Mixed Market Development Workshop

Apr 16, 2018

This past week saw NASHO and Equal Spaces, with the assistance of the Government of Canada, who is the major funder of the Equal Spaces Programme through Global Affairs Canada, host a 2 day workshop of Mixed Market Developments in Urban Regeneration Precincts.

BACKGROUND

South African Metros are characterised by spatial residential segregation based primarily on income and wealth. Given the history of South Africa this is further layered with racial segregation. The challenges to change this are significant and require market interventions by government and other stakeholders.

To date the thrust of South African housing policy for low and moderate income households has emphasised ownership, informal settlement upgrade and a small programme providing affordable rental. The BNG programme has produced substantial number of ownership units but few in well located parts of our cities, often leaving poorer households on the periphery of our cities with long and expensive commuting costs to access the socio – economic benefits of these cities.

The Metros face a further challenge in controlling urban sprawl and increasing densification to make more efficient and effective use of investments in land, infrastructure and public transportation networks.

A few Metros in South Africa are taking up these challenges and are intent on accelerating the pace and scale of affordable housing production while striving for socio-economic integration in their urban areas. Metros are using their resources to encourage mixed residential developments with particular emphasis on creating and preserving rental housing opportunities for low to moderate income housing solutions within well located city spaces. The spatial focus creates an emphasis on precinct-based mixed residential developments where well managed affordable rental housing spearheads urban regeneration. It helps stabilise inner-city areas and, in the longer term, protects spaces for low and moderate income households in areas of increasing property values.

The involved Metros are doing this through the use of the National Social Housing Programme which provides some of the key elements needed for successful market intervention and sustainability. But more is needed from the Metros and critical is the use of government land resources to achieve the integration.

Use of such land and building assets are important levers for the Metros to achieve their socio economic objectives in the process of regeneration. This involves not only strong spatial targeting, but also maximising the sustainable use of the asset through densification. In many instances these higher densities involve construction of medium and high rise buildings. These buildings have much higher construction costs than walk-ups – the standard social housing rental product. The primary Social Housing subsidy instrument, the RCG grant, does not incentivise tower buildings nor is it adequate to provide a reasonable equity base to seek commercial lending to build tower buildings.

One approach to making up the funding gap is through cross-subsidisation in a mixed development on a single site or across a number of sites within a precinct. In addition, this type of development has the potential to make truly economically integrated neighbourhoods and prevent the development of low income enclaves. Achieving these types of developments require different sorts of partnerships where mixed development business partnerships (SHIs and private developers) can join cities’ efforts to utilize residential development to activate economic growth in inner cities.

There are increased stirrings among some Metros to pursue this approach. However, it is a very new “developmental” space in South Africa and all involved have much to learn. It is therefore timely to bring together practitioners involved in pursuing well located mixed income residential development to share their experiences and challenges and through this develop learning “exchanges”.

Equal Spaces, in conjunction with NASHO, Municipal Partners and other stakeholders, is holding a national workshop to bring together three Metros and key practitioners. All of them are working on mixed-market developments with social housing components as a mechanism to assist urban regeneration or inner-city revitalisation through economically integrated neighbourhoods. The workshop is funded through the Government of Canada grant to Rooftops Canada for the Equal Spaces Programme supporting development of the Social Housing Programme in South Africa.

PURPOSE OF WORKSHOP

  • To share practical definitions and how are precinct-based integrated neighbourhood development with mixed-market uses that includes social housing (not just stand alone social housing projects) starting to be encouraged in Cities.
  • To better understand the challenges and opportunities for economic integration through mixed use and mixed tenure residential development in better located parts of our cities.
  • To better define the linkage of this to the intent for cities densification, urban space re-structure, focussing investment in inner cities, nodal areas and transport corridors.
  • To explore the use of municipal land and building assets and, other incentives to assist in supporting dense residential development with affordable housing components.
  • To better understand the opportunities for financial cross subsidisation in high density mixed market site development to support long term preservation of low to moderate income housing.
  • To understand the role of Private Sector Developers in these efforts, explore the best types of partnerships between SHIs and Private Developers to deliver these products
  • To identify existing tools, practical mechanisms and organisational practice that support these approaches
  • To define collaborative action and best practices exchanges between Metros that can help deliver viable and sustainable integrated neighbourhoods as catalysts to urban regeneration

Below are the presentations from the two days:

The Context
Mixed Mkt Development in 3 SA Metros
City of Joburg – Inner City Progress Presentation
eThekwini Municipality
Equal Spaces Mixed Market Presentation_CoCT_12042018
Day One Summary
Canadian Lessons
SHRA Presentation
Group Activities
We would like to thank all who attended and participated.

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