KATE THOMPSON DAVY: Have the promises of the digital sharing economy withered on the vine?

The “as-a-service” model of platforms such as Airbnb, WeWork and Uber disrupted industries, created competition for incumbents, and offered the promise of side-hustles and extra income to Joe Public. The principle remains alluring: we don’t have too little, we have unequal distribution.

By listing your spare bedroom for rent or adding your car to a ride-share scheme you would make money, help those who need those services, and reduce the nonproductive downtime of such assets. In 2024, though, many are starting to look askance at the model and ask if the dreams of the digital-enabled sharing economy have morphed into a nightmare of insecure gig jobs and rising rents.

In Barcelona this weekend thousands of people participated in a protest against mass tourism in the city, shouting “tourists, go home”, blocking access to hotels and restaurants, and — in a few cases — even using water pistols (the toy kind, not high pressure) to spray tourists in a direct protest against overcrowding in the city.

A major villain in their narrative is Airbnb and other share-economy accommodation platforms (such as Booking.com and Homeaway) that promise rooms as a service. In June the city’s mayor pledged to, in effect, ban short-term tourist lets in Barcelona by end-2028 by not renewing landlord tourist licences, which he claimed would have an effect “equivalent to building 10,000 new homes”.

Barcelona isn’t alone. Many global cities have dramatically regulated to curb the “Airbnb effect”. A Bloomberg article from June provided this useful summary: “Cities including New York, Vancouver and Tokyo now insist that hosts must live in apartments they rent, while San Francisco and Seattle limit the number of properties a single host can list. Dallas has banned short-stay apartments from certain neighbourhoods, while many others — London, Amsterdam and Paris among them — have placed limits on the number of nights an apartment can be rented annually on the market.”

There are signs that such protests could find fertile ground locally, especially in Cape Town. The Mother City has a booming short-term let market and is a top-ranked destination for “digital nomads”. But it also has an acknowledged housing crunch — in both supply and affordability terms.

SA formally introduced a digital nomad visa in March 2024, and certainly the nomad spend is something most agree we desperately need. Cape Town Tourism has been collaborating with Airbnb on initiatives to encourage such visitors for years. The power of tourist spend cannot be downplayed or denied. But the global cost-of-living crisis has made the conversation far less one-sided.

Writing for Bloomberg this week, former US labour department chief economist and academic Betsey Stevenson argues that a ban on Airbnb isn’t the salve people want it to be and may make the situation worse. “Allowing residents to rent out their homes can help them recoup some of their investment and make city living more affordable.”

But her focus in the article seems to be the spare-room contingent who benefit when there is increased demand (around an event like the Olympics) and fails to address the vacancy conundrum caused by “entire place” short-term lets, where landlords make more money off a handful of room nights a year than they would from long-term tenancy. In Cape Town this is a real issue.

It’s a topic that’s irked residents and advocates of affordable housing alike. As property writer Joan Muller wrote in the Financial Mail in February: “The trend is prompting the body corporates of apartment blocks, which have historically been occupied largely by permanent owners and long-term tenants, to ban short-stay lets.” Muller’s industry sources suggest that it is more common than my own do.

I recently spoke to someone who is now the only long-term resident in his building. Beyond the anecdotal, data from InsideAirbnb — a collaborative advocacy project — shows that Cape Town (including Somerset West) has about 23,000 listings on Airbnb, of which 81% are offered as “entire houses/apartments”. Filtering for recent and frequent bookings drives this right down to 5,000, of which 92.6% are rented as an entire units.

On average, those units are renting out at R3,000 a night, with short term accounting for 99%. They have been booked for an average of 135 nights in the past 12 months (36% of the year). The average income from these is R403,702 a year. (This drops to R132,000 if we zoom back out to the full 22,000 listings, rather than the oft-booked outliers.)

Cape Town is the only African city listed on the site, but it also boasts more Airbnb listings than Singapore, Amsterdam and San Francisco combined. That is a lot of housing stock for a city that runs on an vacancy rate of just 2.5%, far below the national average of 7.9%, according to Business Tech, citing research from Rode & Associates.

Is it fair to lay the blame at the feet of Airbnb itself? No! And for the record, this is not my intention. There are multiple truths in the mix here: the Airbnb model is an innovative one that promotes tourist access, and the effect of Airbnb on rental prices and housing stock is becoming a global concern.

The truth, to my mind, is that scarcity is the cause of the discord here. If there was loads of affordable housing, losing a portion of it to the tourism trade wouldn’t hurt. So how do we ensure we reap the economic benefits of this tourist mecca and digital nomad trend without sacrificing locals on the altar of property investment?

Writing in the first edition of The Digital Economy in 1995, Don Tapscott warned: “Some signs point to a new economy in which wealth is even further concentrated, basic rights like privacy are vanishing, and a spiral of violence and repression undermines basic security and freedoms.”

Tapscott is a consultant and author whose focus is the effect technology is having on business and society. In the Harvard Business Review in 2016 he reflected: “Technological utopians are being proven wrong by the facts: technology does not create prosperity, good democracy and justice — humans — do.”

My 2c on that: we must recognise that technology has an amplifying effect, rather than offering pure solutions. 

• Thompson Davy, a freelance journalist, is an impactAFRICA fellow and WanaData member.