November 7, 2005
By Neil Fraser
ALTHOUGH primarily based on research among tenants that lease buildings from the Trafalgar Group, the annual Trafalgar Report has become an important contributor to the city's residential database.
It provides factual information that can be interpolated into a broader overview of the state of the inner city residential market.
The report has been expanded this year from Johannesburg, to include Tshwane and Durban, and its section Who lives in the inner city? provides a fascinating comparison between the residents of the three cities.
In Johannesburg, the typical transient city, 76 percent of respondents want to rent accommodation and not buy. This figure is only 45 percent in Pretoria and right down to 20 percent in Durban.
Turning to length of stay in the inner city, in Johannesburg 36 percent moved into the inner city in the last two years and in Durban 40 percent in the past 12 months. In Pretoria 27 percent have lived in the inner city between two and four years and 22 percent between four and five years.
Inner city residential accommodation is estimated at 230 000 and the typical Trafalgar tenant in Johannesburg is under 30 years old, probably male and more likely to be single than married. They are accustomed to living in flats and prefer to rent rather than buy, at least for now.
They have dependent children and family and there is a good chance that they are either technikon or university educated.
Positives
From an investment point of view, on the positive side:
- Demand continues to be strong and steady for both individual and family accommodation;
- Supply is getting tighter and tighter, with most major portfolio owners reporting zero vacancies;
- Greenfield projects are few, Brickfields being one exception;
- Stock shortage combined with strong demand means that prices are going to rise;
- Rentals are increasing and there is no sign of a rental ceiling as yet - bachelor flats in Joburg have achieved a new high of R1 850 a month excluding utilities, one-bed R2 100, two-bed up to R2 500 and three-bed up to R2 700;
- Tenants are more performance-aware and are demanding improved levels of service; and
- Cities and city management are fleshing out a much clearer view of residential policy.
However, there are negatives. These are:
- Concern regarding the management of sectional title units is growing;
- "The same old gripes about law enforcement, urban management and the council's efficacy do continue to constrain the marketplace. After so many years, it is difficult to understand why these housekeeping basics are not yet being implemented effectively." Hear, hear;
- The apparent inability of the metropolitan government to manage the influx of poor people looking for opportunities in urban areas. This is being red-flagged as a real and worsening threat to the revival of the inner city;
- Freeloading property owners - some property owners who have done nothing to maintain their buildings continue in this mode, waiting to profit-take eventually; and
- As residential policy is clarified questions arise regarding social infrastructure provision, schools, medical facilities and sports and recreational facilities.
Negatives
For me under negatives are two comments that are attributed to the regional director of Region 8 (basically the inner city area). The first is: "Johannesburg's inner city can never be the domain of either the rich or the poor."
I cannot believe that the City has not accepted the fact that the city residential population will always be a mixture of high, medium and low income, the latter including the so-called "urban poor".
The current Better Buildings Programme, while excellent in conception, has proved to have two problems. The first is the unavoidable gentrification which affects the urban poor and the other is the legal process that slows the programme down to a snail's pace.
The other comment attributed to the regional director is, "If I could wave a magic wand and change just one thing in the inner city, it would be to dispel all the negative perceptions of crime, grime and chaos that still plague the region."
It isn't a magic wand that is needed. As the report comments elsewhere, "Combined with private sector efforts, the City must target ongoing and effective urban management to include everything from maintenance of the city environment, to infrastructure provision and by-law enforcement."
What is clearly needed isn't a wand, but for city agencies to do their work, particularly the metro police and Pikitup.
Cheers, Neil
P.S. Carte Blanche screened a story on the provincial government precinct last night. Unfortunately I couldn't get involved as I am in the UK, but hopefully it gave a balanced view.
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