Urban Densification Imperative in South Africa

As part of a natural demographic trend that happens as countries develop. It is also happening at a much larger scale than people may believe. According to the Centre for Development and Enterprise (CDE), 70% of South Africa’s population will be urbanized by 2030, with more than 60% urbanized already. South Africa’s urban development and, in particular, the current approach to making housing investments have contributed to enormous and unsustainable urban sprawl as people continue to flock to urban areas and inner cities. Urban densification must be managed carefully to avoid creating urban decay in the process. This challenge cannot be done with the traditional property development approach of building single, large scale and often comparatively expensive projects on the periphery.

Lockdown restrictions implemented to contain the COVID-19 pandemic catalyzed the adoption of work-from-home strategies for many traditionally office-based employees. Even with restrictions easing, many companies are either not returning to the office, or are reducing the office space they rent, to reduce costs. Many large, listed organizations and investors who own commercial properties in inner cities are either looking to sell or transform their building stock into residential or mixed-use developments. Inner cities are multi-sector economies that, when managed well, attract pedestrians, commercial activity and reliable tenants while stimulating new businesses. As ordinary South Africans remain under financial pressure, and as working from home becomes part of the ‘new normal’, people seek affordable, decent accommodation with access to physical and social infrastructure. A certain level of urban densification is necessary for economic and social action. It contributes to economic development at a micro level, which is by its nature inclusive. Stimulating the economy in localized spaces – one city block at a time – is critical to uplifting people from poverty. As South Africa’s economy seeks to recover from the impact of the pandemic, this kind of inclusive growth will be crucial. While still being aimed at stimulating micro-economies in the immediate surroundings of a development so that urban densification largely has a net positive fiscal impact. This not only stimulates economic growth but attracts people that are more likely to be able to pay for services, rates and taxes. These projects also require less upfront investment, as they make use of existing infrastructure that can be refurbished or improved.

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