March 17, 2025
Cape Town has cemented its reputation as one of the world’s top Airbnb hotspots, with over 21,000 short-term rental listings, surpassing the combined totals of San Francisco, Amsterdam, and Singapore (CapeTownEtc). The Atlantic Seaboard, in particular, has seen a 190% increase in Airbnb listings since 2022, making it the most profitable short-term rental area in the city.
For property investors, Airbnb presents an exceptional return on investment (ROI). Short-term rentals in the city can generate yields between 10% and 15% per annum, compared to the 4% to 7% yields typically seen in the long-term rental market (Property24). This premium pricing, coupled with high tourist demand, has driven more property owners to shift toward short-term letting, creating housing accessibility concerns and pushing up rental prices.
The profitability of Airbnb rentals is clear, particularly in prime locations like the Atlantic Seaboard:
- Atlantic Seaboard Airbnb rentals earn 30-50% more per month than long-term rentals (BusinessTech).
- City Centre short-term rentals earn up to 25% more than traditional leases (CapeTownEtc).
However, vacancy rates are a concern as off-season periods can lead to inconsistent earnings. With these figures in mind, investors need a smart strategy to balance short-term rental profits with long-term asset stability.
As the Airbnb market surges, concerns over housing shortages and uncontrolled tenant turnover have prompted municipal and national regulatory discussions.
Currently, the City of Cape Town allows short-term letting in residential properties for stays under 30 days, provided it complies with zoning laws (Snymans). However, bodies corporate and homeowner associations can still impose their own restrictions (Coastal Property Group).
Looking ahead, the South African government is considering a national framework that could introduce licensing requirements, occupancy limits, and taxation on Airbnb revenue to manage the market’s impact on housing affordability (PropertyFlash). While details remain unclear, investors should prepare for possible regulatory shifts.
"If you allow open Airbnb letting, there’s no way to control the nature of tenants or maintain property integrity," says Berman.
Berman Brothers Group CEO, Paul Berman, unpacks the opportunities and challenges of Cape Town’s booming Airbnb market. He acknowledges the unmatched returns and investment potential while emphasizing the importance of self-regulation to protect developments.
To strike a balance between profitability and stability, Berman Brothers Group has implemented minimum-stay policies in our developments to help protect the building’s value, investment potential, and resident experience while still leveraging short-term rentals’ lucrative advantage:
- Station House – 30-day minimum stay to ensure a sense of community.
- Mont Reve – 7-day minimum stay to prevent excessive tenant turnover.
Despite looming regulations, Paul Berman believes the Airbnb market remains a prime opportunity for investors. With Cape Town’s continued tourism growth, high-yield rental performance, and limited supply in premium areas, demand is unlikely to slow down anytime soon. However, strategic investment planning is key—investors should prepare for possible policy changes while ensuring their properties remain resilient, profitable, and compliant.
