Cape Town’s Airbnb Boom: A Blessing for Tourism, a Curse for Residents

Cape Town’s tourism has surged in the post-pandemic era, attracting visitors with its stunning landscapes and vibrant culture. However, this influx has created a housing crisis, as short-term rentals like Airbnb have flourished. As a result, residents are struggling to afford living in the city. With over 23,500 listings, Cape Town ranks among the highest in Airbnb numbers globally, surpassing cities like San Francisco, Amsterdam, and Berlin.

In the wake of this boom, a growing number of Capetonians can no longer compete with rising property and rental costs. Data from Inside Airbnb shows that in peak season, short-term rentals in Cape Town fetch up to R4,000 per day, with some properties charging R200,000 for just two months. The average daily price currently sits at R2,367, reflecting a steep increase even as the city emerges from winter.

Property Prices Soar, Locals Suffer

One of the major concerns is the impact on the local housing market. Investors targeting short-term rentals are driving up property prices, making it difficult for residents to buy or rent homes. According to the data, 81.8% of all Airbnb listings in Cape Town are entire homes or apartments, leaving locals with fewer affordable options. Even middle-class families, once comfortable in the city, are being priced out.

Urban policy researcher Nick Budlender has highlighted the risk to affordable housing efforts. The Cape Town government, however, is attempting to counteract this by releasing well-located land for affordable housing projects, with 10,000 units in the pipeline.

Calls for Regulation Intensify

In response to growing concerns, there have been increasing calls for tighter regulation of short-term rentals. According to the City of Cape Town’s Municipal Planning bylaw, short-term rentals are only regulated under the definition of tourist accommodation, which requires special consent in certain zones. However, this does not directly address the broader impact on affordable housing.

Airbnb itself has voiced support for regulation, provided it is simple and balanced. Velma Corcoran, Airbnb’s regional lead for Africa and the Middle East, told MyBroadband that appropriate regulation could benefit everyone. She acknowledged that while some hosts use Airbnb to supplement their income, stricter measures may be necessary for larger investors or ‘bad actors.’

In a significant step forward, Airbnb has signed a memorandum of understanding with the Department of Tourism. The agreement includes plans for a national registration system, aimed at increasing transparency and helping the government create suitable regulations. Corcoran believes now is the right time to introduce these regulations, balancing the interests of both individual hosts and larger property owners.

Tourism Amendment Bill: A Possible Solution?

The South African government has been working on the Tourism Amendment Bill since 2019, which is set to regulate platforms like Airbnb. A green paper on the development and promotion of tourism, published in October 2023, has outlined proposals that could reshape the sector. Among the most notable is the potential for the Minister of Tourism to limit how many nights a property can be rented out on platforms like Airbnb.

While these efforts aim to protect consumers and ensure safety, there is concern that overly stringent regulations could hurt small-scale operators, especially in poorer communities. FEDHASA, the country’s hospitality association, has called for a balanced approach that fosters entrepreneurship and job creation, while safeguarding the interests of local residents.

The Path Forward

Cape Town is caught in a difficult balancing act. On one hand, the rise of Airbnb has brought substantial economic benefits, boosting tourism and providing an income for many. On the other hand, the unchecked growth of short-term rentals is pushing local residents out of their homes. As the city navigates this complex issue, it will need to find solutions that protect both tourism and housing.

Whether the new regulations will solve Cape Town’s housing crisis remains to be seen. For now, the city continues to grapple with the unintended consequences of a booming tourism industry.