FRANCOIS VIRULY: Unleashing opportunities in the built environment

There is growing recognition that decisions made in the real-estate sector have a role to play in the development of prosperous, inclusive and sustainable cities. The sector encompasses a broad group of stakeholders who engage in different spheres of the built environment and influence the location and quality of the spaces in which we live, work and play. But the sector’s ability to play its social role relies largely on the success of local government programmes and their ability to create an appropriate legislative and regulatory environment. Successful cities also rely on a strong level of collaboration between private and public sectors.

It has been estimated that 60% of the global population will live in urban areas by 2030. SA is similarly seeing a rapid rate of urbanisation that places considerable strain on municipal infrastructure and services. In 2020, about two-thirds of the SA population lived in urban areas. By 2050, the country’s population is projected to grow by an additional 19-million to 24-million people (State of Cities Report 2021) with a significant proportion of this growth located in urban areas.

According to the State of Cities Report (SoCR), the Cape Town population increased by about 20% between 2011 and 2019, with the local economy struggling to absorb this growth. The SA Cities Network (a network of cities and partners that encourages the exchange of information, experience and best practices on urban development and city management) puts the unemployment rate in Cape Town at about 22.5%. As highlighted in the SoCR, the ability of SA cities to effectively respond to growing urban challenges remains patchy. The report highlights that success in meeting social and economic outcomes will be influenced by the governance of cities; creating productive cities; creating inclusive cities; creating sustainable cities and by changing the legislative and regulatory environment to unleash the potential of cities. It is also accepted that creating a level of trust within communities and building a strong working relationship between the public and private sectors is critical to develop appropriate urban interventions. 

Opportunities to work together

The adoption of the principles associated with a stakeholder economy provides new opportunities for urban communities to work together. Private-sector enterprises are rapidly adopting environmental, social & governance (ESG) frameworks that recognise the need to be accountable to a wider spectrum of stakeholders. This has resulted in triple bottom-line reporting, which encapsulates people, planet and profit.

For investors and developers, this also requires the identification of the risks and opportunities associated with a rapidly changing social, economic and environmental environment. There is an equal recognition that entities in the public and private sectors have unique strengths in reducing risks in the urban environment and in the promotion of new opportunities.

While the private sector has in recent years focused on the “E” in ESG and the adoption of green technologies, there is a call to place a greater focus on the “S” of the ESG objectives. This means emphasising the social outcomes and social value investments and developments in the property sector.

Indirectly, the “S” of ESG relates to the ability of the built environment to enhance economic, social and environmental wellbeing. The Urban Land Institute (ULI) in the US highlights that social value is created to a large degree by collaboration between government and private-sector entities. It also emphasises corporate leadership, transparency, innovation, education and collaboration.

Globally, the future urban agenda is guided by the UN’s 2015 Human Habitat sustainability development goals (SDGs). A total of 17 SDGs were identified, ranging from the reduction of urban poverty and hunger to the provision of adequate housing. Attached to the 17 SDGs are 169 targets that need to be reached by 2030 for the programme to meet its objectives.

The built environment can deliver on the SDGs in numerous ways: there are opportunities in the provision of housing, clinics, student accommodation and urban infrastructure. The SDG framework is also supported by the UN Development Programme’s New Urban Agenda, which highlights the important links between sustainable urbanisation, job creation, enhanced livelihood opportunities and improved quality of life. The challenge lies in creating a framework that promotes investment and development activities with financial investment returns — but which simultaneously develops a quality urban environment.

While private-sector decision-making in the built environment shapes the places where people live, work and play, the ability to effectively improve city livelihoods and respond to challenges in the urban environment requires a strong partnership between different social and economic stakeholders. However, the starting point lies with government providing a clear vision for the future of the urban environment that unleashes the potential of the private sector to be part of the delivery of social and economic outcomes.

• Viruly is director: urban real estate research unit at the University of Cape Town (UCT). This article is an extract from the “State of Cape Town Central City Report 2021 — A year in review”, published by the Cape Town Central City Improvement District.