Land availability through the public sector has a critical role to play in housing delivery. Photographer Ayanda Ndamane / Independent Newspapers
The Housing Development Agency (HDA) says substantial capital investment is required to fulfil their housing mandate. However, in spite of challenges, it is optimistic about the potential for progress.
"The current funding constraints limit our capacity to deliver at the scale required to meet housing needs effectively,” the agency stated, shedding light on the critical issues faced in the pursuit of sustainable human settlements.
However, "by collaborating with the private sector to unlock innovative solutions, such as affordable housing finance mechanisms, strengthening partnerships with municipalities, and leveraging innovative building technologies, we can significantly enhance housing delivery", the HDA said.
With partnerships spanning national, provincial, and local governments, in addition to collaborations with communities, developers, and financiers, the HDA is pushing against a backdrop of mounting challenges, such as inadequate bulk infrastructure, a scarcity of well-located land, and escalating construction costs exacerbated by growing housing delivery backlogs and urbanisation.
Despite these hurdles, the HDA remains optimistic about the potential for progress within the human settlements sector.
The agency said meaningful advancements can be achieved by addressing existing challenges and harnessing available opportunities.
Recent findings from the agency reveal that while strides have been made within the sector, uneven growth persists, particularly in urban areas challenged by rapid migration.
Bureaucratic delays, insufficient funding, and limited private sector engagement continue to hinder advancement. The HDA stresses the need for streamlined regulatory frameworks to facilitate swifter project approvals and urges both public and private investors to commit more resources to the housing sector.
Furthermore, the agency calls for cohesive interventions from the government, highlighting the importance of enhanced policy alignment across various levels to tackle land availability and zoning issues, supported by the Integrated Urban Development Framework (IUDF).
Financial institutions are encouraged to increase funding for innovative housing solutions, while businesses can play a crucial role in fostering mixed-use developments and championing sustainable construction practices.
Active community involvement is also essential, as the HDA believes it will ensure that development projects genuinely reflect beneficiaries' needs. "These interventions will create a more cohesive and impactful approach to human settlement development," the agency concluded.
On the road to impactful progress, the HDA has marked significant accomplishments, including the acquisition and release of 12,151.5472 hectares of land for human settlements, alongside the rezoning of 6,597.86 hectares for development purposes. These milestones are crucial in expediting housing delivery and nurturing sustainable, integrated communities.
Echoing these sentiments, Professor Francois Viruly from the University of Cape Town highlighted the necessity of public sector involvement in housing delivery. However, he emphasised that the focus should not only be on land quantity but also on strategic location, especially inner-city land with existing infrastructure.
Viruly’s insights shed light on the intricate relationship between public sector land management and the private sector's capability to drive development. He advocates for collaborative approaches, such as public-private partnerships (PPPs), allowing both sectors to balance risks and directly address housing demands.
The landscape of public sector development projects in South Africa could be transformed if financial and development models effectively integrated public and private interests. Utilising innovative financing methods, such as Tax Increment Financing (TIFS), could generate a much-needed influx of resources into projects that meet market demand and ensure the delivery of necessary infrastructure.
Viruly, an associate professor and director of the Urban Real Estate Research Unit (URERU) at UCT, said land availability through the public sector has a “critical role to play in a housing delivery and a Human Settlements policy”.
He said that however, it is not just about the amount of land that is required but also the location of this land.
“Often the required public sector funding is not available to ensure the delivery of bulk infrastructure on green field developments at the required standards.
“Without this infrastructure spending, you simply cannot develop land, and in certain cases the cost of infrastructure significantly reduces the feasibility of projects.
“This also leads to the question whether greater emphasis should not be placed on inner-city land which often has the required infrastructure. This could also include the development at higher densities along transport corridors,” Viruly said.
He said the exact role of the public sector in promoting housing developments is often debatable.
“While the public sector can add value in packaging land for developments, the actual development process is best left in the hands of the private sector.
“The public sector can add value in the development process by delivering land, infrastructure and ensure that the required planning processes have been taken care of.
“In other words, the public sector can add value by packaging land for development. The private sector, on the other hand, is usually better positioned to raise capital and undertake the actual developments.”
The professor said there have been examples of public sector driven development companies in South Africa and internationally.
He said to be effective such entities need to be in a position to attract the required development expertise and have the independence to undertake the risks associated with a development project.
“They also need to raise the finance from the private sector beyond what is available from the public sector.
“The funding is reliant on ensuring that projects are brought to the market that are financially feasible and meet market demand.
“The issue is that public sector projects may have numerous non-financial objects that are difficult to bank. In most cases public sector development projects and entities work best when they are undertaken in conjunction with the private sector through for instance public private partnership( PPPs).
The property expert said for current public sector driven projects to work, financial and development models need to be found that integrate public and private sector interests.
He added that in particular it means finding financial models that are able to fund infrastructure models through for instance Tax Increment Finance( lTIFS) models which rely on the benefits that are derived from the rising tax base produced by developments and through PPP arrangements.
PROPERTY