Controversy around the R86.5m sale of municipal land in Cape Town’s Foreshore district has thrown issues of affordable and inclusive housing in the Mother City into sharp relief.

In 2016 "Site B" was sold on public auction to Growthpoint Properties, which plans to develop a mixed-use building that includes more than 24 floors of office space, an internationally branded hotel on the roof and two floors of retail space at its base.

"We are in the planning approval process to develop a building that will be worth R2.2bn and create 1,000 jobs in its construction phase," says Tim Irvine, Growthpoint’s Cape Town asset manager. "It will also lead to the creation of long-term jobs with the hotel. It will serve the people of Cape Town and contribute R16m a year in rates."

But not everyone is behind the development. Members of lobby group Reclaim the City, the Social Justice Coalition and the UniteBehind coalition protested at the site last week, arguing that the authorities should not have sold the public land in view of the housing crisis in the city.

At issue is the price Growthpoint paid for the land, given that it comes with rights for a skyscraper, says Jared Rossouw, co-director at Ndifuna Ukwazi, a nonprofit activist organisation backing Reclaim the City.

"The [auction] reserve price was set based on 17,500m², but the actual rights were nearer 46,000m²," says Rossouw. He estimates that this means the city undercharged by about R140m for a site that should have sold for more than R200m.

Irvine disagrees. He says Growthpoint did its calculations before it bought the site. Any developer would do a residual value calculation and determine what could be built, and then weigh time, cost and risk against potential rental to determine what value to pay, he says.

We see exclusive developments approved with prices out of the reach of 80% of residents who live in the city
Jared Rossouw

"If the land had been valued at more than R200m, it would imply charging office tenants well above market rental, which would have had absolutely no possibility of being achieved."

Besides, he says, "Site B as an inner-city high-rise building is not best utilised as a residential development". The planned mixed-use development suits the site’s shape, and its location in a commercial business precinct, Irvine says.

"If it were suited for a residential scheme we would have been outbid by an experienced residential developer at the auction, [which] was well attended," he says.

Irvine believes social groups such as Ndifuna Ukwazi "clearly want to draw attention to housing and how the city should best handle its resources to address the issue".

Which is why Site B is in the spotlight.

Rossouw says an inclusionary housing policy would stimulate development and density in well-located areas where there is a hot market, while ensuring that a fair proportion is affordable for poor and working-class people.

But Cape Town’s deputy mayor, Ian Neilson, is concerned that areas such as Site B are being used as political tools. He says the city owns 1,000ha of land that has already been rezoned for housing — not counting other unused land.

"There are many opportunities to build affordable housing in Cape Town, many of which have not been taken," Neilson says. "The national government in Cape Town controls District Six, for example, and it has failed to do anything substantial with this over the past 25 years.

"All [the government] built there was buildings with two or three storeys. This is a missed opportunity," Neilson says.

What it means

Cape Town authorities and activists for affordable housing are at loggerheads over city policy

He maintains the city is "wedded" to the idea of inclusionary housing. "We recognise that the historical layout of the city is inefficient. People need to be able to live near work opportunities at an affordable cost."

To that end the city is working with the private sector on an inclusionary housing policy — but Neilson says he’s not yet ready to put a time frame on its release. "It won’t be in January or February."

Rossouw believes the city already has an obligation in law to advance the principle of spatial justice on every land-use application. "They have failed to do this and as a result we see exclusive developments approved with prices out of the reach of 80% of residents who live in the city. We’ve raised legitimate objections to large developments together with clear solutions to include a fair proportion of affordable housing that is feasible," he says.

"The city first refused to admit that developments were spatially unjust; then it refused to impose conditions because it argued it had no powers; then the mayor agreed that the city did have the powers to impose conditions," he says.

Rossouw says this shows the city has failed to govern.