Most global cities now have restrictions, and in some cases an effective ban, on short-term rentals. Here are some examples, along with their annual nightly rental cap as I understand them (and by this, I mean what ChatGPT is telling me):
Berlin: Secondary residence rentals are limited to 90 days per year
London: Annual cap of 90 nights
Mexico City: Annual cap of 180 nights
New York City: Only host-present stays allowed
Paris: Annual cap of 120 nights
Rio de Janeiro: Annual cap of 90 nights
San Francisco: Annual cap of 90 nights
Singapore: Minimum stay of 3 months for private properties and 6 months for HDB properties (Singapore's public housing authority)
Sydney: Annual cap of 180 nights
Toronto: Annual cap of 180 nights
These rules and caps will have nuances to them. Like if you want to rent your place on the third Tuesday of a month and your property faces west and has a view of an outdoor terrace with no more than 6 brass bistro tables, you probably require a special license. Okay, this isn't true. But broadly speaking, most cities now have strict caps in the range of 90-180 nights and differentiate between whole-home rentals and host-present stays.
What this, of course, means is that most big cities don't want people operating short-term rentals as a business. They'd like hosts to be people who maybe rent out their place while they're away on vacation and/or offer up an extra room when some conference or event is taking place in town. In other words, cities do not want short-term rentals to negatively impact their supply of long-term rentals.
It's no wonder that Airbnb is investing heavily in both its "experiences" and "services." It has to do this because its core "homes" business is facing significant regulatory headwinds. But what this also means is that the hospitality industry is now shifting toward other solutions — things like aparthotels/serviced apartments. These are purpose-built solutions that typically require commercial zoning.
Globally, the aparthotel segment is expected to be the fastest-growing subset in commercial lodging for the remainder of this decade. And that makes sense. With STR regulations only becoming more stringent and with the continued rise of digital nomadism, the demand for this kind of apartment-like product is going to need to be satisfied in other ways.
There's clearly a market for kitchens, washing machines, and a bit more space.
Cover photo by Aquilion Property on Unsplash
One city that we didn't talk about from Monocle's recent Quality of Life Survey, but that regularly appears on the list, is Tokyo. In this year's ranking, it was bestowed with "best for cleanliness."
All of this isn’t to say that there’s no rubbish in Tokyo but, overall, it’s much tidier than other cities of a comparable size. Tokyo spends a fortune on keeping things presentable. The Clean Authority of Tokyo’s waste management budget for the central wards is ¥105bn (€640m) this year, of which ¥83bn (€507m) is dedicated to cleaning. But the secret to the city’s sparkle is that it’s not simply the work of city employees: it’s a collective job.
If any of you can remember my "Takeaways from Japan" post from this earlier this year, you might recall that cleanliness shows up in my first point. It is absolutely astounding that the largest city in the world — it almost has the entire population of Canada — manages to be so clean. On top of this, it manages to achieve this with almost no public garbage bins.
If you've been to Tokyo, you'll know this. There are very few places to throw out your garbage in a public space. This is perhaps the irony of Tokyo's cleanliness. But it works because of the expectation that people will take their garbage home and then sort it according to the city's strict separation rules. And of course, this is what people do.
That said, there are some other reasons for the lack of public bins, namely the 1995 subway sarin attack. There remains a deep fear that garbage bins might be used to conceal a terrorist device, which is why if you do see a garbage bin, it'll often be transparent in nature so that nothing nefarious can be concealed. But by and large, the Tokyo approach seems to work because everyone wants it to.
This reminds me of an incident when our ski and snowboard group was there in February. We were walking around Harajuku and a few of us decided to indulge in a set of elaborate desserts involving crepes, various fruit-like mixtures, and an absolutely excessive amount of whipped cream. You know, the sort of thing you'd never order if you were at home.
One of us ended up wearing their dessert. He had it on his face, his chest, his hands, and somehow all over this jacket sleeves. There was whipped cream everywhere. He needed to abandon ship immediately and rid himself of what remained of his dessert. Except, there were no garbage bins anywhere! This is despite being on one of the busiest tourist streets in the city (see cover photo).
It became a mission to get himself cleaned up. But what he absolutely did not do is litter. That's just not how one conducts oneself in Japan — with or without public garbage bins.
According to the Financial Times, Cape Town's population (metropolitan area) grew by 27.6% from 2011 to 2022, landing at approximately 4.77 million. Last year it was estimated at 4.97 million. At the same time, residential property prices increased by about 160% during the period from 2010 to 2024, outpacing all other cities in South Africa. Last year the average price of a home increased by 8.5% in Cape Town versus the national average of 4.5%. And as is the case in most desirable cities around the world, this has some people worried.
But who and what is to blame?
Is it because of tourism? It is estimated that there are some 25,800 active short-term rental listings in the city. Is it digital nomads? South Africa recently launched a Digital Nomad Visa program allowing foreign nationals to live and work in the country provided they can demonstrate an annual income of at least 650,976 ZAR (US$37,500). However, this is a recent thing. Is it foreigners coming with US dollars, euros, and/or pounds? Or is it because of internal migration, which South Africans refer to as "semigration?"
As always, it's a debate. But I think the outcome we are seeing makes intuitive sense for at least three reasons. One, Cape Town is an objectively beautiful and amenity-rich city sandwiched between mountains and the ocean. See above cover photo. It also has a warm and temperate climate. The average high in January (their summer) is 29 degrees and the average high in July (their winter) is 19 degrees. This is a huge competitive advantage — albeit a natural one.
Two, it's a relatively safe place. The above FT article quotes a transplant from Johannesburg saying, "You can't ride your bike in Joburg unless you are in a walled-off estate." If you have the means, that's a strong motivator to move somewhere else. And it's understandably easy to assign a lot of value to safety and security. "Sure, this home may be more expensive, but I can walk to places and ride my bike without fear." That's something worth spending money on.
Lastly, we are all becoming less tethered to specific locations. Digital nomadism and remote work are here to stay. But I don't think this means that people are going to just decentralize and move to the middle of nowhere. I think it means that people are going to increasingly vote with their feet and choose exactly where they want to live their life. What this means is that the need to create better places is only going to become more important. Because more than ever, every place is now in a global competition for talent and investment dollars.
Cover photo by Tobias Reich on Unsplash