Should You Buy a Small Apartment in Cape Town for Airbnb?
Studios and one-bedroom apartments have become one of the most accessible ways to enter Cape Town's property market. While larger homes and luxury apartments continue to command premium prices, smaller properties are attracting investors looking for strong rental potential without the same upfront capital.
Many buyers purchase these properties with short-term rentals in mind, using platforms such as Airbnb, Booking.com and LekkeSlaap to reach both international and local travellers.
But is buying a compact apartment specifically for short-term letting still a smart investment?
The answer isn't simply yes or no. It depends on the property, the location, your financial goals, and whether you've done your homework.
Why smaller apartments are attracting investors
For many buyers, a studio or one-bedroom apartment offers a lower barrier to entry than larger residential properties.
Beyond the purchase price, these properties typically cost less to furnish, maintain and service. Levies, utility bills and ongoing maintenance are often more manageable, making them appealing to first-time investors or buyers building a property portfolio over time.
Smaller apartments also suit the type of guests who regularly visit Cape Town. Couples, solo travellers, digital nomads and business travellers often prioritise location, security and convenience over extra bedrooms.
According to AirDNA, one-bedroom apartments make up more than half of Cape Town's active short-term rental listings, highlighting just how popular this segment has become among investors.
Cape Town remains one of Africa's strongest short-term rental markets
Cape Town continues to attract both local and international visitors throughout the year. While summer remains the busiest tourism season, the city also benefits from business travel, sporting events, conferences and an increasing number of remote workers choosing longer stays.
International visitors frequently book through platforms such as Airbnb and Booking.com, while many South Africans use LekkeSlaap when travelling locally. Together, these platforms provide property owners with access to a diverse mix of leisure travellers, business visitors and longer-stay guests.
Recent market data suggests average occupancy across Cape Town's short-term rental market sits at around 60–70%, although performance varies significantly depending on location, property quality and professional management.
The important takeaway is that not every short-term rental performs equally. A well-located apartment can achieve consistently strong occupancy, while a similar apartment only a few kilometres away may struggle to generate the same demand.
Location is everything
If there's one lesson experienced investors agree on, it's this: location has a greater impact on returns than almost anything else.
Neighbourhoods such as Sea Point, Green Point, De Waterkant, the City Bowl, Gardens and the V&A Waterfront continue to attract high volumes of visitors thanks to their walkability, restaurants, attractions and proximity to Cape Town's business and tourism hubs.
Guests generally value convenience. Being able to walk to cafés, beaches, restaurants or major attractions can have a meaningful impact on occupancy rates and nightly pricing.
High rental yields don't tell the whole story
Short-term rentals can generate higher income than traditional long-term leases, particularly during peak tourism months.
However, higher income often comes with higher costs.
Investors should budget for:
- Professional property management
- Cleaning between guest stays
- Linen replacement
- Utilities and internet
- Furniture maintenance
- Platform service fees
- Marketing and photography
- Periods of lower occupancy
Rather than focusing solely on potential nightly rates, it's important to understand your likely annual return after expenses.
Don't underestimate seasonality
Cape Town's tourism market isn't consistent throughout the year.
Peak summer months often see excellent occupancy and premium nightly rates, while quieter winter periods may require lower pricing or longer guest stays to remain competitive.
Successful investors plan for these fluctuations rather than relying on peak-season income all year round.
It's not just about tourists
Demand for short-term rentals extends beyond holidaymakers.
Cape Town also attracts digital nomads, business travellers, families visiting relatives, people relocating to South Africa, conference delegates and film production crews. This diversity helps support demand throughout much of the year, particularly for well-located apartments.
Check the building rules before you buy
One of the most important due diligence checks before buying a short-term rental investment is understanding the building's conduct rules.
Many sectional title schemes and body corporates regulate or restrict short-term letting, while some prohibit it altogether. Proposed regulatory changes have also been discussed at both city and national level, making it increasingly important for buyers to understand the rules before investing.
Before purchasing, buyers should confirm:
-
Does the body corporate permit short-term letting, and are there any restrictions on guest stays or letting periods?
- Future maintenance plans or special levies.
- Building security and guest access arrangements.
Taking the time to understand these requirements before purchasing can help avoid costly surprises later.
Ask yourself these questions first
Before purchasing a small apartment as a short-term rental investment, ask yourself:
- Does the location consistently attract visitors?
- Have I budgeted for quieter months?
- Can the property still work as a long-term rental if needed?
- Have I included management and operating costs in my calculations?
- Does the purchase price still make financial sense?
- Am I investing for immediate income, long-term capital growth, or both?
The bottom line
A smaller apartment can be an excellent short-term rental investment—but only when the fundamentals are right.
The most successful investors aren't necessarily buying the biggest or most expensive properties. They're buying apartments in locations with consistent demand, realistic pricing and strong long-term appeal.
Many buyers, particularly international investors, also value the flexibility these properties offer. A well-located apartment can serve as a lock-up-and-go holiday home when they're in South Africa, while generating rental income through short-term letting platforms when they're away.
As with any investment, careful research, realistic expectations and choosing the right property will ultimately determine your success.
Explore Apartments for Sale
If you're considering a short-term rental investment, choosing the right property is the first step. Browse our curated collection of studios, one-bedroom apartments and investment opportunities currently available across Cape Town.
