Western Cape short stay surge: What investors must know now

• Tourism-driven short-stay demand is soaring, pushing occupancies above 70% and boosting investor yields across Cape Town.
• Heritage neighbourhoods face pressure as inner-city units convert to short-term rentals, driving calls for responsible management.
• Investors can benefit from strong returns, if they screen, manage and price correctly in a tightening regulatory environment.

The new lay of the land

‍Cape Town’s short-term rental sector has surged into one of South Africa’s most dynamic accommodation markets. Hotels, serviced apartments, owner-managed Airbnbs, aparthotels and hybrid operators now serve a tourism market that includes:

• Holidaymakers
• Digital nomads
• International visitors
• MICE travellers
• Long-stay corporate guests

Tourism numbers continue climbing, and short-stay platforms now form a critical pillar of Cape Town’s R40-billion visitor economy. Over 700,000 travellers booked short-term rentals in 2023 alone.

The financial rewards are compelling. Industry data shows the median Cape Town short-term rental achieved 71% occupancy between August 2023 and July 2024, generating R420,000+ in gross income per annum for a single well-located unit.

But this boom has also reshaped neighbourhood dynamics. A City of Cape Town study reports that up to 70% of inner-city residential units now operate as hotels or short-stays, significantly constraining long-term housing supply.

The result: A powerful market, rich with opportunity, but under growing scrutiny.

Where culture and commerce collide: Bo-Kaap as case study

‍Few areas illustrate Cape Town’s balancing act better than Bo-Kaap.
The neighbourhood’s global cultural appeal continues to attract high-spending visitors, yet its heritage profile makes it particularly sensitive to short-stay pressures.

Ryan Flowers, Managing Director of Flyt Property Investments, argues that responsible operators must enhance, rather than erode neighbourhood identity.

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“A short-term rental should contribute meaningfully to its surroundings. When operators take responsibility seriously, the neighbourhood flourishes.”

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Flyt’s developments, including 150 Buitengracht in Bo-Kaap and Eton Square in the Southern Suburbs, apply a community-first hospitality model via their WINK Aparthotels brand prioritising:

• Professional oversight
• Predictable standards
• Neighbourhood engagement
• Alignment with heritage and cultural priorities

This is the direction in which the Western Cape market is moving: professionally managed, community-aligned, investor-friendly hospitality assets.

How investors can benefit in WC’s short stay market today

‍The opportunity is real, but investors need strategy, not luck. Here’s how to leverage the market safely and profitably:

1. Know the Demand Drivers

Short-term rentals perform best when supported by:

• Proximity to beaches, nightlife, transport or corporate hubs
• Walkable neighbourhoods
• Security and modern amenities
• High tourism footfall

Cape Town CBD, Sea Point, Green Point, Bo-Kaap, Waterfront, Observatory, Salt River and Century City remain top performers.

2. Choose Professional Management
Top-performing rentals typically partner with professional operators or aparthotel brands who handle:

• Pricing optimisation
• Cleaning and turnover
• Marketing and guest relations
• Compliance and permits
• Revenue management

This ensures consistent income, particularly in seasonal markets.

3. Understand Your Numbers
Short-term rentals earn more, but cost more:

• Levies
• Rates
• Turnover costs
• Furnishing and maintenance
• Platform fees

Investors must model net return, not headline revenue.

4. Stay ahead of regulation
Cape Town is actively working toward

• Clearer zoning rules
• Responsible operator standards
• Community protections
• Heritage and cultural oversight

Professional management helps investors remain compliant while avoiding damaging community friction.

5. Target the right traveller segment
Cape Town’s strongest short-stay demand now comes from:

• Digital nomads
• Remote workers
• Urban explorers
• Corporate relocations
• International long-stays

These guests value:

• High-speed internet
• Security
• Workspaces
• Location
• Lifestyle

Investor tips to maximise profit (Without burning bridges)

• Screen every guest: Responsible operators reduce neighbourhood friction.
• Use dynamic pricing: Cape Town’s seasonality demands real-time rate optimisation.
• Track your occupancy trends: Optimise for shoulder seasons, not just peak tourism.
• Stay insured: Short-stay risk differs from long-term tenancies.
• Maintain immaculate upkeep: Guest ratings make or break income.
• Keep reserves: High guest turnover increases wear and tear.
• Consider hybrid strategies: Some operators combine long-stay corporate bookings with short-stay tourism for stable cash flow.

A market of huge potential, if managed responsibly

‍Cape Town’s short-term rental market is booming, reshaping neighbourhoods and delivering high returns in a global tourism hotspot. But the sector’s future depends on responsible operation, clear regulation, and active community alignment, especially in heritage areas like Bo-Kaap.

For investors, the opportunity is substantial. The Western Cape remains one of Africa’s most attractive rental destinations, and those who approach the market strategically, using professional management, sound financial planning and community-aligned practices, can unlock strong, sustainable returns.

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