Murray Clark
Neighbourgood
CEO and co-founder
St John Gardner
Neighbourgood
Commercial director and co-founder
In the dynamic global real estate landscape, the rise of medium-term rentals of 1 to 6 months is reshaping traditional norms in leasing and hospitality practices, particularly in vibrant cities such as Cape Town and San Francisco, which provide an appealing ‘home base’ for those seeking flexible lifestyles.
Remote work and the demand for flexible living across the world are driving the rise of medium-term rentals, says St John Gardner, commercial director and co-founder of Neighbourgood, a Cape Town-based hybrid hospitality company that buys and renovates properties to create a combination of co-living, working, and lifestyle spaces. They then share the value created from the renovation with co-investors who own a share in the company that owns each property.
According to Global Citizen Solutions, the number of remote workers around the world increased from approximately 10.9 million in 2020 to 35 million in 2024, representing a 224% rise. Additionally, a report by Skyscanner estimates that by 2030, around 60 million people will be working remotely from anywhere in the world. Meanwhile, the World Economic Forum’s projection for remote-capable jobs estimates over 90 million positions by 2030.
Gardner states that for any property investor, maximum occupancy with high-quality tenants, profitable rental returns, and hassle-free management are essential factors.
Bridging the gap between long-term stability and short-term flexibility, this emerging trend towards medium-term rentals in world-class cities such as Cape Town and San Francisco caters to the dynamic needs of today’s tenants while optimising returns for landlords. It offers a unique opportunity to blend the advantages of short-term rental upside with traditional long-term rental risk mitigation and improved occupancy across the full 12-month year.
A common space in Neighbourgood Hill in Green Point, Cape Town
Exterior view of Neighbourgood Sutter in San Francisco, USA
Exterior view of Neighbourgood 1st Crescent in Camps Bay, Cape Town
Exterior view of Neighbourgood Hill in Green Point, Cape Town
The middle is the new way ‘up’
Neighbourhood sees the gap between the two historically separate options of short- and long-term rental closing rapidly, as property owners and managers or operators recognise that the ‘middle’ or intersection between the two segments is ideally placed to capitalise on the growing shift towards remote work and the rise of those who have more flexible accommodation requirements.
One of the standout advantages of medium-term rental lies in its flexibility. Unlike the rigidity of long-term leases, which typically lock tenants into commitments of a year or more, and the transient nature of short-term rentals, medium-term leases strike a balance. They provide tenants with the stability of a longer stay without the long-term commitment, appealing to remote workers, expatriates and professionals seeking temporary accommodation solutions.
“Cape Town and San Francisco are two specific cities where the demand for flexible housing options tends to fluctuate with seasonal and economic trends,” says Gardner. Medium-term rentals effectively cater to this demand by offering landlords the ability to adjust rental rates more frequently than in long-term leases, responding promptly to market conditions. This flexibility not only enhances occupancy rates but also optimises rental yields, adapting to varying demand cycles throughout the year.
From a financial perspective, medium-term rentals also present a compelling case. Unlike short-term rentals, which may incur higher turnover costs and experience more wear and tear due to frequent tenant changes, medium-term leases strike a balance. They minimise turnover-related expenses while providing landlords with a stable income stream that often exceeds that of long-term leases on a monthly basis. This net rental advantage, along with reduced vacancy periods, contributes significantly to the overall profitability of rental properties.
In Cape Town, a city renowned for its seasonal influx of tourists and remote workers, medium-term rentals have become a popular choice. Landlords enjoy steady occupancy rates and higher rental yields compared to traditional long-term leases, capitalising on the city’s appeal as a global destination.
In San Francisco, where the tech industry drives rapid shifts in employment and fluctuations in housing demand, medium-term rentals offer landlords the agility to adjust rental rates in response to evolving market conditions. This adaptive pricing strategy enhances property profitability while catering to the diverse housing needs of a transient workforce.
Gardner says key advantages of medium-term rentals for investors are:
Medium-term rentals command premium rates while minimising turnover and operating costs.
There is a lower vacancy risk as 85-90% occupancy is achievable in comparison to the inconsistent demand of short-term rentals, which on average fluctuate between 65-75% and carry a much higher risk profile than longer-term rentals due to reliance on ad hoc bookings versus contractual income.
A reduction in tenant turnovers leads to less frequent deep cleaning and lower maintenance costs.
Demand is growing in key markets. Cities such as Cape Town and San Francisco are experiencing increased demand for flexible, furnished rentals from remote workers, young professionals, business travellers, and expatriates.
And there’s a further benefit for tenants, as Murray Clark, CEO and co-founder of Neighbourgood, points out: “For decades, consumers have only ever experienced the luxury of hospitality amenities and guest services at traditional hotels. But as consumer expectations shift, so too does the requirement to bring hospitality-level amenities to the estimated 2.4 billion rental homes around the world. If hotels and apartment buildings were once considered distant cousins, they are potentially now more closely related siblings.”
Adds Gardner: “In both Cape Town and San Francisco, medium-term rentals strike the perfect balance between rental income, stability, and operational efficiency. Investors can benefit from higher net returns than long-term leases, lower costs and more stability than short-term rentals, and increasing demand from remote workers and professionals.
“For property investors looking for a profitable, low-risk and hassle-free income stream, medium-term rentals present a very compelling investment strategy for 2025 and into the future as the trend towards flexibility is not showing any signs of diminishing.”
Neighbourgood operates and manages several properties in Cape Town and San Francisco, with investments starting from R500 000 and investment periods ranging from 5 to 10 years, along with hybrid rental durations.
For further information email hello@neighbourgood.co or telephone +27 (0)21 140 6778.
Issued by Gaye de Villiers on behalf of Neighbourgood