Hol­i­day­mak­ers snap up short-term rentals

Busy sum­mer tourist sea­son looms, At­lantic seaboard and City Bowl set for short-term rental boom

Weekend Argus (Saturday Edition) - - PROPERTY -

THE AR­RIVAL of sum­mer in Cape Town sig­nals end­less sun­shine, lazy beach days and the ar­rival of scores of hol­i­day­mak­ers.

“The At­lantic seaboard, V&A Wa­ter­front and City Bowl are prime lo­ca­tions for hol­i­day­mak­ers, so there is strong de­mand for short-term flat and house rentals and it is an ex­cel­lent time for prop­erty own­ers and in­vestors to achieve at­trac­tive rental yields,” says Ruth Mu­nitz, man­ager of Se­ef­fSHORTSTAY.

“Cape Town is now the busiest hol­i­day tourist city in Africa, at­tract­ing mil­lions of peo­ple from across the coun­try, con­ti­nent and globe and now has a very busy short- term rental mar­ket. This sec­tor of the mar­ket is grow­ing, and now con­trib­utes no­tably to the Cape prop­erty sec­tor.

“The last tourist sea­son was the busiest on record. Cape Town Tourism re­ported a hike of 8.9 per­cent in vis­i­tor ar­rivals for 2015 with more than 4.6 mil­lion peo­ple vis­it­ing the city. More and more peo­ple now visit each year, es­pe­cially from Oc­to­ber to April and we ex­pect this sea­son to be as busy, if not busier than last year.”

Although Airbnb has grown enor­mously, Mu­nitz says it caters pri­mar­ily for the mid- to lower end of the mar­ket. There is how­ever, a thriv­ing top end where houses and flats are in­creas­ingly sought for the flex­i­bil­ity and ex­clu­siv­ity that this home- away- from- home model 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 num­ber of en­quiries and shoul­der an ad­min­is­tra­tive bur­den – be­fore your vis­i­tors have even ar­rived.

“Though it may be easy enough to man­age the odd rental or vis­i­tor through Airbnb, many land­lords say that even this can soon be quite a bit of work. When it comes to a flat or a house, it be­comes even more chal­leng­ing for prop­erty own­ers and in­vestors.

“Rental agen­cies can fill the gap left by Airbnb and other lo­cal and in­ter­na­tional por­tals by tak­ing the has­sles 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 prof­its. If you add the ad­min­is­tra­tive and time bur­den into the mix, then the op­por­tu­nity to make some money can quickly loose 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. There may also be sim­ple things that land­lords can do to in­crease the mar­ketabil­ity and rental re­turns of the prop­erty.

“We rec­om­mend a re­view of the prop­erty to de­ter­mine the achiev­able rental rates. Earn­ing a good rental in­come de­pends on a num­ber of fac­tors, start­ing with a good lo­ca­tion, prefer­ably close to the beaches. Views are a big at­trac­tion and the bet­ter the lo­ca­tion, views and fin­ishes, the higher the daily rate you can achieve.”

Then, says Mu­nitz, there is the guest ex­pe­ri­ence. This be­comes es­pe­cially im­por­tant for high de­mand hol­i­day ar­eas such as the At­lantic seaboard and City Bowl where vis­i­tors will re­lay their ex­pe­ri­ences on­line and quite often turn into re­peat guests.

This is a crit­i­cal fac­tor for the short-term rentals mar­ket, she says. Good re­views drive book­ings.

Good ba­sic ameni­ties such as satel­lite tele­vi­sion, Wi- Fi and se­cu­rity are gen­er­ally now a must for the short-term mar­ket. Don’t for­get also that your guests will need to know how to op­er­ate var­i­ous as­pects of the prop­erty that you may not even think of.

This in­cludes for ex­am­ple how to re­set Net­flix, op­er­ate the Jacuzzi, what to do when the wash­ing ma­chine does not work and so on. Here too, a rental agency can pro­vide this ser­vice along with a concierge ser­vice sim­i­lar to that on of­fer in guest houses and ho­tels, all adding to the guest ex­pe­ri­ence and mar­ketabil­ity of the prop­erty.

Aside from the list­ing, mar­ket­ing and at­tract­ing of vis­i­tors and ten­ants for your prop­erty, there is also the on­go­ing man­age­ment of the prop­erty, look­ing out for risks of da­m­age, es­sen­tial main­te­nance and other as­pects, says Mu­nitz.

Where a land­lord only wants to rent the prop­erty out for a lim­ited pe­riod, there may be the need to ar­range pack­ing and stor­age of per­sonal ef­fects.

Out­side the busy tourist sea­son, there is also on­go­ing de­mand for short-term rentals from busi­ness ex­ec­u­tives, cor­po­rates, com­pany re­lo­ca­tions and gap rentals where home buy­ers or own­ers need tem­po­rary ac­com­mo­da­tion while ren­o­vat­ing or wait­ing to move into their new homes.

All of this, says Mu­nitz, has con­trib­uted to a sig­nif­i­cant rise in the de­mand for short-term rentals across this prime res­i­den­tial belt.

Book­ings for the sea­son are al­ready in full swing and she says that home own­ers and in­vestors need to en­sure that they list soon if they hope to cap­i­talise on what is set to be a busy sum­mer tourist sea­son.

While rental rates can range to well into the up­per thou­sands a day for a lux­ury prop­erty in Clifton or Camps Bay, two of the most pop­u­lar ar­eas, she says that such high rates tend to be few and far be­tween.

“As a gen­eral guide­line, prop­erty own­ers and in­vestors can ex­pect rental in­come of around R6 000 to R8 000 a day over the com­ing hol­i­day sea­son for a two to three bed­room home with a view in Camps Bay. Rentals for lux­ury houses can range up to R20 000 to R25 000 a day for a home with a swim­ming pool and views.

“Clifton bun­ga­lows and apart­ments should achieve on av­er­age about R23 000 to R35 000 a day over the high sea­son.

“City Bowl flats with two to three bed­rooms, prefer­ably with a view, can at­tract on av­er­age around R5 000 to R7 000 a day in sea­son and a house with all the lat­est mod­ern con­ve­niences, a swim­ming pool and city views can achieve as much as R10 000 to R20 000 a day.

“The peak pe­riod be­tween Novem­ber and the end of March tend to at­tract the high­est rates.

“Out of sea­son, the rates tend to drop by about 30 per­cent to 40 per­cent,” says Mu­nitz.

Clifton bun­ga­lows, al­most on the beach, rank among the most sought af­ter short term rentals. This large pri­vate north fac­ing bun­ga­low has di­rect beach ac­cess, a pri­vate pool and deck, and sea and moun­tain views. Rates range from R25 000 a day.

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