Cape Town’s new Local Spatial Development Framework envisions an ambitious plan to accommodate 40,000 additional residents in the city centre by 2040. At its heart is the aim to create more affordable housing close to employment hubs, a proposal often viewed through the lens of social equity. Yet packing affordable housing into the inner city may bring more problems than solutions for Cape Town.

If it is “successful”, this plan may end up turning Cape Town into something resembling Johannesburg, with all the misery that entails.

The inner city’s unique character and vibrancy stem from its role as the commercial heart of the City. Increasing residential density, particularly with affordable housing, risks undermining the very qualities that make it attractive to business and tourism.

By forcing the integration of lower-income housing into this high-value area, the city may inadvertently stifle its economic engine. The pedestrian-friendly streets, heritage architecture, and bustling commercial zones could lose their appeal if overburdened with the challenges that often accompany dense affordable housing projects, such as increased pressure on public services and infrastructure, increases in crime and gangsterism.

Racketeering and extortion have already started to drain the vitality that was still evident in Long Street ten years ago, and much has declined. The City has been pleading for more policing powers from the state, but has instead settled for subordinating itself to SAPS in exchange for the dismissal of the dangerously corrupt chief of police and head of provincial crime intelligence.

Currently, Cape Town’s inner city boasts some of the most valuable real estate in the country, driven by demand from businesses and high-end residential markets. Introducing large volumes of low-cost housing will have a deflationary impact on property values, which will deter private investment.

The city risks losing its allure as a premium business district if it cannot balance the influx of residents with the needs of commerce, particularly in areas like Bree Street and the Foreshore, where property values are buoyed by proximity to corporate offices and tourism.

Moreover, while it is true that the city must address housing affordability, shoehorning such developments into prime urban spaces comes at the expense of alternative locations that could be better suited for housing expansion. The Foreshore Freeway precinct, long viewed as an opportunity for bold urban planning, is emblematic of this misalignment. While slated for affordable housing projects, the area’s unfinished freeway infrastructure and stark, imposing city blocks make it a less-than-ideal setting for the city’s vision of livable, “pedestrian-friendly” neighbourhoods.

The plan’s intention to retrofit old office buildings into residential units in response to post-Covid changes in office demand sounds appealing on paper. However, such conversions often come with high costs and technical challenges, limiting their feasibility. Moreover, working from home has already lost its appeal, and businesses are starting to steer their employees back to the office to increase focus, communication and productivity.

Without robust regulation of short-term rentals like Airbnb, affordable long-term housing is likely to be squeezed further as property owners chase more lucrative, tourist-driven markets anyway. The opening of the housing market to the property pages of the New York Times has also seen spiralling property prices which lock out all but the wealthiest.

Increasingly, the middle class are choosing to live in the outlying Boland towns and northern suburbs and commuting into Cape Town, and the rapid urban development into malls and private housing complexes is cratering the high streets of these old towns, which are in turn being bought up by foreigners, mostly Chinese and Pakistani, who are well known to use their shopfronts for money laundering.

This is not just about the capital, but about the entire province.

And this is not a new problem - the City is now imitating the worst city planning habits of the United States, which have decimated many of their own best cities by deliberately shoving the poor into the centre, creating a dismal radiating crater of decay that drives white flight and economic collapse. Economists have aptly dubbed this phenomenon the "donut effect."

Arjun Ramani and Nicholas Bloom, in a recent working paper for the National Bureau of Economic Research (NBER), have shown that people fleeing city centres are typically not moving far. Instead, they’re relocating to the suburbs and exurbs of the very urban areas they previously inhabited. In our case, that means the outlying towns like Stellenbosch, Somerset West, George and Paarl.

Here, they illustrate the effect in New York: a heat map in their research illustrates a clear migration away from Manhattan towards the outer boroughs and Long Island.

Although the "donut effect" is most pronounced in cities like New York and San Francisco, its shadow looms over others, including Chicago, whose trajectory bears worrying similarities to Detroit — the original "donut city." Decades of decline in Detroit’s downtown, driven by the collapse of the US auto industry, white flight, and rising crime, left its once-grand buildings largely vacant.

While transport can ameliorate some of the problem, this is South Africa we are talking about, and unless we see secession in the cards, the kind of structural changes we need to see are unlikely to ever happen.

Tracy Hadden Loh of the Brookings Institution notes that cities with effective public transit, such as London and Paris, have fared better than their American counterparts. New York, despite its beleaguered subway system, still shows more downtown economic activity than places like Chicago or Los Angeles, where transit infrastructure is lacking. These latter cities, already grappling with deep social segregation, are facing a dual crisis: commercial real estate is in trouble, and the amenities that once drew people downtown — restaurants, entertainment, retail — are dwindling.

While the financial side may not be quite as comparable in South Africa, the Federal Reserve’s recent financial stability report highlighted the exposure of financial institutions to commercial real estate as a potential threat to the US economy. Office buildings, already grappling with falling valuations, make up a significant chunk of commercial real estate mortgages. As property values adjust downward, the risks to banks and credit markets will likely multiply.

Cape Town has taken a leaf out of Jane Jacob’s book on mixed-use urban development, which is mirrored on the right by Leon Krier’s New Urbanism, but these approaches only work in high-trust societies where violent crime is not much of a factor.

But the worst aspect of their hubris is that we have examples of this sort of urban decay right here in South Africa. The doughnut effect we observe in many global cities aptly describes the decay of Johannesburg’s Central Business District (CBD).

The CBD, once the financial heart of South Africa, began its decline in the late 20th century, as crime rates surged, infrastructure deteriorated, and urbanisation increased pressure on infrastructure while crime skyrocketed.

As businesses fled the CBD for safer, more affluent suburban areas like Sandton, they took with them investment, jobs, and much of the city’s economic vitality. Sandton emerged as Johannesburg’s new financial hub, with modern office buildings, luxury apartments, and robust infrastructure. The CBD, on the other hand, was left with vacant and hijacked buildings, increasing crime, and dwindling public services.

Residential flight compounded the problem. Many middle- and upper-income residents moved to the suburbs, leaving behind a lower-income population with fewer resources to maintain urban spaces, still taxable, but unable to affect their own environment. Community safety initiatives and private security have insulated these outlying areas, but the centre is gone forever.

The sprawling urban layout and limited public transport options have also exacerbated the effect. The Gautrein can make some parts of the commute easier, but its not exactly the London Underground, nor could such a system be made safe enough in that context that anyone who had a choice would go anywhere near it.

The hollowing out of Johannesburg’s CBD mirrors the experiences of other cities suffering from the "donut effect," where economic activity moves outward, leaving urban cores in decline and peripheral suburbs thriving. Addressing these dynamics will require comprehensive urban renewal efforts, improved public transport, and policy interventions that attract investment back to the city’s heart.

What the DA are doing thus doesn’t merely threaten to ruin the one good city in the country, but equally the entire surrounding area, but they are hell-bent on this project, and it would take a thunderclap to get any of them to pay attention.

The one upside here is that previous such attempts by the City to ruin developed areas have failed, due to various reasons. The Foreshore development has caused unending hell for City development committees, and has been stuck in limbo since the days of de Lille's mayoralty. Town planning experts have almost unanimously bashed it for its hubris, and undoubtedly will come out of the woodwork once again, once the inner city poverty sink goes from the oning to the planning phase.

For now, we can only hope someone realises what they are doing.