Digitalization: The Unexpected Effects of the Pandemic on the Furnished Rental Market

Shaken up by the health crisis, the furnished rental market has been able to reinvent itself and adapt. A halt on furnished tourist rentals, an explosion of traditional furnished rental offers, an increase in French clients, new needs from owners who are increasingly attracted to traditional furnished rentals: at the start of the year, Lodgis, the leader in furnished rentals in Ile-de-France, takes stock of 2020 and prepares for 2021.

Future trends:

Furnished rentals as a response to new housing needs

In 2020, many French tenants rediscovered traditional furnished rentals (nearly 50% of tenants received by Lodgis in 2020 were French rather than 36% in 2019). A wide range of properties at prices similar to those of unfurnished rentals also come with many advantages: traditional furnished rentals are recognized today as the simplest alternative for temporary or more permanent housing needs, (the proportion of main residence rentals exploded in 2020 with an increase of 7.6 points, or 37.4% of Lodgis’ rentals). “Despite a slight decline in transaction dynamics, the traditional furnished rental market will not fall in 2021”, explains Alexis Alban, Deputy General Director of Lodgis.

Another upheaval for this market: the development of “teleworking” and its impact on the French Lifestyle. Flex office, remote work, redesigned business travel, coliving, distance from large cities for a “green” life: there are so many changes in housing needs.
“Furnished rentals are a real long-term alternative,” explains Alexis Alban. “The properties are equipped, fully furnished, with an Internet connection, located in the heart of large cities. They respond in every way to these new societal trends and to the new housing needs. Furnished rentals could become the example of shorter term accommodation in the city. These trends could also make it possible to rethink professional mobility and the use of business premises. If these premises are to be transformed into housing, then the needs for rental management will grow.”

The key to these changes is the need to offer new à la carte options, with services tailored to the new needs. “The democratization of traditional furnished rentals suggests good prospects,” confirms Alexis Alban. “At Lodgis, we are constantly thinking about how we can evolve our service offers to best meet the needs of our customers. Thus, for several months now, we have been offering our owners à la carte management services as well as a "decoration & furnishing" offer to support unfurnished property owners from A to Z who wish to equip their home to rent it as furnished. On the tenant’s side, shouldn't we consider creating new types leases to respond to these new market trends, these new lifestyles?”

Expertise, flexibility and adaptability: the real estate agency at the heart of the new relationships between owners and tenants

An unexpected effect of the health crisis on the furnished rental market: an unprecedented imbalance between an explosion in supply and a restricted, Franco-French demand. “This imbalance has had a strong impact on the relationship between owners and tenants,” explains Alexis Alban. “As a result, some owners have chosen to lower the rent of their accommodation to make it more attractive. A profitable strategy that we have adopted at Lodgis: three quarters of the furnished properties offering a rent reduction of 5 to 10% were rented within the month. In the long term, we can anticipate certain trends: will rental prices stay lower over the long term? Will owners come out of the crisis more aware of rental vacancies and will they be more inclined to lower the rent to avoid them? Will new insurance or management offers responding to these new trends develop?”

These imbalances have placed the real estate agency at the heart of the new relationships between owners and tenants as a trusted third party. “More than ever, support for our owners and tenants is necessary,” explains Alexis Alban. “For rent reductions, for example: while some are final, most of these reductions were made over fixed periods, as the owner decides. When the time comes, our role as professionals and experts will be necessary to support owners who wish to increase their rent in accordance with the regulations.” And Lodgis wishes to go even further in this role as a trusted guide by developing its rental management activity: “If, until now, rental management represented 25% of our activity, the context of the health crisis has highlighted our business, as a property manager with many destitute landlords faced with tenants who left in a hurry or with complicated and anxiety-provoking inventories to be carried out. We have therefore rethought our rental management services to provide owners of furnished accommodations with tailor-made offers that are clear and free of hidden costs… the basis for establishing a relationship of trust and supporting our development in the large urban areas of France! We are completely convinced.” declares Alexis Alban.

The year 2020 has been marked by the urgent need to remain agile, flexible and the need to adapt. “During this year at Lodgis, we have placed the flexibility requested by our clients at the heart of our priorities, by reimbursing our agency fees if necessary and by taking the time to teach our owners,” explains Alexis Alban. “The context pushed us to renew ourselves and adapt to our processes and our business. At Lodgis, we launched new offers quickly: The Digital Boost Pack (including the realization of a virtual visit) and the punctual organization of deferred inventories were launched in 1 month. These changes steadily continue to meet our customer’s needs.”

On the subject of international mobility: the health crisis has brought an unprecedented halt to business travel and foreign students. “International clients usually represent 70% of our tenants,” explains Alexis Alban. “We have therefore renewed our approach to seek out a French clientele and adapt to their demands. This clientele seems to have found a renewed interest in furnished rentals, which responds to their new lifestyles (mobility, new housing needs) and also fills the gaps in the empty rental supply (little turnover within the park, less well-maintained housing, heavier relocation constraints, etc.). From now on, it is up to us to retain this new clientele by listening to them.”

Accelerating the digitalization of the sector: Lodgis' winning strategy

The health crisis has accelerated the digitalization of the furnished rental market. Websites and virtual tours were already incorporated, but new standards have emerged in supporting owners and tenants, such as electronic signatures. A pioneer in many digital subjects (electronic signature for 15 years, 1st agency to accept bitcoin payments, etc.), Lodgis goes further by offering, for example, an automated rental process (80% of rentals are finalized remotely) or even an online owner portal to manage their property and rentals in real time (a new, more innovative version will soon be available). The objective that we are pursuing through this digitalization of the profession is to allow agents and managers to concentrate as much as possible on their daily customer relationships. “The concept of a digital agency has been fully validated,” explains Alexis Alban. “This is the business model that Lodgis chose when it was founded more than 20 years ago. And now it is normal: the digital agency model has matured and it is up to us to go even further, always with the aim of securing and simplifying real estate by offering an expert, agile and accessible experience to people from here and elsewhere.”

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