Special Ratings Areas are transforming SA’s neglected urban nodes, unleashing economic potential and upping property values one precinct at a time

Urban degeneration is not a uniquely South African problem. But the success of a growing number of carefully managed Special Ratings Areas (SRAs) worldwide, and the related learning and expertise in this field, is resulting in the marked upgrade and growth of many economic nodes.

They are tagged locally as Special Ratings Areas (SRAs), City or Business Improvement Districts (CIDs or BIDs) or Urban Improvement Precincts (UIPs). Considered management of these public open spaces is making huge headway in unlocking economic development and delivering liveable urban spaces, as well as optimising public and private sector investment and property values – and enhancing the quality of life of their users.

And as SAPOA KwaZulu-Natal regional chairman Ed van Niekerk, also executive director at Maxprop, comments, “When property values increase, every single property professional benefits.” So do the users of those properties.

CAPE TOWN AND GAUTENG

With 34 CIDS, Cape Town leads the local field in precinct management. The city’s oldest CID – the Cape Town Central City Improvement District (CCID), established in 2000 – manages the CBD. The CCID is an area that will boast a cumulative property investment of R32bn by 2021 – R24bn (as recorded in the City of Cape Town’s latest 2013/14 official property valuation report) – and conservatively, another R8bn in current constructions and new developments on the cards.

In Gauteng, it’s notable that, besides marked capital investment, job creation and support of local economy, crime rates within CIDs are comparatively much lower than the wider sector in which they are situated.

And while there’s no doubt that, in most South African towns and cities, CBDs have declined due to loss of buying power to suburban developments, according to National Treasury the CIDs and SRAs that have emerged in commercial nodes represent a new public and private sector commitment to turning these negative trends around. They give property professionals a reason to invest and promote these once-attractive nodes.

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SHAPING PERCEPTIONS

The cold truth is that regardless of what statistics say or how physically attractive an environment may be (a revamped city centre, a beautiful beachfront promenade), desirability, economic vibrancy and property returns are determined by perception – how the man in the street, the tourist, the business, the investor, feels about a place. How safe they feel relative to the experience they had in that place is what determines if they will return with their families or invest in that node.

It is these intangibles that form the basis of effective precinct management, according to Brian Wright, founder and MD of Urban MGT. “Our work is about stitching together interventions that collectively transform the public realm and change perceptions, which together create a solid base that turns areas around,” he says.

Wright has been involved in precinct management since 2007. Areas under his vigil include Ballito UIP, Bridge City Management Association, Cornubia Industrial Business Estate, Florida Road UIP, Riverhorse Valley Business Estate and uMhlanga Rocks UIP.

Riverhorse Valley is one of the pioneers in the implementation of a greenfield management structure. “It has been nothing but a success,” says estate manager Bruce Macaulay. Founded 15 years ago, plots on the estate sold for R285/m2. “Four years ago the last available plot was sold, filling the 304ha estate. Land is currently priced in excess of R2,000/m2. Drawcards include a pleasant work environment, safety and superb infrastructure, thanks to the diligent management of the precinct,” he says.

The Florida Road UIP put structures in place to deal with their informal car guard issue last year. “The difference is amazing,” says Dina Soukop of Soukop Property Group, whose head offices are located there. “You can see and feel the difference. It’s cleaner, the area is buzzing again, we don’t feel afraid and we’ve had a surge of people wanting to buy in Florida Road. We’ve even been asked whether we want to sell our own building.”

And Florida Road UIP is only a toddler. The real difference introduced by precinct management can be seen in an example such as uMhlanga Rocks (see sidebar on the next page for the case study by Urban MGT).

WHAT NEXT?

Why then don’t we have more SRAs? National Treasury asks how, with scarce resources, can municipalities support the operational management of key precincts that require services beyond what the municipality can equitably provide to all its citizens?

Short of cash and leadership, creating a SRA isn’t child’s play. While National Treasury is aware of the importance of SRAs in adding value, committing to assisting however it can, Wright believes “municipal/private sector partnerships are essential for the success of precinct management as neither party can, on their own, cost-effectively deliver at a competitive level.

“There are two parallel but inextricably linked deliverables required. The private sector has to show decisive leadership by getting organised into a credible institutional structure to engage with municipalities with a unified and collective voice. And municipalities have to embrace precinct management partnerships with the private sector as catalysts for economic development. This underpins a city’s, and in fact a country’s, sustainability and liveability.”

PLANS FOR MAJOR CENTRES

SAPOA KwaZulu-Natal has undertaken to formalise a collective precinct management voice, engaging with municipalities and spearheading a way forward, with the Durban beachfront and city centre earmarked for future urban management precincts.

In Cape Town the CCID is working in partnership with the City of Cape Town to introduce a number of pilot projects new to SA as a whole. This includes leveraging a R1.7bn fibre optic network being rolled out by the city to government buildings across the metropole, which is now robust enough to be leveraged by the private sector. As part of the pilot project, connections will be made, at the city’s cost, to about 1,000 privately owned CBD buildings by June 2021 (to date 49 have been connected).

In Gauteng The Johannesburg CID Forum has been set up as a platform from which Joburg CIDs can share info, follow international trends and keep track of issues having an impact on CIDs as a collective. There are  30 CIDs (18 legislated, 12 non-legislated) in the Joburg municipal area, collecting  an estimated R91m annually for services in public spaces. The CIDs have attracted an estimated R25bn in private investment in built form, representing a total municipal value of about R53bn. SAPOA is working on a National CID Forum to act as a similar structure for national urban management structures.

What about property values? Says Cara Reilly of Urban MGT: “One of the fundamental advantages for those selling or buying a property in  a managed urban environment is not just that it looks better and feels safer. It is the assurance that, in well-structured and formal management precincts, there are sound and productive relationships with local municipalities that are realising the potential of precinct management to solve the challenges faced in urban nodes and unlock the economic viability of an entire area.”

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uMhlanga Rocks case study

In 2008 uMhlanga Rocks was in crisis. Crime was on the increase, there was little enforcement of bylaws, a poor municipal structure was degenerating, urban decay was rampant and the precinct was in economic crisis as investors disinvested in favour of new uMhlanga Ridge developments.

The private sector in uMhlanga Rocks took action. They put together a “war chest” to drive the establishment of uMhlanga Rocks Village UIP. As with sustainable SRAs, it was imperative to have a mutually beneficial relationship between the private and public sectors. They engaged with eThekwini Municipality and brought them on board as partners.

This mutual cooperation included:

• Lobbying for economic-enabling infrastructure
• Agreement on municipality service levels and optimising service delivery
• Integration of SRA and municipality service delivery
• Fault reporting to the municipality, follow-up and meetings

This particular SRA put its operational plan into practice, with the focus on securing property values and building investor confidence to retain and attract investment.

The project has been an overwhelming success. Since its inception there have been reinvestments, a stream of new tenants and upgrades to private properties and residential complexes. Improvements were also made to Breakers Resort, uMhlanga Sands Resort, Cabana Beach Resort, The Oyster Box Hotel, Umhlanga Centre and a Protea Hotel (in progress), and there is a planned Beverly Hills Hotel upgrade. Despite tough economic conditions there have been new developments including Beacon Rock and  the Pearls of Umhlanga. The total estimated value of these investments exceeds R5.5bn.

uMhlanga UIP Perceptions Survey:
Public Space Rating 2015-16

91%  – rated safety good/excellent
86% – rated cleanliness good/excellent
83% – rated general maintenance good/excellent

FIND OUT MORE

uMhlanga Urban Improvement Precinct: umhlangauip.co.za
Florida Rd Urban Improvement Precinct: floridaroaduip.co.za
Ballito Urban Improvement Precinct: ballitouip.co.za
South African Property Owners Association: sapoa.org.za
Cape Town Central City Improvement District: capetownccid.org
Johannesburg City Improvement District: cidforum.co.za

Words: Andre Fiore