Real Estate Investor Magazine South Africa Dec/Jan 2016/17 | Page 32

MARKET TRENDS

Developing

Africa’s Future Cities
Commercial Real Estate Trend Forecast
BY NADIR JEEVA

C

ities 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

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DEC/JAN 2017 SA Real Estate Investor

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 global financial crisis 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 f lexibility, 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.
In order to prepare for the future, commercial
property owners, investors and developers should
www.reimag.co.za