Regeneration of African Inner Cities

by Hogan Lovells

Hogan Lovells

It is said that the shift from rural to urban population is the most significant phenomenon since independence in most African countries. Projections indicate that by 2030, Africa’s population will exceed that of Europe, South and North America combined. Between now and 2050, it is projected that the number of Africa’s urban dwellers is to increase from 400 million to 1.26 billion. The actual realization of such population distributions will depend on the rapidity of Africa’s infrastructure expansion to unlock sparsely populated areas, and its ability to create livelihood opportunities in these areas.

It is well published that African cities are burdened by high infrastructure deficits and shortages in access to technologies and services. To overcome the deficit the economies of scale in production, large markets for labor and goods, and the ease of information flows in urban environments may enhance productivity and innovation. Moreover, the density and diversity of cities can encourage the emergence of progressive values and institutions that promote social cohesion. Urbanization could be a major driver of this and this is seen more and more in Johannesburg.

Property trends in South Africa's central business districts are being driven by rapidly changing urban lifestyles. City dwellers are generally spending less of their disposable income on their gardens, for example, and more on lifestyle oriented activities such as art and food markets, gym memberships, health services and eating out. Urbanization in Johannesburg has taken an innovative turn, which is seeing young professionals living and working in the Johannesburg city center. It is said that a new breed of developers in Johannesburg are ushering in a new residential dimension that is turning past housing trends, of having a garden and a white picket fence, and transforming once shunned locations into trendy properties. Security considerations and the advent of disposable living are fueling the new trends, which are attracting property investors and young home buyers into the inner city. Mixed use residential units located in the Johannesburg city centre no larger than 36 square metres are selling at a rapid rate. 

Mixed use precincts such as Maboneng in the city centre, which have loft apartments on top and restaurants, food and art markets, retail stores, art galleries, gyms and tree lined walkways below are proving popular. The private sector has taken advantage of the current craze, which has given rise to investment opportunities in the inner city. Property developers taking advantage of this have had the foresight to purchase derelict buildings and refurbish them into stylish one and two bedroom loft apartments. Such developers have undoubtedly been instrumental in reshaping the inner city. One only has to look at the Maboneng Precinct where numerous buildings have been refurbished and transformed into trendy apartments such as Main Street Life, Revolution House, Artisan Lofts, Urban Fox and Rocket Factory. This has brought a significant proportion of younger and more educated people into the inner city.

Agents of change in Johannesburg, bringing a significant proportion of younger and more educated people there, may be attributed to the private sector and public private partnerships as well as civil society. For residents, the attraction is the cosmopolitan ambience, good security and the lock up and go lifestyle. For investors, residential developments in the Johannesburg city centre offer opportunities such as tax incentives through the urban development zone. Through the urban development zone scheme, the South African government is incentivising investors to spend money on urban rejuvenation. 

The refurbishment of buildings into trendy apartments in the Johannesburg inner city, more often than not, means that the developer would need to open a sectional title register and have the sectional plans registered over existing space. From a legal perspective this would require that a conveyancer attending to the opening of the sectional title register to, simultaneously with the opening, ensure that the Registrar of Deeds issues the developer a certificate of registered sectional title in respect of each unit that have not been sold.

The rules governing Maboneng Precinct developments have been drafted and settled from a great deal of legal input in order to cater for the mix use nature of the developments. The rules cater for restaurants, food and art markets, retail stores, art galleries, gyms and tree lined walkways activities, which meant that the standard rules had to be changed.

Should Africa's population exceed that of Europe, South and North America combined as projected then most African city centres will most probably be populated by young professionals who are inclined to spend their disposable income on lifestyle oriented activities. Being that the case, the current real estate trend in the Johannesburg city centre may well be a catalyst signalling what a typical African city may look like in 2050.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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