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Seaside Gold: Unlocking the Investment Potential of Short-Term Property Letting

  • Latest News
  • January 30, 2024
Seaside Gold: Unlocking the Investment Potential of Short-Term Property Letting

PropInsights: Real Estate Revelations


Following unprecedented tourism activity in December 2023, Cape Town is a thriving tourist destination with more property investors seeking to prosper from the lucrative short-term holiday rental market. Consider these factors before you invest in a property for short-term gains.

Cape Town’s sun-kissed Atlantic Seaboard is not just a superb marine stretch; it’s a coastal kaleidoscope for property investors seeking short-term gains.

Investment properties on the Atlantic Seaboard offer excellent returns, especially in the high season, comments real estate expert Sandy Walsh, General Manager of Property.CoZa Prestige in Mouille Point.

Her view is especially relevant following a record-breaking summer season in December 2023; more than 400,000 local and international travellers visited Cape Town and the Western Cape region, with local accommodation providers enjoying exceptionally high occupancy.


Top Table Mountain Offerings

“Cape Town’s Atlantic Seaboard undoubtedly has much to offer visitors and holidaymakers.

For example, last year, a two-bedroomed apartment at the iconic Cape Royale Hotel purchased for R4.8 million, is commanding R2 000/night during the high season from October through to April,” says Walsh.

With Time Out’s extensive survey involving 20,000 global travellers ranking the City of Cape Town 2nd in the “50 Best Cities in the World to Visit in 2024,” Walsh asserts that the Mother City stands tall among the world’s top destinations.


Investor’s Paradise

The Atlantic Seaboard’s allure lies in its quality offerings for property investors with an enormous appetite.

“Properties boasting luxury villas in Clifton, Camps Bay, Fresnaye, or Bantry Bay are opulent statements and fetch nightly rates ranging from R18,000 to R200,000,” remarks Walsh. However, she says potential investors should be aware that the price tag can range from R30 million to R85 million and beyond.


Cash Buyers’ Oasis

Walsh comments that with Atlantic Seaboard property prices at a premium, it’s attracting many overseas and regional cash buyers who understand the value of prime coastal real estate in the Mother City.

“Our Atlantic Seaboard agents offer properties from Hout Bay to Llandudno, Camps Bay, Bantry Bay, Sea Point, Green Point, and on our home turf, Mouille Point. Properties in these areas currently range from R2 500 000 for an apartment in Sea Point to a penthouse in Bantry Bay for R29 800 000.”


Fit for Purchase

Choosing the right investment fit on the Atlantic Seaboard is crucial. Walsh suggests focusing on sectional title properties for ease of management and added security. “Security, parking, and easy maintenance are key considerations for this type of investment.”

However, Walsh cautions before investors commit, they must dive into the Body Corporate Rules to understand the regulations and ensure short-term rentals are allowed. “That’s because some Body Corporates and Homeowners’ Associations of sectional title properties don’t allow rentals of less than six months, which will eliminate short-term or holiday lets.”


Atlantic Seaboard Cape Town Lifestyle


Navigating the Wave

Owning a rental property has its perks, as no legal restrictions exist. Still, Walsh points out that owners will have income tax obligations to the South African Revenue Services (SARS) on their received rental income.

As for sectional title properties, owners and their tenants must only adhere to the regulations and restrictions stipulated by the Body Corporate or Homeowners’ Association.

Walsh advises investors about the importance of a viable yield since investors often don’t consider Cape Town’s seasonal factor when buying for short-term letting. “As a rule of thumb, calculate your potential short-term rental income based on 20 days of monthly occupancy for 12 months.”

Investors should be able to achieve a rental yield of 10%, but Walsh says this could vary depending on the property type and what additional features it offers.

“Also consider running costs such as rates and taxes, maintenance, levies (if a sectional title property), and, where necessary, a managing agent’s commission of 10%,” she says.

Beyond Cape Town’s increased rental traffic in the high season (between October and March), Walsh comments that maintaining year-round rental occupancy is achievable depending on property location and type.

The Atlantic Seaboard is far more than a captivating coastline; Walsh describes it as an investment canvas where dreams are painted in high returns and magnificent views.
“As Cape Town’s tourism tide continues to rise, and whether you’re attracted to a chic apartment, villa with spectacular views or the allure of short-term gains, now is the time to seize the opportunity to dive in and invest wisely,” she concludes.

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