The arrival of summer in Cape Town signals endless sunshine, lazy beach days and lounging by the poolside. It is also the time that scores of holidaymakers descend on the city.
While rental rates can range to well into the upper thousands per day for a top-end property in Clifton or Camps Bay, two of the most popular areas, such high rates tend to be few and far between.While just about the whole of Cape Town is a tourist mecca, the Atlantic Seaboard, V&A Waterfront and City Bowl are prime locations for holidaymakers. Ruth Munitz, manager of Seeff SHORTSTAY, says this means that there is high demand for short-term apartment and villa rentals, and it is an “excellent time for property owners and investors to capitalise and achieve attractive rental yields”.
She says Cape Town is the busiest holiday tourist city in Africa, attracting millions from across the country, continent and globe. It has a thriving short-term rental market and, according to Munitz, this sector of the market is not just growing, but now contributes notably to the Cape property sector.
“The last tourist season was the busiest on record,” she says. “Cape Town Tourism reported a hike in visitor arrivals of 8.9% for 2015, with more than 4.6 million people visiting the city.”
Munitz says more and more people now visit each year, especially over the October to April high season period, and they expect this season to be as busy, if not busier, than last year.
“While Airbnb has grown enormously, it caters primarily for the mid- to lower-end of the market,” she says. “There is, however, a thriving top end where villas and apartments are increasingly sought after for the flexibility and exclusivity that this home-away-from-home can offer.”
For this top-end sector, the time and administrative hassle that comes with short-term rentals can be a real challenge, says Munitz. “You often have to field an enormous amount of enquiries and shoulder an administrative burden - and that is before your visitor has even arrived.”
Munitz says this is where the services of a rental agency come in. “The aim is to essentially fill the gap left by Airbnb and other local and international portals by taking the hassle out of the process. This includes managing the property and guest experience, and maximising the rental yield for the property owner or investor.”
She says there are many hidden costs when it comes to short-term and holiday rentals that will all “eat into your profit”.
“If you add the administrative and time burden into the mix, then the opportunity to make some money can quickly lose its sparkle.”
One of the first things that a skilled agency can do is to ensure that the rental is pegged at the correct rate, taking into account all relevant aspects to ensure maximum rental returns, says Munitz. There may also be simple things that the homeowner can do to increase the marketability and rental returns of the property.
“The high season, from mid-November to mid-March tends to achieve the highest rentals, while the rate can drop by about 30% to 40% outside of the high demand periods,” she says.
Bookings for the season are already in full swing and “homeowners and investors need to ensure that they list sooner rather than later” if they hope to capitalise on what is set to be a busy summer tourist season, she advises.
While rental rates can range to well into the upper thousands per day for a top-end property in Clifton or Camps Bay, two of the most popular areas, Munitz says such high rates tend to be few and far between.
“The better the views and the closer you are to the beach, the better the rates you can expect,” she says.
So what rentals are owners getting?
As a general guide, Munitz says property owners and investors can expect rental income of around R6 000 to R8 000 per day over the coming holiday season for a two to three bedroom home with a view in Camps Bay. Luxury villas can range up to R20 000 to R25 000 per day for a home with a swimming pool and fabulous views.
“Clifton bungalows and apartments should achieve on average about R23 000 to R35 000 per day over the high season period," she says.
“City Bowl apartments with two to three bedrooms, preferably with a view, can attract on average around R5 000 to R7 000 per day in season, while a house with all the latest mod cons, a swimming pool and fabulous city views can achieve as much as R10 000 to R20 000 per day.”
The peak period between November and end March tends to attract the highest rates. Out of season, the rates tend to drop by about 30% to 40%, she says.
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