Short-term rentals move from seasonal ‘gold rush’ to long-term property play

While South Africa’s coastal property markets have long anticipated the annual December “gold rush” – the rise of short-term letting is no longer just a seasonal side hustle. Instead, it has evolved into a legitimate investment strategy that directly influences property valuations year-round.

In areas like Cape Town, the Garden Route, and the KwaZulu-Natal (KZN) North Coast, a home’s ability to perform on platforms like Airbnb or Booking.com is increasingly viewed as a core asset, with buyers willing to pay a premium for properties with a proven income track record.

Read: Bo-Kaap residents call for Airbnb to be regulated

Lucrative yields in key regions

The financial potential of the festive season is significant, particularly in major tourism hubs where demand far outstrips supply during the holidays. Data from Airbtics highlights the revenue disparity across the country’s top markets:

Cape Town: Dominates the sector with a 71% average occupancy rate, generating roughly R433 000 in annual revenue per listing. The KZN North Coast outperforms in total annual earnings, with hosts averaging R479 000.

Urban hubs in Durban and Johannesburg also show strong domestic demand, bringing in R258 000 and R154 000 annually, respectively.

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Understanding shared property models

Grant Smee, CEO of Only Realty Property Group, notes that while coastal surges are the most visible, urban nodes like Sandton and Rosebank are gaining traction as business travelers and digital nomads mix work with holiday leisure.

Capital appreciation and value drivers

According to Smee, short-term rentals do more than generate immediate cash flow; they bolster long-term capital growth. Agents are now highlighting “rental potential” as a primary selling point in listings, as high-performing properties attract a specific class of investor focused on yield. However, he cautions that value is closely tied to management.

“If short-term tenants disrupt neighbours or neglect property rules, it can damage the complex’s reputation and, ultimately, impact property values negatively. This is where regulation becomes essential,” he says.

The regulatory landscape

As the industry matures, the legal framework is becoming more defined to protect both residents and investors. All landlord-tenant relationships, including short-term stays, are governed by the Rental Housing Act.

Furthermore, local by-laws and recent court rulings have provided much-needed clarity:

• Cape Town By-laws: Restricts short-term rentals to 30 consecutive days per booking to maintain residential stability.
• High Court Rulings: A recent Gauteng High Court decision affirmed that Homeowners’ Associations (HOAs) and body corporates have the right to regulate short-term letting as a commercial activity.

According to Smee, these regulations are a positive step, ensuring that well-managed rentals add to the investment appeal of a community rather than detracting from it.

Maximising festive returns

To capitalise on the peak season, homeowners are encouraged to prioritise the guest experience through professional staging and high-speed amenities.

Strategic moves such as adopting flexible pricing tools can lift yields by 10% to 20% by tracking demand spikes around public holidays.

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Legalities around landlords, tenants and rental agreements
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Furthermore, owners must ensure they are insured for commercial activity and declare rental income to the South African Revenue Service (Sars), utilising deductible expenses like maintenance and cleaning to offset costs.

Ultimately, while the December boom lasts only a few weeks, its impact on property values and investor confidence endures throughout the year.

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