COMMERCIAL REAL ESTATE TREND FORECAST: DEVELOPING AFRICA’S FUTURE CITIES
On Thursday, various planning authorities will gather to shape and inflect discourse on urban development and the challenges and opportunities of urbanisation under the banner “Developing Future Cities” at the African Real Estate and Infrastructure Summit in Cape Town.
Cities are “smart” when infrastructure, urban assets, public services, human and social capital, mobility systems and other forces are improved and optimised under ICT. The important benefit is higher economic growth, better quality of life for citizens and a more responsible form of stewardship over natural resources.
However, the creation of such futuristic cosmopolitan utopias are often complex because of variables and variances in development levels, resource availability, technological infrastructure, innovation, cultural systems and issues such as the digital divide.
While other non-African nations are successful in building future cities, their templates can simply not be casted over the cities of this continent each with its own unique set of challenges, opportunities, urban development maps, and local economic development plans.
Commercial real estate developers, investors, property owners and facility managers are a critical link in casting a vision and blue print for future African cities, especially because they provide the spaces and sites for profitability, productivity, sustainability, innovation, cultural cohesion and heritage preservation.
There is a misunderstanding that megacities are the engines of global growth. According to a McKinsey Global Institute (MGI) report, the 23 megacities in the world—with populations exceeding the 10 million mark—will only contribute about 10% of global growth in 10 years from now. Growth will come from mid-size cities with populations of between 150,000 and 10 million.
To achieve this growth, role-players in the commercial real estate value chain have shaped developmental narratives with local planning authorities.
However, the South African commercial real estate sector is faced with a set of challenges: on the one hand sluggish economic growth and on the other hand the slow-burning and very real transmutation of physical spaces into virtual sites of economic productivity as a result of technological innovation.
Since the great recession of 2008/09, South Africa’s national vacancy rate has hovered between 9,8% – 10,6%, and is likely to be frozen at the same level or increase further unless South Africa’s economic growth prospects improve. Workplace flexibility, virtual working and telecommuting – as a result of technological innovation and shifts in organisational policies can put the national vacancy rate under further pressure in the distant future.
