The Impact of Short-Term Rentals on Housing in Nairobi and Across Africa

Short-term rentals are reshaping housing dynamics across the continent, particularly in Nairobi, where the effects have become acute.

According to Knight Frank’s Africa Horizons 2025/26 report, an estimated 15% of Nairobi’s housing units have transitioned to short-term rentals, leading to a 10% rent increase over two years.

This change has intensified competition between long-term tenants and transient guests, contributing to affordability concerns.

“Residents are now competing with this new demand,” Knight Frank notes, highlighting how platforms like Airbnb have disrupted conventional urban tenancy models.

While the shift provides new income streams for property owners and flexible accommodation options for travellers, the impact on housing access for Nairobi’s working population is troubling, especially amid wage stagnation.

“Policymakers face a delicate task: harnessing the economic benefits of short-term rentals without deepening the housing crisis,” the report warns.

Beyond Nairobi: A Pan-African Phenomenon

Across East Africa and the wider continent, cities such as Cape Town, Lagos, and Nairobi have seen explosive growth in short-term rental markets.

Cape Town hosted over 700,000 Airbnb guests in 2023, generating approximately US$778 million in GDP value. During Lagos’ 2024 festive season, short-let apartments generated more than US$13 million in revenue, demonstrating the platform’s expanding footprint.

“Africa’s short-term rental market is surging… but it also sparks concerns about housing affordability,” the Knight Frank report cautions.

The concern is particularly pronounced for urban populations: 54% of East Africa’s city dwellers already live in informal settlements, making upward rent pressures especially destabilising.

Housing Deficit in Select African Countries

Source: Knight Frank, Census & Government reports, World Bank, Statista

Socioeconomic Strain on Households

Platforms like Airbnb offer travellers affordability and location flexibility, but local workers are feeling the pinch. As highlighted in the report:

“Salaries in 2024 lagged behind inflation and cost of living measures for the fifth year in a row, weakening workers’ purchasing power and their standards of living.”

This disparity threatens long-term housing security and undermines sustainable urban growth.

Strategic Policy Recommendations

To prevent short-term rental growth from worsening the housing crisis, several regulatory interventions are recommended:

1. Cap Short-Term Units per Property
2. Prevent market domination by commercial operators to preserve residential access.
3. Incentivise Purpose-Built Developments
4. Encourage developers to construct mixed-use buildings with dedicated Airbnb floors, reducing pressure on long-term housing.
5. Mandate Data Transparency
6. Require platforms to share real-time rental activity data to help governments refine regulations and assess market impacts.
7. Enforce Zoning Regulations
8. Restrict short-term rentals in high-stress residential zones to protect local tenant stability.

The Path Forward: Equity Through Planning

The rise of short-term rentals presents an opportunity for property investors and hospitality markets across Africa. However, proactive governance and land-use reform are crucial to ensure these benefits don’t come at the expense of affordability and housing equity.

“Policymakers must prioritise land tenure reforms, developer incentives, and expanded financing—such as rent-to-own models and cooperative housing—to temper the impact of short-term rentals,” Knight Frank recommends.

By blending market innovation with urban planning foresight, governments can cultivate vibrant real estate ecosystems while safeguarding the rights and livelihoods of long-term residents.

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