This is a guest article written by Sarah Johnson, Senior Property Analyst at capetownpropertyinsights.co.za. With over 26 years of experience in the real estate industry, Sarah brings a deep understanding of Cape Town’s property landscape and the factors shaping its growth. This article offers a clear overview of how the short-term rental market works today, the key trends driving performance, and what new investors should consider before entering one of South Africa’s most dynamic real estate sectors.
Current State of Cape Town’s Short-Term Rental Market
Between mid‑2024 and mid‑2025, around 12,400 Cape Town Airbnbs brought in about USD 20,500 per year each, through an average nightly rate of USD 191 and roughly 46% occupancy . But not all listings perform the same: premium units, those featuring ocean views, stylish design, and backup power, can bring in up to USD 399 per night with nearly 90% occupancy .
The market seasons follow the sun. January is the best month, bringing in USD 3,800–4,100 per listing, while June dips down to just USD 1,270–1,470 . Smart hosts change their approach: charging more in peak season, offering longer‑stay discounts in winter, and setting 30‑night minimums to attract stay‑cationers and remote workers during quieter months.
Real Estate and Lifestyle Changes
Cape Town’s property market is surprisingly steady. In June 2025, the average home sold for around R3.5 million (about USD 190,000), a 5% increase compared to last year. Areas like Woodstock and Observatory have become STR goldmines, offering rental yields of over 8% .
At the same time, high‑end homes along the Atlantic Seaboard and City Bowl, often priced between R15 million and R60 million, deliver premium returns. These properties, with top-tier views and luxury finishes, show that Cape Town is not just a holiday spot.
Medium‑Term Rentals: The Sweet Spot
A quiet shift is happening. As remote work sticks around, more people want to stay for six weeks to three months, long enough to feel settled, but short enough to remain flexible. Property groups like Neighbourgood are creating serviced co‑living spaces that combine hotel-like comforts with the feel of a home .
These medium‑term rentals offer great benefits for landlords, lower turnover costs, fewer vacancies, and steady income, especially when standard bookings dip below 35% .
Keeping Up with Rules and Regulations
Despite the benefits, not everyone is happy with the STR boom. Some Cape Town residents worry about rising rents and changing neighbourhoods . City hall is exploring new rules, like taxing full‑time STRs as small hotels, requiring registration, and placing caps on rental days .
Condominium buildings are also tightening rules, some now require 30‑day minimum stays to reduce noise and frequent guest turnover . That’s why many hosts are getting ahead: registering their rentals, staying tax compliant, and budgeting for possible increases in municipal fees.
The Bigger Picture: Equity, Infrastructure, Sustainability
Some historic areas, like Bo‑Kaap, are seeing local outrage, residents blame STRs for pushing up rents and shifting the area’s character . And as the city’s population nears 5 million, there’s growing pressure on roads, sewage, and housing. Cape Town is responding with a R40 billion infrastructure investment plan .
Developments in the CBD are trending toward “15‑minute city” designs, walkable neighbourhoods, bike lanes, green buildings, and spaces that mix living, working, and leisure . Eco‑upgrades, like solar power, water-saving systems, and central locations, are in demand, from both guests and communities.
How Smart Hosts Are Doing It
To stay on top of all this, a growing number of investors work with experienced property managers like Lykke Living, who handle everything from guest communication, pricing to arrangement of cleaning and other premium services, helping ensure strong returns and fewer headaches.
Equally important, successful hosts engage with their communities. They hire local staff, support neighbourhood initiatives, and follow body corporate rules. These small but meaningful steps help maintain good relationships with neighbours and foster long-term acceptance in the areas they operate.
Final Thoughts: More Than Just a Side Hustle
What is important to understand is that success doesn’t come from simply listing a home, it requires understanding, adaptability, and respect for the city’s culture and needs.
