One property rental sector in South Africa is booming

Short-term rentals are booming in South Africa, with Cape Town, in particular, seeing a significant rise in Airbnb listings. However, the popularity of these services has led to increased calls for government regulation.

This was revealed by Airbnb’s Regional Lead for the Middle East and Africa, Velma Corcoran, who told Kaya Biz that Cape Town’s Airbnb sector is soaring, sporting more listings than the cities of Sydney and San Francisco combined.

This has had a noticeable impact on the city’s economy, with Airbnb having contributed significantly to Cape Town’s GDP.

Corcoran said the service has supported over 42,000 jobs and generated over R14 billion in economic activity in the city.

However, Airbnb has also come under scrutiny for its significant presence in Cape Town. Many have raised concerns about the impact of short-term rentals on locals in terms of property pricing and rental structures.

Some have also raised concerns that short-term rentals like Airbnb are contributing to a housing crisis in Cape Town.

Corcoran said Airbnb is aware of these concerns, and also believes the sector requires more regulation.

To address this, the company has called on the government to establish a National Register for short-term rentals.

“The reason why this is important is we believe that the government should have transparent data so that they can make informed decisions about the impact of short-term rentals and then create appropriate regulations,” she explained.

“Airbnb is just one player in the sector. In a National Register, you would have all players in the sector across all different platforms.”

“So, the government would have a very clear idea about who is hosting, and where they are hosting and for how long, so you can really make informed decisions about whether or not regulation is needed.” 

The Department of Tourism recently published its White Paper on the Development and Promotion of Tourism in South Africa.

This paper sets out the strategy for South Africa’s tourism sector over the next 10 to 15 years. 

Corcoran said a key part of this strategy is regulation and a National Register for short-term rentals.

“I feel like we are on the path, and we’re very excited to be working with the department over the coming months to try and shape what that regulation would look like,” she said.

Johannesburg versus Cape Town

While Airbnb is booming in Cape Town, the service is not as prolific in Johannesburg. This speaks to a wider phenomenon found between the two cities, where a ‘semigration’ trend has appeared.

In recent years, Johannesburg has seen its status as one of the world’s richest cities diminish, and its role as the heart of South Africa’s economy has become less important. 

While the city is still the largest contributor to economic output among the country’s metro, years of mismanagement and corruption have seen the rich flee the City of Gold. 

Many locals, particularly wealthier South Africans, have left Johannesburg for the Western Cape in search of better governance, improved service delivery, and enhanced safety. 

Johannesburg is still the wealthiest city in Africa, with 12,300 millionaires, 25 centi-millionaires, and two billionaires. 

However, the number of millionaires living within its boundaries has declined by 44% over the past decade, with many moving to South Africa’s coastal areas. 

In contrast, the country’s other centres of wealth, which are spread around the Western and Eastern Cape, are seeing a surge in their millionaire population. 

Cape Town is the largest beneficiary of this semigration trend, with the number of millionaires in the city rising 20% in the past decade. 

Cape Town is on track to overtake Johannesburg to become Africa’s wealthiest city by 2030, and Henley & Partners expects several major Johannesburg-based companies to move their head offices to the city by then.

The company estimates the city’s millionaire population will nearly double over the next decade while Johannesburg’s will continue to decline.