Holidaymakers snap up short-term rentals
Busy summer tourist season looms, Atlantic seaboard and City Bowl set for short-term rental boom
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.