has sought to catalyse private sector investment in ‘deprived’ areas through area-based interventions. This has taken the form of capital investment in social infrastructure, as well as improvements in the public realm. The implementation of the BRT and associated public infrastructure projects is a continuation of this strategy. Although this is the City’s most consistent tool for shaping market forces, there is a lack of conclusive analysis done regarding the impact of these interventions. The City claims successes in certain spaces such as Braamfontein, where after public environment upgrades there have been declining rental vacancy levels (JDA 2009). Yet measuring success through economic indicators only suppresses concerns around exclusion and gentrification (Winkler 2009: 33). A detailed analysis of these factors has yet to be done. There is the certainty that if the City demonstrates confidence in an area and invests in it, the private sector will follow. This approach is being replicated in the City’s TOD programme but it is supported by a sophisticated set of incentives. Even so, developers vacillate when asked whether they follow the cue of public investment or whether public investment follows their developments. In fact, many remain uninfluenced by CoJ policies and patterns of investment. Adams, Croudace and Tiesdall confirm that globally the public sector has extremely limited control over the power of the market (2012: 2578). The tool for the implementation of components of the SDF – including the Corridors – is a capital investment programme which is located in the City’s Development Planning Department. Private and public sector development in the selected critical areas will ensure institutional support from the CoJ through incentives, public sector investment and capital interventions. The critical implementation question is therefore around who will do the development and within which parameters. It seems that it is anticipated that, aside from public infrastructure, the development will primarily be driven by the private sector. As with any City-driven capital investment programme that is reliant upon partners, the investment success and development required for TOD is influenced by the economy, developers and the property market. Despite CoJ investments or the public sector offerings and lead in COF, if there is no demand and hence no finance available for new developments, the property sector will remain cautious. Adams et al argue that “the
Transit corridors & the private sector
developer’s expertise often lie in knowing the local market (product), spotting opportunities (location) and resolving constraints to make things happen when required (timing)” (Adams et al 2012: 2582). The City’s approach to wooing the property sector is based on the assumption that it is able to create the right opportunities developers will respond to. Creating a pipeline of development in the Corridors is the simpler part of the cycle. The ability of the CoJ to demonstrate demand for developments will be the most effective tool through which to attract developers (insight from interview with Rob McGaffin, 28 July 2016). The less risky a development opportunity, the more likely it is to attract developers. The City needs greater clarity regarding who in the property sector would be likely to develop, as well as what kind of developments developers would respond to. However, creating a permissive planning regime comes with many hazards. Staying true to the development vision of the COF is important. Public sector infrastructure interventions can play a role in encouraging the market if efficiently executed, but it is not clear exactly what public infrastructure is most valued. Further, there is uncertainty as to the point at which public infrastructure is a pull factor. While the CoJ has done a comprehensive analysis of the densities required along the Corridors, it needs to be matched by a market research and viability study of the property market. Internationally, information pertaining to the property market is opaque and difficult to access (Keogh 1994: 60). Yet even with the uneven information the starting economic analysis for realising the private sector involvement in the Corridors is supply and demand (interview with Rob McGaffin, 28 July 2016). Given current economic trends, the property sector is not in an optimum position to support the COF.
3.3. Overview of the Factors that Guide Property Development As discussed above, the macro-economy does not support large-scale and risky property development at present. The City’s public infrastructure investment and strategy would be optimised under favourable economic conditions. Given this reality, the ability of the City to shape market forces in the face of a multitude of other factors is uncertain. However if the City had a more nuanced and better understanding as to what drives development
Transit corridors & the private sector
Published on Aug 2, 2017
Part of the Spatial Transformation through Transit-Oriented Development in Johannesburg research series. Published by the South African Rese...