Durban’s Billion Rand Success
Initiatives to arrest decay and restore to their former glory the high-profile business and residential elements of Durban’s inner city are paying dividends with more than R1 billion having been pumped into the area in recent years, a new report revealed.
The Trafalgar City Report 2008, now in its seventh edition, indicates that potential investors into Durban have linked arms with the municipality to effectively change the face of the city’s traditional commercial areas.
Banking groups Absa and Standard Bank, as well as Old Mutual Properties have capitalised on the tax incentives offered by the urban development zone project, effectively upgrading key sites within the city’s central arterial.
Developments on council-owned land – including the Kingsmead Office Park, Hoy Park and property around the multi-million-rand Albert Luthuli International Convention Centre – have paved the way for new business hubs on the north-eastern fringe of the traditional central business district.
The report cites the Warwick Junction transformation as a critical component of Durban’s regeneration initiative and precinct plans include a R400 million shopping centre complemented by a comprehensive taxi rank.
New projects include a General Motors dealership on the corner of Prince Alfred Street and Old Fort Road, the refurbishment of Himalaya House in Yusuf Dadoo Street (formerly Grey Street) and the Albaraka Bank complex at Kingsmead Office Park. One of Durban’s most historic commercial precincts, Yusuf Dadoo Street has benefited from a R1,3 million city upgrade of the vendor tables, street lighting and paving.
Considering residential property, the report highlights that highly sought-after areas have experienced dramatic property price hikes despite escalating interest rates. Elsewhere, the interest rate has claimed victims via lower sales prices or a marked decrease in sales activity and transfers.
Nationally, some areas showed a sales growth in three-bedroom houses and a corresponding drop in smaller home purchases, whereas other areas show an increase in smaller home purchases as entry-level homeowners seek cheaper options in bachelor flats and one-bedroom homes.
Data based on deeds office information reflects that the average property price in central Durban rose 27% over 2006 and 2007 and stock remained buoyant. Further afield, potential buyers in the Richards Bay central business district would have been rejoicing at the prospect of securing cheaper investments as the average price dipped 19%.
Dr Yusuf Dadoo Street (Grey Street) in the Durban inner city and the gentrified Windermere Road emerged among the country’s top performing areas with prices surging 174% and 83% respectively. However, Beverley Hills in Westville and central Pinetown were among the worst performers with average house prices falling more than 25%.
The report noted that both Durban and Pietermaritzburg bucked the trend with sales volumes across property sizes – from bachelor to three-bedroom apartments – declining. The fall-off was most significant among bachelor flats in Durban central, but there was also slower demand for one, two and three-bedroom homes.
In the foreword Trafalgar managing director Andrew Schaefer says social housing – the provision of rental housing for lower-income earners caught between government-subsidised homes and having the capital to purchase their own accommodation – has not typically been viewed as a private sector responsibility.
However, particularly among developed nations, the private sector has been expected to contribute towards boosting social housing stock. Locally, black households dominate the rental market, followed by the coloured population and annually 105,670 new units are demanded.
The report dismissed the probability that the private sector would usurp government and non-government organisations involved in housing, rather highlighting the substantial business opportunities that could be gained within this sphere.
An estimated 20% of South African households live in rental accommodation with the bulk being among poor and low-income earners. Yet, both private landlords and social housing institutions reflect “exceptionally low” vacancy rates with new social housing projects typically oversubscribed.
Statistics released by the Department of Housing reflected that by the third quarter of the 2007/2008 financial year 186,094 houses had been either completed or were under construction with KwaZulu-Natal accounting for 43,234 units.
However, the Affordable Housing Conference held last year noted South African metropolitan areas demand 55,000 new houses annually against the 6,700 currently being built.
In a parallel consideration, the report argues that green building – the practice of increasing the efficient use of energy and resources by buildings and reducing the impact construction has on human health and the environment – is not being sufficiently addressed locally.
Sustainable development is integral to the green building process and it is hoped that the newly-established Green Building Council of South Africa will tackle the criticism levelled at the building industry in this regard.
Pilot studies conducted at Eskom’s Megawatt Park, Anglo American’s headquarters, Rand Water, Sanlam’s Sancardia Centre, the CSIR Conference Centre, the Old Mutual Centre and Mutual Park each demonstrated green building effectiveness.
“Essentially, South Africa has the systems, legislation and policies in place to deliver on its housing requirements. The way forward demands large-scale implementation; unrelenting follow-through on non delivery; consistent engagement with stakeholders and communities and the strict enforcement of existing legislation,” Schaefer says.