Flexible, hybrid living is driving the rise of medium-term rentals

In the dynamic, global real estate landscape, the rise of medium-term rentals of 1-6 months is reshaping traditional norms in leasing and hospitality practices, particularly in vibrant cities like Cape Town and San Francisco, which offer an appealing ‘home base’ for those seeking flexible lifestyles.

Remote work and the demand for flexible living across the world is driving the rise of medium-term rentals, says St John Gardner, commercial director and co-founder of Neighbourgood.

According to Global Citizen Solutions, the number of remote workers around the world increased from around 10.9 million in 2020 to 35 million in 2024, representing a 224% increase, and in a report by Skyscanner, by 2030 an estimated 60 million people are expected to be working remotely from anywhere in the world. Meanwhile, the World Economic Forum’s projection for remote-capable jobs estimates over 90 million roles by 2030.

Gardner says for any investor in property, maximum occupancy with high-quality tenants, lucrative rental returns and hassle-free management are key 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 best of short-term rental upside with traditional long-term rental risk mitigation and better through-occupancy over the full 12-month year.”

The middle is the new way ‘up’

Neighbourgood sees the gap between the two historically separate options of short- and long-term rental closing rapidly, with property owners and managers or operators recognising 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 cater effectively 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, it 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 offering landlords a stable income stream that often exceeds that of long-term leases on a monthly basis. This net rental advantage, coupled 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 emerged as a preferred option. Landlords benefit from steady occupancy rates and higher rental yields compared to traditional long-term leases, leveraging the city’s appeal as a global destination.

Similarly, in San Francisco, where the tech industry drives rapid employment shifts and housing demand fluctuations, medium-term rentals provide landlords with agility in adjusting rental rates to match evolving market conditions. This adaptive pricing strategy enhances property profitability while accommodating the diverse housing needs of a transient workforce.

Gardner says key advantages of medium-term rentals for investors are:

• Medium-term rentals command premium pricing while avoiding excessive turnover and running costs.
• There is lower vacancy risk as 85-90% occupancy is achievable compared to the inconsistent demand of short-term rentals, which on average fluctuate between 65-75% and have a much higher risk profile than longer-term rentals due to reliance on ad hoc bookings vs contractual income.
• Fewer tenant turnovers mean less frequent deep cleaning and maintenance costs.
• There is growing demand in key markets. Cities like Cape Town and San Francisco enjoy 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.”

Issued by Gaye de Villiers on behalf of Neighbourgood