Several Small Hotels for Sale
About a dozen small hotels or hotel apartments are for sale in downtown Reykjavík, Morgunblaðið reports. They were listed at different times, so the reason for their being for sale is not clear. To view their location, see here.
The Icelandic travel industry was severly affected by the bankruptcy of WOW air last year, and it was dealt a much larger blow in March, when flight service to the country was restricted, due to the COVID-19 pandemic.
According to Árni Valur Sólonsson, board member of the Association of Companies in the Hotel Business, one can expect it to take at least six months for tourist numbers to bounce back to previous levels after travel bans are lifted. While supply exceeds demand, price wars are likely to result in lower prices for overnight accommodation.
“Hopefully, this will wipe out the illegal part of the Airbnb market,” he states.
Magnús Árni Skúlason, CEO of Reykjavík Economics, states that the downtown Reykjavík real estate market is undergoing major changes. High-quality hotels have been built in the past year, upgrading the quality of Icelandic travel service by a star, as he puts it.
He finds it likely that increased competition and stricter rules for short-term rent for tourists will lead to many apartments being listed for sale or rented out long-term.
He suggests that an increased supply of apartments may lead to lower real estate prices, as well as rent, in some areas in the short term.
An estimated 1,000-1,300 apartments are believed to be rented out short term in the capital area. Ólafur Sindri Helgason, chief economist for the Housing and Construction Authority, finds it likely that 500-600 of those will enter the general rental market this year – most of them in or near the city center. He finds it likely that an increased supply of apartments will lead to lower rent, provided supply remains unchanged.