Cape Town Airbnb Market – Where strong fundamentals, solid yields, and capital growth meet (in a beautiful setting, one of the greatest places on earth).

Throughout my property investment journey, I’ve often been faced with an either-or situation, where I’d have to choose between capital growth and yield. It is more often than not the case that in your more exclusive areas, you will experience wonderful capital growth, but lower yields, and vice versa.

But, when you look hard enough, do your research, and put in the work required to perform proper due diligence, you often do find those sweet spots in the market where you get the best of both. And for that, the fundamentals need to be strong.

So, let’s look at the fundamentals of this market in the most simplistic way possible – Economics 101 style – supply and demand.

Supply:

• Very limited.

• Due to the small geographical size of Cape Town.

• Limited by a mountain on one side and an ocean on the other.

Demand:

• High.

• Very popular among travelers from the Northern Hemisphere.

• The visitors’ strong currencies Euro, USD, and GBP make it even more attractive to them.

• Every year, Cape Town is voted as one of the top tourist destinations in the world. This year, again, the popular UK publication, The Telegraph, had its readers vote Cape Town the No. 1 city in the world.

High demand and low supply are a beautiful mix for anyone who understands the basic fundamentals of business, regardless of the industry.

But let’s cut to the chase and show some actual numbers:

These are the actual numbers on one of our units, 606 Docklands in De Waterkant, Cape Town, from May 2021 (where Covid still had an impact) to September 2023. Expected figures for October 2023 to March 2024 have also been included, based on the market info at hand.

We purchased this unit for R6m at the end of 2020. This same property is now worth around R8.5m.

Now, of course, the market has since recovered from Covid, and yes, we got in at the exact right time, when owners were offloading out of fear for the impact of Covid. The fact that we own a stake in what is, in my opinion, the top Airbnb management company in Cape Town is, of course, a plus too.