Way back when, urbanisation was the process in which rural communities grew to form cities or urban centres and, by extension the growth and expansion of those cities. Simply put, a particularly prosperous and efficient village attracted the attention of other, less prosperous tribes who then joined the successful settlement. Fast forward several 100 years and the principle remains the same, however many other factors have come into play, changing the face of urbanisation as we know it.
The two main causes of urbanisation are natural population increase and rural to urban migration. These causes are influenced by economic and commercial opportunities, modernisation, industrialisation, employment prospects, changes in the mode of living and ultimately the promise of a better way of life – all of which continue to boost the demand for the development of, and investment into the property sector.
Two decades ago the percentage of South Africans living in urban areas was at 46.6% but according to the Parliamentary Monitoring Group that figure now sits at a whopping 63%. In the Western Cape alone, almost 90% of the Province’s population is urbanised with the majority living in the Cape Metropol Area. “This elevated rate of urbanisation, particularly in the Western Cape is driving significant demand for real estate across all sub-sectors,” says Quintin Rossi, CEO of JSE listed property group, Spear REIT.
It is argued that urbanisation is at its peak in South Africa because there is little or no money left in the rural economic regions. The Western Cape however, which is a little different to the rest of the country, is experiencing the growing phenomenon of zoom towns. This is most likely due to the resilience of these towns resulting in them being an attractive relocation option, firstly, due to good, local governance, secondly, relatively good connectivity infrastructure, the natural beauty of these towns and lastly people have realised that it is possible to buy a lifestyle.
“Lifestyle aside, you can’t top good infrastructure as a motivating factor for the increase in migration numbers to the Western Cape,” says Rossi. Local municipalities are well regulated and while there is still much work to be done, there is a proactive approach to investing in and managing existing services, along with a genuine push to create and maintain sustainable frameworks to support the economy, the people and the built environment.
Despite Covid and stringent lock down restrictions Cape Town has shown remarkable resilience, and investor and property development interest in the City and outlying metros remains steady. There are challenges though in keeping up with property demands and filling vacant space timeously. Commercial space is rated at nearly double the vacancy rate for residential and pivoting these buildings swiftly is hampered by a legislative environment that requires a drawn-out process of building plan approvals and land rights matters. “Some dialogue around this with local Government members would be a great incentive for them to assist commercial developers in filling vacancies more efficiently,” states Rossi.
On a positive note, significant capital has been put into new developments, redevelopments, refurbishments and upgrades, currently under construction and in the pipeline with mixed-use office, retail and residential developments providing much-needed accommodation for the influx of people and businesses looking for the convenience and lifestyle urban living provides.
Expanding on why urbanisation is at an all-time high, Deon van Zyl, Chairman of WCPDF (Western Cape Property Development Forum) says that over and above good governance, the Western Cape is showing astute political leadership and local Government understands the importance of the role of both provincial and local Government in the economy. “Good governance means good political leadership, good administration and therefore predictability to the private investment sector.”
This approach bodes well for the future especially with urbanisation projected to rise to 71% by 2030, and by 2050, eight in 10 people will be living in urban areas, increasing the demand for property, and improved infrastructure.