The physical form of our cities is one of the most significant drivers of a broad range of social, economic and environmental issues. Over 50% of people live in cities; 70% of global economic output and over 70% of global carbon emissions derive from cities.
In an increasingly urban world, getting cities right is arguably the single most impactful thing that can be done to ensure a more economically prosperous, environmentally sustainable and socially equitable future.
In the case of South Africa, our cities also bear the spatial legacy of Apartheid-era spatial planning. With over 95% of current affordable housing taking place at the urban periphery, poor (and typically black) households remain spatially marginalized and far from economic opportunity, essential services and amenities.
The following are some of the economic, social and environmental costs resulting from sprawling urban form:
Accommodating low-wage earning households in well-located, amenity rich neighbourhoods is therefore an economic, environmental and social imperative.
However, given the capital intensive nature of buildings and infrastructure, it is a fiscal impossibility for any government to solve this problem on its own and therefore the private capital market needs to be leveraged.
Fortunately, the inherent qualities of well-located affordable rental housing lends itself to being an excellent asset class for long-term institutional investors such as pension funds and long term insurers.
Divercity Urban Property Fund is demonstrating how strategic investment in South Africa’s inner cities can deliver the kind of cities we need, while offering investors stable, and above market property returns. See Divercity’s investment strategy and investment case for more detail.