Kenya’s real estate market has been buzzing in recent years, driven by urbanization, tourism, and a growing middle class. Investors, both local and foreign, are drawn to opportunities in Nairobi, Mombasa, Kisumu, Nakuru, and coastal towns like Diani and Malindi. The big question that often arises is whether short-term rentals through platforms like Airbnb or traditional long-term rental arrangements generate better returns.

The debate isn’t new. Many investors are lured by the glamor of Airbnb, especially because of its potential to earn quick, high returns from travelers. On the other hand, seasoned landlords argue that long-term rentals provide consistency, stability, and less hassle. Both models have advantages and risks. The choice often depends on an investor’s goals, risk tolerance, and financial strategy.

In this article, we’ll break down how both investment strategies work in Kenya, compare their profitability, and analyze real-world examples to help you decide: Should you list your property on Airbnb or lock in a long-term tenant?

Understanding Airbnb in Kenya

Airbnb has revolutionized the hospitality industry globally, and Kenya is no exception. Simply put, Airbnb is an online platform that allows property owners to rent out homes, apartments, or even single rooms to guests for short stays. Instead of booking a hotel, travelers—especially millennials and digital nomads—prefer the comfort, affordability, and authenticity that Airbnb offers.

In Kenya, Airbnb has grown rapidly in major cities like Nairobi and coastal regions like Mombasa and Diani. Tourists, business travelers, and expatriates form the bulk of Airbnb clients. For instance, in Nairobi’s Kilimani or Westlands neighborhoods, a one-bedroom furnished apartment can earn between $30 to $70 per night. During peak tourism seasons or big events like the Safari Rally or international conferences, rates can shoot up, making Airbnb a lucrative option.

What makes Airbnb attractive to investors is flexibility. You can rent out a spare bedroom, an apartment, or even a villa by the beach. Unlike hotels, Airbnb allows hosts to personalize experiences, which creates a loyal customer base and higher ratings. However, it’s not just about listing your property and waiting for guests. Success on Airbnb requires high-quality furnishings, professional photos, strong marketing, and consistent guest management.

Understanding Long-Term Rentals in Kenya

Long-term rentals are the traditional approach to real estate investing. Here, a property is leased to tenants for extended periods, typically 6 months to several years. The tenant pays a fixed monthly rent, and in many cases, a deposit upfront.

In Kenya, long-term rentals are popular among working professionals, expatriates on contracts, students, and families. Areas like Kileleshwa, Lavington, and Runda in Nairobi attract high-income tenants, while middle-income families often rent in areas like South B, Donholm, or Rongai. Coastal towns also see long-term demand, especially from retirees and expatriates looking for a serene lifestyle.

The main advantage of long-term rentals is predictability. A landlord can count on consistent monthly rent, which makes financial planning easier. Unlike Airbnb, where occupancy fluctuates, long-term rentals provide stability even during low travel seasons. However, the downside is that returns are usually lower compared to Airbnb during high-demand periods. Additionally, problem tenants—such as those who delay rent payments or cause property damage—can be a headache, especially if the landlord lacks a proper lease agreement.

Comparing Airbnb and Long-Term Rentals

Airbnb and long-term rentals serve different markets, and each has unique characteristics. Let’s break it down:

  • Airbnb caters to tourists, expatriates, and business travelers. Bookings are usually short-term (a few days to weeks).

  • Long-term rentals cater to residents, professionals, and families who need stable housing. Tenure ranges from months to years.

When comparing the two, the main differences revolve around income potential, occupancy rates, management requirements, and legal obligations. Airbnb can generate significantly more income in a good month than a long-term rental of the same property. For example, a one-bedroom in Kilimani might fetch KSh 80,000 ($600) a month as a long-term rental, but the same property could make KSh 200,000 ($1,500+) on Airbnb if booked consistently.

That said, Airbnb requires more effort. You must manage bookings, clean frequently, handle guest complaints, and keep utilities running smoothly. Long-term rentals, while less glamorous, require far less day-to-day management. You collect rent, handle occasional repairs, and let tenants settle in.

In short, Airbnb is like running a mini-hotel, while long-term rentals are more of a steady income stream. The choice depends on whether you value high but inconsistent returns or steady, predictable income.

Profitability of Airbnb in Kenya

The profitability of Airbnb in Kenya depends on location, property type, and management. Nairobi, Mombasa, and Diani are the top-performing Airbnb markets. In Nairobi, business travelers book Airbnbs for proximity to offices, while in Mombasa and Diani, tourists seek beachside villas and apartments.

  • Earnings Potential: A one-bedroom apartment in Westlands listed at $50 per night can make $1,500 in a month if booked out fully. Even at 70% occupancy, that’s about $1,000, which is higher than what a long-term tenant would pay.

  • High Season vs Low Season: Kenya’s tourism peaks during July–September (Great Migration) and December–January (holiday season). During these months, Airbnb hosts can double or triple their nightly rates. However, in off-peak months, bookings may drop sharply.

  • Additional Income Streams: Many successful Airbnb hosts in Kenya upsell services like airport transfers, car rentals, and guided tours. These add-ons significantly boost income compared to traditional rentals.

However, profitability comes with effort. Guests expect hotel-level cleanliness, fast Wi-Fi, and reliable customer service. Negative reviews can hurt your listing, while positive reviews can skyrocket bookings. To stay competitive, hosts must reinvest profits into maintaining and upgrading their properties.