Cabo’s short-term rental market has faced notable challenges in 2024, with year-to-date revenue continuing to lag behind 2023. Overall, market income decreased by 22% compared to the same period last year, driven by rapid real estate expansion and a decline in tourist arrivals. Despite these hurdles, some signs of recovery are on the horizon as the market adjusts.
In 2024, Cabo’s short-term rental market experienced a significant revenue decline, down 22% year-over-year. This decrease is primarily attributed to a surge in new real estate developments, leading to an oversupply of rental units, coupled with a decrease in tourist arrivals. According to the Cabo Airport Group, airport passenger arrivals fell by -11% in August and are down -3% year-to-date.
However, since May, active rental listings have been on the decline, as some property owners shift towards long-term rentals in response to lower occupancy and revenue. This shift could provide some relief to the market in the coming months.
Supply: As anticipated, active listings have decreased by -7% since peaking in May. This decline is likely due to owners reacting to lower revenues by either transitioning their properties to long-term rentals or selling. Despite this reduction, overall supply remains 68% higher than in 2022, keeping some pressure on occupancy rates.
Demand: Both local and international travel demand to Cabo has dropped, with local passenger arrivals down -9% and international arrivals falling by -13%. This has directly impacted the number of nights sold, which dropped by 23% in September, contributing to the overall revenue decline.
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