SOUTH Africa’s inner cities have benefited significantly from government initiatives for regeneration with the private sector investing billions of rand into rehabilitating derelict buildings and providing low-cost housing.

Research unveiled in the 2006 Trafalgar Inner City Report – dubbed “Princes and Paupers” - shows that mechanisms like City Improvement Districts had contributed towards rebuilding inner cities in the country’s major metropolitan areas with Cape Town already attracting around R11bn investment.

Since 2000 more than 50 central business district (CBD) buildings have been renovated, translating into an R11bn cumulative investment in the city centre measured in terms of the capital value of current leases, new developments, investment purchases, upgrades and renewals. The report indicates that by the end of next year, 2700 new apartment will be built in the Cape Town CBD, boosting the number of apartments brought on to the market since the regeneration to 3500 and creating homes for 8000 new residents.

In Johannesburg the metropolitan council has offered debt relief to investors prepared to upgrade run-down buildings, translating into 15 inner city buildings undergoing renovations worth R500m. This was in return for the council writing off R250m in arrears on rates and taxes. The Durban CBD, which essentially averted the degeneration that affected Johannesburg and Cape Town, has become home to aspirant young black professionals and civil servants, as well as the poorer population operating within the informal sector.

B-grade office accommodation has undergone rudimentary conversions to workhouse-type residences and small family rooms portioned off with chipboard walls. However, the council has expressed vigilance in monitoring landlords in these and other sectional title buildings.

Trafalgar Chairman Neville Schaefer said downtown South Africa reflected the growing demand for living and working within the same geographic space. Tenants were savvier and owners were reaping the rewards for property investments in areas previously marginalised by bank red-lining. “The levels of upkeep have improved as owners show pride in their investments, thus diminishing the decay too often associated with inner city living. Property remains a key investment holding and now that phenomenon is being reflected in the inner cities,” Schaefer said.

Established more than 30 years ago, Trafalgar has a proven track record in the property management and financial services industry. Via a national branch network, the family-owned business lets and brokers residential and commercial properties as well as manages bodies corporate, Home Owners’ Associations and commercial and industrial properties.

The current portfolio covers 60000 residential units in 1200 buildings nationally and more than 1-million sq mt of commercial and industrial premises in the country’s major metropolitan centres. As the largest specialised property insurance broker in South Africa, Trafalgar Financial Services also has an insurance book touching R30bn.

Schaefer said nationally people were flocking to the inner cities, but most earned too little to rent flats and thus slum blocks had evolved as the only viable alternative. Inner city statistics revealed that between 37% and 49% of the people living in the country’s inner cities were employed. Cape Town again scooped top honours followed by Pretoria with 45%, Johannesburg (44%), Port Elizabeth (43%), East London (39%) and Durban.

The report highlighted that the anticipated R28bn Gautrain would significantly impact on the property around the anchor stations in downtown Johannesburg and Pretoria. Financial modelling concluded by property information company eProp showed direct private sector development around the two inner city stations was conservatively R1,1bn with the project generally boosting densities near the station sites.

International experience suggested gross densities of 25 dwellings per hectare were required to attain acceptable passenger levels. Passengers using the service for retail shopping purposes generated 10 times more trips than passengers who required the public transport system between their home and work.

However, the report indicated the Johannesburg station would attract more than 500000 sq mt – or between 5000 and 6000 units - of new residential development as well as significant investment in schools, crèches and colleges. There were also opportunities for bringing warehousing, light industrial sites and parking facilities to the market. Calculated at R6500 per sq mt, the report said the investment could top R22,7bn.

The Pretoria station, modelled to accommodate 56000 passengers daily by 2017, would be incorporated into the Pretoria CBD Regeneration Plan. This initiative anticipated a sound mix of land uses and facilities including high density residential, community and retail facilities and offices.

The future direct additional value around the station would amount to more than R500m or 78000 sq mt at current prices. Schaefer said essentially the Inner City Report provided a bird’s-eye view for the new rich and poor. What had emerged was the extent to which the growing demand for quality inner city accommodation was creating pockets of gentrification that were displacing the poor.

“While the demand brings with it long-awaited impetus for renewal, it also has the effect of moving the problems of accommodating the poor in decent homes,” he said.

Issued By:
Marshall Inc Communications
Kerry Osborne
031 201 9745
083 701 5592
This email address is being protected from spambots. You need JavaScript enabled to view it.