Doubts have been raised about the adequacy of the R110 billion commitment by the government towards infrastructure in Johannesburg over the next decade.
Ilse French, the asset management and real estate leader for Africa at PwC, said Gauteng’s population would increase to 22 million by 2030 from 11 million today if current trends continued.
French said by 2050 the global urban population would have increased by 75 percent to 6.3 billion and there would have been a huge expansion in cities, with mixed consequences.
The pace of urbanisation in sub-Saharan Africa was forecast to be exceeded only by Asia’s.
French said these unprecedented shifts in population would drive changes in demand for property, with technology also changing the economics in the real estate sectors.
The need for physical office and retail space was decreasing due to telecommuting, digital technology and satellite offices and while certain stores would always remain relevant, others would be heavily affected by trends in online commerce, she said this week at the release of a new PwC report, titled Real Estate 2020: Building the future.
French said that the larger population would consume more food, resulting in a need for agricultural land, but she stressed that less than 13 percent of South Africa’s land was suitable for agriculture.
Kees Hage, the global real estate leader at PwC, said the property industry was at the centre of rapid economic and social change that was transforming the built environment.
Hage said the growing middle class and ageing populations in emerging economies were increasing demand for specific types of property, such as affordable housing, retirement accommodation, gated communities outside cities for families and smaller urban apartments without kitchens or parking space for young professionals.
“As real estate is a business with long development cycles, now is the time to plan for these changes,” he said.
Hage said property managers would need to respond and adapt. He highlighted the need for them to think globally, understand the underlying economics of cities, factor technology and sustainability into asset valuations, collaborate with governments to enable economic and social progress, decide where and how to compete and assess opportunities to reflect a broader range of risks.
Global property output was expected to almost double to $15 trillion (R160 trillion) by 2025 from $7 trillion in 2012 but the philosophy of “build it and they will come” would not prove universally successful.