Three statements immediately struck me while perusing the City of Cape Town’s draft Local Spatial Development Framework for the Central Business District (CBD) that is out for review this month: First, that 90% of Capetonian households in need of accommodation cannot afford residential unit prices in the CBD; second, that 70% of accommodation in the CBD is geared towards the tourism; and third, that the City does not have a policy for managing short-term rental units and their impact. By themselves these statements are not very surprising to those familiar with the Mother City, though they still are a stark indicators of the economic dynamics at play in the city. Tourism is a huge driver of the economy. The CBD is the resilient economic heart of Cape Town, yet for over 30 years the significant development that has taken place there has completely omitted new affordable residential housing.
The LSDF asserts the need for accommodating 50,000 more people in the CBD by 2040. Providing more housing in the CBD is the right thing to do to achieve a sustainable, efficient, accessible, and just city. More people need affordable housing that is close to economic opportunities. Focusing public investment spatially where considerable investment has already been made will increase efficiency and reduce costs. Re-orienting the CBD’s built form away from monolithic corporate office space will also address the shift in working patterns that were accelerated by the pandemic.
However, the statistics quoted above reflect a reality that the City must face if it expects to actually accommodate 50,000 new residents: as long as the current housing market in the CBD is driven by the market for short-term rentals and “investment” properties, it will continue to be unaffordable to Capetonians. The relationship between the statistics noted above are not coincidental. The housing market in the CBD is already driven not by what Capetonians can afford, but by what European, American, Chinese, and Saudi tourists and investors can. It is, in a sense, a very different “market” than the one that serves the purpose of housing most of Cape Town’s residents, one that does not respond to the needs of the majority of the city.
It is sometimes assumed that simply building new housing anywhere of any type will help address housing affordability everywhere. But new housing built to accommodate tourists or invest extra cash will not necessarily move the needle on housing that is accessible to local residents, particularly in a city with such great income inequality. So long as the disconnect continues between local needs and international appetite, any public investments, subsidies, and incentives thrown at residential development in the CBD will not address Cape Town’s housing crisis. Instead, it will likely do little or nothing for Cape Town’s housing shortfall while further exacerbate problems with urban mobility, accessibility, and socio-economic fragmentation. Put simply, filling up the CBD with luxury apartment complexes that sit empty for 9 (or more) months a year will not be good for Cape Town.
This brings me back to the last of the three statements I noted above in the draft LSDF: the absence of any short-term rental restrictions. This type of restriction can help re-align the use of property with the need for housing by tempering the incentive to produce and rent housing only for short-term renters. Plenty of “world class” cities—New York, Barcelona, Berlin, Vancouver—have taken steps to equip themselves to address the pressure on housing created by AirBnB and other short-term rental facilitators. They see the value in balancing of providing for tourists while protecting their own residents. Reasonable limits on short-term accommodation, such as requiring registration of short-term units, limiting the number, density, or location of units offered, and in some cases prohibiting absentee landlord rentals, could help address the detachment of the CBD housing market from providing actual housing for Capetonians. It is not a silver bullet to Cape Town’s housing crisis, but with close collaboration with all affected stakeholders the City can craft a reasonable and workable policy.
The point isn’t to drive away tourists, but to make the CBD work for Capetonians. Making the CBD a more affordably place to live is completely consistent with maintaining it as the vibrant economic and social heart of Cape Town. In fact, adding residents is exactly how to maintain and increase its vibrancy, making it a place people want to visit. Creating public policies and requirements that support this should therefore be the City’s priority. While the LSDF is not the right process for implementing such a policy, it demonstrates why one is needed.
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