New property trend hitting Cape Town

The global surge in remote work is driving demand for flexible medium-term rentals (1–6 months), especially in cities like Cape Town, offering investors higher returns, lower turnover costs, and more stability.

Commercial director and co-founder of Neighbourgood, St John Gardner, explained that remote work and the demand for flexible living worldwide are driving the rise of medium-term rentals.

According to Global Citizen Solutions, the number of remote workers around the world increased from around 10.9 million in 2020 to 35 million in 2024, a 224% increase.

A report by Skyscanner estimated that by 2030, 60 million people will be working remotely from anywhere in the world. The World Economic Forum’s projection for remote-capable jobs estimates over 90 million roles by 2030.

Gardner said that for any investor in property, maximum occupancy with high-quality tenants, lucrative rental returns, and hassle-free management are key factors.

He explained that medium-term rentals bridge the gap between long-term stability and short-term flexibility. This is particularly true in world-class cities like Cape Town and San Francisco.

In these cities, medium-term rentals cater to the dynamic needs of today’s tenants while optimising returns for landlords.

“It offers a unique opportunity to blend the best of short-term rental upside with traditional long-term rental risk mitigation and better through-occupancy over the full 12-month year.”

Neighbourgood explained that the gap between the two historically separate options of short and long-term rental is closing rapidly.

Property owners and managers or operators recognise that the intersection between the two segments is ideally placed to capitalise on the growing shift towards remote work and increasingly flexible accommodation requirements.

One of the standout advantages of medium-term rental lies in its flexibility. It is less rigid than long-term leases, which typically lock tenants into a year or more commitments.

They are also less volatile than short-term rentals. Medium-term leases strike a balance. They provide tenants with the stability of a more extended stay without a long-term commitment.

This particularly appeals to remote workers, expatriates and professionals seeking temporary accommodation solutions.

Flexible pricing and higher returns

“Cape Town and San Francisco are two specific cities where the demand for flexible housing options tends to fluctuate with seasonal and economic trends,” Gardner said.

Medium-term rentals effectively cater to this demand by offering landlords the ability to adjust rental rates more frequently than in long-term leases, responding promptly to market conditions.

This flexibility not only enhances occupancy rates but also optimises rental yields, adapting to varying demand cycles throughout the year.

From a financial perspective, medium-term rentals also present a compelling case. Short-term rentals may incur higher turnover costs and experience more wear and tear due to frequent tenant changes.

Medium-term rentals, however, minimise turnover-related expenses while offering landlords a stable income stream that often exceeds that of long-term leases every month.

This net rental advantage, coupled with reduced vacancy periods, significantly contributes to rental properties’ overall profitability.

In Cape Town, a city renowned for its seasonal influx of tourists and remote workers, medium-term rentals have emerged as a preferred option.

Landlords benefit from steady occupancy rates and higher rental yields than traditional long-term leases, leveraging the city’s appeal as a global destination.

Similarly, medium-term rentals allow landlords to adjust rental rates to match evolving market conditions in San Francisco, where the tech industry drives rapid employment shifts and housing demand fluctuations.

This adaptive pricing strategy enhances property profitability while accommodating the diverse housing needs of a transient workforce.

A winning formula for investors and tenants

Gardner explained that there are several key advantages of medium-term rentals for investors. are:

• Medium-term rentals command premium pricing while avoiding excessive turnover and running costs.
• There is lower vacancy risk as 85-90% occupancy is achievable compared to the inconsistent demand of short-term rentals, which on average fluctuate between 65-75% and have a much higher risk profile than longer-term rentals due to reliance on ad hoc bookings vs contractual income.
• Fewer tenant turnovers mean less frequent deep cleaning and maintenance costs.
• There is growing demand in key markets. Cities like Cape Town and San Francisco enjoy increased demand for flexible, furnished rentals from remote workers, young professionals, business travellers, and expatriates.

Murray Clark, CEO and co-founder of Neighbourgood, pointed out a further benefit for tenants. “For decades, consumers have only ever experienced the luxury of hospitality amenities and guest services at traditional hotels.”

“But as consumer expectations shift, so too does the requirement to bring hospitality-level amenities to the estimated 2.4 billion rental homes around the world.”

This means that the gap between short-term rentals, like hotels and guesthouses, and long-term rentals, like apartments, is shrinking.

“In both Cape Town and San Francisco, medium-term rentals strike the perfect balance between rental income, stability, and operational efficiency,” Gardner said

“Investors can benefit from higher net returns than long-term leases, lower costs and more stability than short-term rentals, and increasing demand from remote workers and professionals.”

For property investors seeking a profitable, low-risk, and hassle-free income stream, medium-term rentals offer a very compelling investment strategy for 2025. The trend toward flexibility continues to grow and shows no signs of slowing down.