Cape Town undertakes controversial experiment to bring affordable housing to the city centre

Affordable housing activists occupy two decommissioned buildings on provincial government property in Cape Town, seen here in March. “This is the first occupation of well-located land in Cape Town," said one demonstrator. The city foresees an affordable housing gap of some 650,000 units over the next decade and a half. (Brendon Bosworth)

CAPE TOWN, South Africa — Among the six proposals for a new mixed-use development envisioned for downtown Cape Town, on display at the city government’s headquarters in March, one stood out with a bold message: “Affordable housing is the Lego from which great cities are built.”

If that’s true, then this seaside municipality of some 4.8 million people is no great city — at least not yet. And it is missing a handful of Lego pieces, especially in the city centre, where no affordable housing has been built in the more than 20 years since South Africa’s transition to democracy.

Cape Town is known by tourists the world over as a charming city that hugs the base of the flat-topped Table Mountain and straddles the gleaming Atlantic Ocean, replete with high-end hotels and restaurants. But with a stunning lack of inner-city affordable housing, the city remains an exclusionary urban environment. Its centre remains largely the preserve of the wealthy, where well-to-do resident sip cups of coffee that can cost twice the hourly wage of a domestic worker.

Rentals in the inner city are extremely limited — just 116 units for rent in the 1.6 sq km downtown, as of December. They’re also costly, at around USD 1,170 per month for an average one-bedroom apartment. By comparison, the national government recently set the monthly minimum wage, to come into effect in 2018, at USD 270 per month.

Against this backdrop, the city now estimates that it will face an affordable housing gap of 650,000 units over the next 15 years. So, the local government is trying out a new experiment to push back on these trends — a strategy that some say gives private sector developers too much leeway when it comes to providing affordable housing.

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For the first time, local officials are using a prime chunk of city land to entice developers to build affordable housing in the central business district. This is the first iteration of a public-private partnership model that the city intends to replicate elsewhere as part of a broad attempt to help change the city’s spatial makeup and bend the arc of a type of marginalization that remains decades after the end of apartheid.

Apartheid legacy

Along with other recently announced plans to create inner-city affordable housing, this strategy is a nascent attempt at undoing the legacy of apartheid-era spatial planning and forced removals. Those policies relegated black and mixed-race residents to the city’s periphery — the so-called Cape Flats and surrounding townships and informal settlements that sprawl outward, southeast of the city centre. Many communities in these areas face high levels of poverty, crime, violence and gangsterism.

“If you look at the developments that have been developed in Cape Town, they’re all private. We’ve never seen even one in the inner city. All social housing [is in] the outer city.”

Sindisa Monakali

While significant progress has been made in other ways of moving beyond the echoes of apartheid, this spatial situation endures. That’s chiefly due to lack of government action and the city’s burgeoning property market, propelled by a city population that has increased by 56 percent over the past decade.

[See: How to solve the Global South’s urban housing crisis]

In recent years, gentrification of previously working-class neighbourhoods that lie east of the city centre — areas such as Woodstock and Salt River — has fueled exclusion of the poor from the city. Many of the residents evicted from these areas now live in “temporary-relocation areas” 30 km outside town.

That means that poor and working-class residents, such as domestic workers, are forced to spend a disproportionate amount of their income simply on transport to get to jobs in the city. In Cape Town, 95 percent of public transport users are considered low to low-medium income. According to official statistics, the average transport cost can be 45 percent of their monthly household income.

The situation in Cape Town is different from other major South African cities. In the central business districts of Johannesburg, South Africa’s economic capital, and Pretoria, its administrative capital, developers bought up underused commercial properties that during periods of urban decline devalued to the point where they could be converted to affordable housing stock at low cost.

In contrast, property in downtown Cape Town has retained its value. In 2015, the average sale price per residential property was around USD 175,000 — up some USD 69,000 from 2013 figures. That makes it financially unviable for private developers to develop affordable housing in the absence of government incentives, said Rob Kane, a developer who chairs the board of the Central City Improvement District.

Prime but ‘sterilized’ spot

Still, there is growing recognition that these trends pose a major problem for Cape Town. In response, the city is now in the early stages of a major new development project known as the Foreshore Freeway Precinct, where local officials are trying out something new.

To be involved, the city’s brief to developers was simple. For a chance to get their hands on a six-hectare tract of land sandwiched between the central business district’s northern boundary and the harbour, developers had to offer proposals for a mixed-use development that includes affordable housing, either on the site or nearby. They also had to come up with a solution to the chronic traffic congestion in the area and devise a strategy for dealing with a freeway flyover that has remained unfinished since the 1970s.

A map of the proposed Foreshore Freeway Precinct development, from the City of Cape Town’s prospectus.

Offering inner-city land in exchange for affordable housing and millions of dollars’ worth of infrastructure development is a new strategy for Cape Town. The approach allows the city to bypass many of the conditions attached to getting housing subsidies from the national government, says Brett Herron, head of the city’s Transport and Urban Development Authority, a unit born this year to tackle transit-oriented development in the city.

The initiative also will unlock the value of the land beneath the unfinished freeway. That’s no small thing, given that currently this area is zoned as a road reserve — “sterilized,” Herron said during an interview in his office. “We couldn’t use it. No one could use it,” he said. “And it wasn’t solving our transport problems, because the transport infrastructure was incomplete. It only has value when you access it by removing those highways, or building around them.”

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In addition to offering affordable housing, developers interested in the Foreshore project needed to offer a plan on what to do with this unfinished highway bridge. (Brendon Bosworth)

The six proposals on display for public comment a few floors below Herron’s office in March showed the spectrum of visions of developers (at this stage, anonymous) for the development. These range from the indulgent — one depicts a large, gleaming circular “tower,” with people being transported around in pods — to the more practical.

The city offered developers a chance to conjure up “blue sky” designs. Along with the requirements outlined above, the city emphasized it was seeking proposals that presented a development solution that includes transportation and social and economic opportunities, supported by ancillary uses such as open space. The development should be “iconic in nature” and encompass green design elements, according to a prospectus. Developers need to carry all risk for the development and be responsible for marketing, too.

Vague requirements

What the city did not do is specify how many affordable housing units it requires from bidders, leaving that key answer up to the ingenuity of the developers. Indeed, officials are not even requiring that the affordable units be built on the property in question, but could instead be constructed on nearby sites.

“The city did not specify how many affordable housing units it requires from bidders, leaving that key answer up to the ingenuity of the developers.”

On paper, the developers appear to have taken seriously the affordable housing component. The proposals offer promises of building an inclusive city, with affordable housing making up between a quarter and half of the new stock. One proposal offers as many as 4,000 mixed-income and affordable housing units, although the exact number of affordable units is not specified.

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Yet housing rights activists have expressed frustration over this variability and the city’s vague requirements on these important points. Critics also are concerned that developers could use very loose definitions of affordable housing, potentially resulting in homes being priced beyond the reach of the working-class residents they’re said to be meant for.

“I believe that the city knows what they’re doing. … They could have been far more explicit about what they were looking for and what they need, if we’re going to talk about affordable housing,” says Hopolang Selebalo, head of research at Ndifuna Ukwazi, an activist organization that works on urban land-justice issues. “It’s a bit disappointing for the lack of stronger terminology, being more explicit. It almost makes it seem like a pipedream of sorts.”

The city’s Herron says the decision not to specify how much affordable housing should be included was deliberate to encourage competition between developers, who will be scored on their offers. Housing classified as social housing and for what’s known as the “gap market” will be regulated through national affordable housing legislation, he says. South Africa’s gap market exists to provide housing for people who earn above the threshold for receiving state-subsidized houses but not enough to get a home loan from a bank.

But critics remain unconvinced.

Sceptical response

Selebalo’s scepticism is not surprising. She and fellow activists have been fighting the city and provincial governments on numerous fronts around affordable housing, including over officials’ failure to deliver affordable housing on sites promised since at least 2008.

When I visited Selebalo at her office, close to Cape Town’s parliamentary building, she was in the midst of a campaign to support activists with “Reclaim the City”, a collective campaigning for the development of inner-city affordable housing. They were organizing under the mantra “Land for people, not for profit.”

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In late March, members of the collective occupied two decommissioned buildings on provincial government property in response to a decision to sell land that had been earmarked for affordable housing. One of those buildings is a former nurses’ home, not far from the Foreshore Freeway Precinct. While the provincial government says it has plans to develop affordable housing at the former nurses’ home, it has not indicated its timeline for doing so.

“I believe that the city knows what they’re doing. … They could have been far more explicit about what they were looking for and what they need, if we’re going to talk about affordable housing,” says Hopolang Selebalo, head of research at Ndifuna Ukwazi, an activist organization that works on urban land-justice issues.

“This is the first occupation of well-located land in Cape Town. And if anything, that should show the government just how tired people are of these empty promises, of being placed on the periphery, of everything that they go through,” said Selebalo. The occupation has continued this summer, and there there is no intention to halt the action, said Selebalo, since people have now claimed the sites as homes.

That frustration of “being placed on the periphery” goes beyond the political and psychological impacts of marginalization. It has a direct impact on people’s financial stability, too. As noted earlier, poor people who work minimum-wage jobs or attend school in the city have to spend significant money on transport to get in from the surrounding informal settlements, said Sindisa Monakali, a young activist who works with a local education activist group and was occupying the nurses’ home when Citiscope visited in March.

“It’s how Cape Town has been structured. We are saying no to the selling of houses [and] buildings in town. Government should build affordable houses for mostly working class, poor working class,” he said, speaking through a metal fence that surrounds the building.

“If you look at the developments that have been developed in Cape Town, they’re all private,” he continued. “We’ve never seen even one in the inner city. All social housing [is in] the outer city.”

‘180-degree change’

On the one hand, the affordable housing to be delivered at the Foreshore development — if it is indeed affordable, and if it is indeed at the Foreshore — will make only a small dent in Cape Town’s housing backlog. On the other hand, the city’s experiment marks a notable shift in its planning strategy, especially around the location of housing.

This shift is clear even from recent official documents. As recently as the city’s Integrated Developed Plan for 2012-17 shows, most government housing projects have been away from the city’s core. The housing projects envisioned under the 2012 plan are not compatible with a new transit-oriented development (TOD) framework — adopted in March 2016 — admits Herron, still fresh in his position at the newly formed agency created under that framework.

Proposals from a half-dozen developers were put on public display in March. Final decisions are slated to be made by next month. (Brendon Bosworth)

“I took over, and I’ve got the list of housing projects, and none of them are aligned to our TOD strategy, so we have to shift that,” he said. “At the moment, I’m grappling with just [how] to get on top of everything that was planned before, and whether it’s still viable.”

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While the city has to honour the housing projects already in the pipeline, it also is working on new affordable housing projects and is looking for more social housing partners to speed up the process. Big news came at a conference last month when Herron announced that the city has identified 10 city-owned sites in the city centre (and neighbouring Salt River and Woodstock) that it will use for affordable housing, including temporary housing for evicted residents. Three of these sites will be developed by social housing institutions, adding roughly 700 new affordable housing opportunities, while another five will be made available for private sector development.

Cape Town will ensure that the affordable housing is not outpriced, Herron said in a statement. The city dubbed this move a “180-degree change” in how it will tackle the affordable housing challenge. The idea is to move away from a “piecemeal development approach” toward a precinct-based strategy that, where appropriate, follows the Foreshore model.

The city’s Brett Herron has been a key figure in the Foreshore development project., as well as in the push to create more affordable housing in Cape Town. (Brendon Bosworth)

Embracing this approach also marks a turn toward private-public partnerships. Previously, there had been little incentive for private developers to get involved with affordable housing in the city centre, especially due to the cash to be made from the commercial and residential markets.

Members of Reclaim the City welcomed Herron’s announcement about the 10 new affordable housing sites, calling it a “step in the right direction”. In a statement, it commended Herron’s leadership but noted it remains cautious until firm deadlines are on the table and implementation is underway.

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Meanwhile, it remains to be seen how the Foreshore Freeway Precinct development and any broader movement toward this model will play out. A technical committee of city and outside experts is now evaluating the Foreshore bid proposals with the aim of identifying a preferred bidder by next month. That bidder then will have six months to demonstrate that they have the finances to go ahead with the development, which should break ground within two years.

For housing rights activists and others watching this process, the real test will come after the bid-winning developer gets approved: in seeing if government and the private sector follow through on the affordable housing promises sold through the pretty pictures that made up their proposals.

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Brendon Bosworth is a correspondent for Citiscope based in Cape Town. Full bio

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