Cape Town, located on the southern tip of the African continent is its most beautiful city and an increasingly popular destination for business, international and local tourists and migrants. This has led to rising demand that has seen rental rates in Cape Town surge across all sectors of the market – with the top end and mid-market sectors seeing the largest increase.
The tourist season extends from November to April and this together with major sporting events, international conferences and festivals, puts pressure on hotel and furnished accommodation during an extended peak season. Landlords are increasingly turning down long term rentals during high season in favour of high daily rates and this trend has increased with Airbnb’s growing share of the rental pool.
At the top end of the market, areas such as the Atlantic Seaboard, the Southern Suburbs and housing in Cape Town’s few gated communities now command rental rates of about 30%-40% higher on average compared to Johannesburg’s equivalent residential areas. The top five suburbs of the Atlantic Seaboard, Clifton, Camps Bay, Fresnaye, Bantry Bay and the V&A Waterfront are achieving the highest rental rates in the country.
Luxury villas in Camps Bay, Bantry Bay and Fresnaye now rent out for upwards of about $3,500 per month to $7,500 at the top end for a luxury home with sea views. While a modest three-bedroomed house in the southern suburbs can still be found for around $2,300, the average rental price for a luxury home in suburbs such as Constantia Upper and Bishopscourt now ranges from $3,900 to $4,600 per month with top end rates now reaching $7,500 to $9,200.
A two-bedroomed apartment at the V&A Waterfront can achieve between $2,300 - $3,000 per month and a luxury unit on the Front Yacht Basin can go for as much as $3,500 - $6,000 per month during the high season.
Even the western and northern side of the city has seen rental rates rise considerably. Where there were plenty of houses to rent at around $1,000 per month two years ago, now luxury properties in Bloubergstrand, Durbanville and Plattekloof are achieving rentals of up to $4,000.
Rentals in the middle price ranges have also been under increasing pressure, as local residents compete with expatriates for these properties in a very fast moving market. Good quality, affordable properties seldom stand vacant for long. Prospective tenants need to act quickly to secure these properties and there is little room for negotiation with landlords. Some agents have even started to arrange bulk viewings of properties, a tactic never before seen in the South African property market.
Some considerations and recommendations for companies moving their people to Cape Town include:
- If possible, plan moves to avoid the peak tourist season. Landlords are more negotiable in February than they are in November.
- Gated communities in the southern suburbs of the city (where most international and private schools are located) are few and far between, and even if housing allowances are sharply increased, there is very little availability. Consider revising security policy to be open to alternatives to only gated communities, such as apartments, clusters and free standing houses with excellent security features.
- Allow sufficient time for home-finding. It is often not possible to view fifteen houses in two days, due to the scarcity of available properties, meaning that the home finding process may be protracted.
- Be positioned to act quickly once a property is chosen. The ability to turn around a lease and arrange for deposit payments to be made in in under two weeks is critical to ensuring that properties are not lost. (Intouch Relocations can assist in expediting the lease process and making payments on behalf of our clients to secure properties, whilst still ensuring that the best interests of our client is protected and due diligence is followed).