• An urbanising population and influx into Johannesburg is resulting in population growth. • There is evidence of competition between commercial and residential uses as higher densities in the residential property market allows it to compete against the commercial property sector. This is indicative of not only residential values increasing, but also the declining value and uptake of commercial use. This feeds into the cycle of skewed neighbourhoods, including the inner city and those proximate to it. • The growth of the affordable housing market and the demand for housing in this income bracket has meant that there are rising prices making housing less affordable (Viruly Consulting 2015: 7).
Figure 1. Size of the South African property sector (Africa Property News 2016)
• Inner city office vacancies are high and almost double that of decentralised nodes throughout South Africa. Johannesburg’s inner city vacancy rates at the end of the second quarter in 2016 were 20% (SAPOA 2016: 9). • Office developments are primarily located within 10 nodes in Gauteng, the leading one being Sandton CBD with 41% (SAPOA 2016: 2, 12). • There was vacancy rate recovery in some of the nodes, but these were determined by locality. • SAPOA argues an improvement in office vacancies is contingent upon macroeconomic factors. • There are new developments underway but these are largely those that are already prelet (SAPOA 2016: 11). In addition, the retail sector appears to be outperforming other sectors of the property market at present. The latest Vukile Property Fund Annual Report showed that in their national portfolio retail properties have experienced greater growth and more stability than the industrial or office sectors (Vukile Property Fund 2016: 13). This cannot be generalised
to all property trends, but it does give an idea as to where some growth is being seen. Nodal analysis in industrial vacancy rates shows a variance depending on the node, with some showing significant growth and others being sluggish. Ahmad and Pienaar (2014: 107) confirm that the growth in industrial developments is largely within 500m of existing industrial areas, and that less than 2% of rezoning applications were for industrial use. SAPOA argues that the e-toll system in Gauteng has influenced the growth in certain nodes (SAPOA 2015: 9). Viruly Consulting contends that on the basis of current trends, the property market should see some growth in 2015/2016. In their 2015 analysis of the property market in Johannesburg they argue that the conditions for the South African commercial property market are improving (some respondents in this study suggested that while retail was performing adequately, office rentals were in decline), and predict that the property market will continue to adjust after the over-supply which resulted from the 2004-2008 property boom (Viruly Consulting 2015: 6). The Viruly Consulting report further advises that the following factors are influencing the property market in the context of Balfour Park on the Louis Botha Corridor (but which can be extended in general terms to other areas):
It is not possible to provide a detailed analysis of the trends in all sectors of the property market in this report. The commercial sector and residential sector grow at different rates but both are contingent upon broader macro-economic trends. Commercial growth is directly correlated with the growth in companies and the need for more space or new space. As stated succinctly by Ball et al: “Growth in demand for commercial property must be related to growth in economic activity” (1998: 47). Further, the commercial market is shaped by the economy as “changes in the nature of production may result in more or less intensive use of space for a given level of output” (Ball et al 1998: 44). Ball et al also emphasise that commercial property location decisions always have a spatial component. A review of Johannesburg suggests that aside from a few key nodes, the downturn in the macro-economy is shaping the office property sector. Sandton is one of the exceptions as it continues to see investment and growth. Residential property is considered to be less sensitive to macro-economic trends than other sectors. The affordable housing market appears to be experiencing growth,5 as does student accommodation.6 The CAHF study referenced earlier illustrates that between 2009 and 2013 the most rapid growth across South Africa could be seen in properties valued under R300 000, clear reference to the government’s subsidised housing programme (CAHF 2015: 2). Further, 62% of new residential property transfers were in this category of housing (CAHF 2015:
5). In Johannesburg’s inner city specifically, affordable rental housing has become an important investment opportunity. This analysis indicates that the Corridors are emerging in a constrained macro-economy where developers and investors are more cautious and risk averse. The opportunities appear to lie in affordable housing (with provisos for the need for associated employment and social facilities, as indicated above).
3.2. Overview of City Strategy and the Corridors of Freedom Within this constrained property market there is a question as to the extent to which the strategic intent articulated in the SDF or GMS will be realised. This is because property development is guided largely by macro-economic factors, although there are both private- and publicly-driven methods through which the property market in individual neighbourhoods or nodes can be modified. The BRT is the backbone of TOD in Johannesburg. It has given structure to the location of area-based development interventions and the CoJ is investing in nodes along the Corridors in order to improve and densify neighbourhoods. The City has elected to intervene in spaces through the BRT and social infrastructure. This is its contribution to shifting spatial patterns. The efficacy of the BRT as the anchor of these efforts remains contentious for some. One built environment professional interviewed sees the BRT as a “scar” on the urban form, arguing that the positioning of the BRT stations in the middle of the road has separated neighbourhoods. For others the BRT stations provide important value capture opportunities. The City sees the BRT as a positive intervention and the symbol of its commitment to spatial transformation. It extends the CoJ’s area-based development logic with an explicit focus on transport-led development. The focus on areabased development and its alignment with transport is based on the premise that transport planners have selected the right areas. However, the best area-based management interventions for the BRT are not necessarily the most optimal for city fabric in general. The City has actively intervened in the public environment through the Johannesburg Development Agency (JDA). Since 2001, the JDA
5 A ffordable housing is understood comprise rental between R2 000 and R7 000 per month. There are however varying definitions.
Transit corridors & the private sector
6 F or instance Redefine Properties has bought into student accommodation Respublica, which has a presence in Doornfontein. See http://www.redefine.co.za/
Transit corridors & the private sector