Cape Town to tighten short-term rentals as Airbnb surges

The City of Cape Town’s move to strengthen enforcement on commercial-scale short-term letting has been welcomed as a step toward regulatory clarity, amid rapid growth in the sector.

The CEO of ONLY Realty Property Group, Grant Smee, said the shift was less about introducing new rules and more about ensuring compliance with existing bylaws.

“I think it’s just about compliance, really, and it is a correct step from the city,” Smee said in an interview on Monday.

Large and growing market

Short-term rentals have expanded sharply in Cape Town, fuelled by tourism demand and investor interest.

Smee estimates the city currently has about 26,000 Airbnb listings and roughly 30,000 across all platforms, a substantial share of the local property market.

“It is an enormous market at the moment in Cape Town,” he said.

Developers have increasingly responded by building smaller units aimed specifically at the short-stay sector, often in older buildings converted or new developments designed for investors.

“A lot of developers have seen the opportunity to provide these studio flats, which, for normal living, isn’t ideal, but for the short-term market, it works.”

Clarity needed for investors

Smee said the city should prioritise passing clear regulations quickly to avoid uncertainty that could deter investment.

“Making sure they get the regulations and bylaws passed as quickly as possible to provide investors with a view on their properties is probably the best advice.”

While foreign buyers remain a talking point in Cape Town’s property debate, he said they still represent only a small portion of owners, with most properties held by South Africans.

Tourism demand is driving the sector

Cape Town’s popularity as a destination continues to drive demand for short-term accommodation, particularly during major events.

Recent conferences and government events highlighted the city’s accommodation shortage, with hotel beds fully booked in central areas.

Smee said market forces would naturally regulate supply over time.

“If demand is no longer sustainable at a certain level, you will see properties re-entering the long-term market or going up for sale.”

Potential price impact

However, he warned that applying commercial rates to short-term rentals could push up costs for owners and, ultimately, visitors.

“That’s going to have an impact; their nightly rates will increase,” he said.

He added that while other metros could study Cape Town’s approach, each city’s property dynamics differed, meaning similar policies might not produce the same results elsewhere.

For more details, listen to Smee using the audio player below: