Nox Cape Town’s Nick Taylor
Owning a property is not just an investment, it’s also a risk, especially if your goal is to earn short-let income. Most owners think of risk in local terms: the season, currency, crime rate and maybe a new by-law. But increasingly some of the biggest risks are coming from much further afield: a war 6,000km away, or a decision made in an OPEC boardroom you’ll never see. Those are harder to predict, but they can hit your investment just as hard.
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According to Nick Taylor, Managing Director of Nox Cape Town, owners who understand these risks, and know how to hedge against them, are the ones whose returns will hold up over time.
To understand the risk, it helps to know where Cape Town’s guests actually come from. Nearly three-quarters of the city’s overseas visitors come from Europe. But one other market matters just as much: the Gulf.
Over the past few years, Cape Town has attracted growing numbers of UAE and Saudi guests escaping the Gulf’s soaring summer temperatures. They typically arrive in July and August, months that were traditionally very quiet. In February this year, the US and Israel struck Iran, and the Strait of Hormuz was closed. By June, the effects were showing up directly in occupancy data here in Cape Town. Gulf visitor numbers decreased massively, and across the whole Cape Town market, occupancy in June and July came in five to seven percentage points below the same months in 2025, making it the worst two-month stretch the market has seen in years.
The drop, however, wasn’t spread evenly across the city. The Atlantic Seaboard is home to Cape Town’s larger villas, which are the properties Gulf families usually book. So when visitor numbers fell, Atlantic Seaboard occupancy fell with them – the clearest sign of how a single global event lands hardest on the specific part of a city most exposed to it.
The war also pushed up costs. Jet fuel prices rose sharply, and the airline industry’s fuel bill went from around $252 billion to $350 billion, while profitability halved. That cost doesn’t stay with the airlines; it affects the price we pay for cleaning, laundry, linen and transfers for our guests on the ground.
The rand is its own, separate risk. It’s traded in a wide band this year, from around R15.70 to R17.20, making Cape Town more expensive for international guests, even though that never shows up directly in a booking calendar.
Looking ahead to December
Bookings are looking healthy. Airline capacity into Cape Town is strong, even as capacity shrinks elsewhere in the world: Virgin Atlantic is running eleven flights a week between London and Cape Town from October through March, Emirates added a third daily Dubai flight, and Lufthansa Group has its largest-ever South African winter schedule. Airline seats are booked up to eighteen months ahead, and that capacity typically leads bookings by six to nine months.
“Our bookings are tracking well too: by mid-August, more than half of Cape Town’s December period was already booked. But the same currency and cost risks described above haven’t gone away. Owners should treat the strong signals as a good sign, not a guarantee,” warns Taylor.
How to hedge against it. Taylor advises:
- Watch leading indicators, not lagging ones. Arrival statistics tell you what already happened last quarter. Airline route and capacity announcements are booked up to eighteen months out, and are the closest thing to an early-warning system this market has.
- Don’t depend on a single source market or season. A portfolio built entirely around one region’s summer, or one region’s economy, carries risk, as this year’s Gulf disruption showed. Diversifying deliberately is the hedge. Over the past year, Nox has been actively building up its bookings from the United States, attending US travel trade shows, targeted digital marketing, and making sure its properties are easy to find whether a traveller is searching online or asking an AI assistant for recommendations.
That effort is paying off: the US became South Africa’s leading overseas source market in both May and June this year, now sitting alongside Nox’s traditional European base rather than replacing it. Spreading demand across regions like this, deliberately and for reasons unrelated to any one shock, reduces how exposed a portfolio is to any single event, in any single part of the world.
- Price in local currency, and manage your calendar instead. Trying to hedge a currency that can move by a rand and a half in a year usually costs more in complexity than it saves. What you can manage is your forward-booking curve, knowing how far out your peak season typically sells, and pricing early bookers at a premium instead of discounting out of nerves.
- Favour yield and length of stay over occupancy alone. Fewer, longer bookings mean fewer changeovers, and far less cost and risk per night sold. That can really help to buffer against shocks like the 34% year-on-year rise in fuel costs, without needing to react on price.
- Read your own submarket, not the citywide average. Citywide numbers can hide what’s really happening at street level. This year, a wave of new, cheaper listings in Cape Town’s City Bowl consisting of over a thousand new listings, resulting in close to 28% growth, at around a fifth of Atlantic Seaboard rates, ended up dragging the citywide average down, even while established submarkets held or grew their rates. Owners who only look at headline numbers often end up solving a problem they don’t have, or missing one they do.
The days of the rand doing the work are over
Cape Town is still a good investment. Supply on the Atlantic Seaboard is genuinely limited, and demand is strong enough that an 11% rise in listings didn’t push rates down. But the passive approach, which many who are still looking to enter the market take (buy an apartment, list it, and let the exchange rate do the work) simply won’t work anymore.
Global volatility, whether it’s a war, a currency swing, or a new by-law, is now a standing part of short-let returns in this city, not an occasional disruption to them. Owners who plan for that, instead of being surprised by it every time, are the ones whose numbers will still make sense in ten years, not just this December.
