Digital nomads, the remote workers of the world, are finding Cape Town an attractive destination, but they’re perceived as contributing to rising rentals.
The city offers comfortable accommodation and work spaces, easy access to outdoor activities and a buzzing food scene, and it is budget friendly as long as you earn euros or dollars.
But as rentals go up, many Capetonians are struggling to make ends meet. Experts say it is a balancing act that needs policy intervention. On top of this, the government plans new regulations to make it easier for nomads to stay and work in the city for longer.
As President Cyril Ramaphosa has promised a visa points system to retain critical skills, Jacques Moolman, president of the Cape Chamber of Commerce & Industry, says the benefit to the economy of attracting digital nomads lies in their spending power.
“Cape Town, in particular, with its solid infrastructure, world-class tourist amenities and tertiary education facilities, is fast realising its potential as a global city,” says Moolman.
“The long-term gain of attracting digital nomads far outweighs the inevitable short-term pain caused by a shortage of housing and rental supply. This shortage is worsened by semigration, as Cape Town continues to attract nomads from underperforming South African cities. However, in the long term the market should correct this imbalance.”
Moolman says the challenge for the government is to stimulate economic growth so that more people can be employed and afford property or rentals. “Stimulating the economy will also generate the tax revenue necessary to subsidise the poor. The government has a social development mandate to provide short-term measures.”
Moolman says Cape Town, as the biggest beneficiary of digital nomads, may need to consider additional measures to help those threatened with eviction from their generational homes because of gentrification.
“In the longer term the solution is to increase housing supply. Supporting job creation and growing the economy is, in our view, the most reliable way of creating long-term security for families earning below [a certain] threshold, [as] housing opportunities are inevitably tied to income potential.
The government needs to explore how to strengthen tenant protection against rising rentals
— Disha Govender
“There is enormous frustration regarding the high rentals and the general state of the economy. But by far the highest level of frustration is felt by people who have been completely locked out of the economy due to the government’s failure to expand it and improve service delivery. The frustration felt by those suffering the short-term effects of high rentals is surely just a fraction of the pain and suffering felt by the destitute and unemployed in desperate need of employment,” says Moolman.
Much as the presence of digital nomads benefits Cape Town, many working-class families in the city won’t experience these advantages. Disha Govender, head of the Ndifuna Ukwazi Law Centre, says that though there may be some pros, there are also significant cons.
“There is a risk that it could advance gentrification, as property owners and developers may seek to take up the opportunity to earn more by catering for the digital nomads who may be able to pay more because of the exchange rate — and that this may be at the expense of local people.” Govender says it may affect what is available for long-term rental housing, which families usually need.
She says the government should use public land to build affordable housing. It should regulate the private sector to ensure it contributes to such housing and regulate the property market and those in it who contribute to increased prices and rents.
“The government needs to explore how to strengthen tenant protection against rising rentals. The current mechanism, which includes the option of referring complaints of exorbitant rental increases to the Rental Housing Tribunal, does not sufficiently protect people. We often see that in such cases landlords simply exercise their right to cancel the lease or to not renew it.”
Ndifuna Ukwazi recently represented residents of Bromwell Street, Woodstock, at the Constitutional Court, challenging Cape Town’s emergency housing programme. Woodstock is traditionally a working-class suburb but has become a trendy and desired neighbourhood. This has resulted in some families facing eviction.
“Poor working-class Capetonians are being excluded from living in the city as no provision is being made for affordable housing for the poorest of the poor,” says Govender. “Bromwell Street residents’ experience reflects the insecurity of tenure that working-class people face.”
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