Dynamic models for understanding
infrastructure and housing investments
ACC Sustainable Human Settlements Citylab
Urban Transformation: Challenges For Infrastructure & Housing Provision
Nick Graham
30th October 2012
Why use dynamic models?
1.
To understand the multiple processes and
variables that simultaneously affect
housing supply and demand
Example: eThekwini Housing Model
2.
To understand the interactions between
housing, infrastructure, transport, space
and money.
Example: City Efficiency Costing Model
2
3
eThekwini Housing Model
Supply and demand in the
housing market at city scale
Demand
Demographic growth
Household fragmentation
High income growth
Economic
growth
Med income overcrowding
Med income backyards
Low income growth
Low income overcrowding
Low income backyards
Low inc. inf. settlements
Policy
Funding
High income self-provision
Med income self-provision
Survival strategies / Market forces
Med income growth
Supply
4
Med income subsidised
Med income overcrowding
Med income backyard
Downward raiding
Low income subsidised
Low income self-provision
Low income backyard
Low inc. serviced inf.
settlements
Low inc. inf. settlements
5
Dynamic housing model
Input data
Demographics
Housing stock
status quo
Scenario data
Demographic and
economic growth
scenarios:
•MSFM projections
•User-defined
•Uniform
Outputs
DEMAND
Housing
dynamic
Delivery scenarios:
Delivery
programme
Capital funding
•Unconstrained
•Match programme to funding
•Eliminate backlog
•Static delivery
Funding scenarios:
•Constrained
•Unconstrained
SUPPLY
Funding
shortfall
AFFORDABILITY
6
Housing delivery
Opportunities per year
30,000
25,000
20,000
15,000
10,000
5,000
-
Interim services
Upgrading
Greenfield
Rural
Sale of council flats
CRU
Affordable housing
Social housing
Low income household housing situation
7
900,000
800,000
700,000
600,000
Households
informal
500,000
formalised in-situ
backyards
400,000
overcrowding
traditional
300,000
downward/upward raiding
200,000
primary stock
100,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
-100,000
Medium income household housing situation
8
350,000
300,000
Households
250,000
informal
200,000
traditional
backyards
150,000
overcrowding
downward raiding
primary stock
100,000
50,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
9
Funding for housing programme
2,500
R million per year
2,000
1,500
1,000
500
-
Capital cost of programme
Funding available
Shortfall
Dynamic model: eThekwini
10
Learning

Interventions need to be understood in the
context of market distortion and general
supply shortage

Targets, budgets and programmes do not
tie up and are unrealistic.
11
City Efficiency Costing Model
12
9 High Income
11 Medium Income
17 Low Income
11 Vacant
Future zones
13
Capital cost components
TOP STRUCTURE
SERVICES
LAND
PREPARATORY WORK
SOCIAL SERVICES
14
Capital cost drivers
PRIMARY DRIVER
SECONDARY DRIVER
LAND
LOCATION
TYPOLOGY
TOP STRUCTURE
TYPOLOGY
BULK INFRA.
LEVEL OF SERVICE
TYPOLOGY
CONNECTOR INFRA.
LOCATION
LEVEL OF SERVICE
INTERNAL INFRA.
LEVEL OF SERVICE
TYPOLOGY
15
Capital cost drivers
PRIMARY DRIVER
SECONDARY DRIVER
LAND
LOCATION
TYPOLOGY
TOP STRUCTURE
TYPOLOGY
BULK INFRA.
LEVEL OF SERVICE
TYPOLOGY
CONNECTOR INFRA.
LOCATION
LEVEL OF SERVICE
INTERNAL INFRA.
LEVEL OF SERVICE
TYPOLOGY
16
Capital cost drivers
PRIMARY DRIVER
SECONDARY DRIVER
LAND
LOCATION
TYPOLOGY
TOP STRUCTURE
TYPOLOGY
BULK INFRA.
LEVEL OF SERVICE
TYPOLOGY
CONNECTOR INFRA.
LOCATION
LEVEL OF SERVICE
INTERNAL INFRA.
LEVEL OF SERVICE
TYPOLOGY
Location, land price and connector
infrastructure
R 1,200
3.5
R 1,000
3.0
2.5
R/m2
R 800
17
Land
2.0
R 600
1.5
R 400
1.0
R 200
0.5
R0
0.0
Poor location
Good location
Connector
premium
R0
In-situ servicing Semi-detached Detached house 3 storey walk-up
house
Land
Internal infrastructure
Bulk infrastructure
Top structure
R 180,000
R 160,000
R 140,000
R 120,000
R 100,000
R 80,000
R 60,000
R 40,000
R 20,000
R0
R 139,981
5 storey flat
18
Connector infrastructure
R 149,062
R 155,687
R 124,742
R 49,868
In-situ servicing Semi-detached Detached house 3 storey walk-up
house
Land
Internal infrastructure
Bulk infrastructure
Top structure
5 storey flat
Connector infrastructure
19
R 450,000
R 400,000
R165,000
R300/m2
3 storey/5 storey
R 350,000
Unit cost
R 300,000
R 250,000
R 200,000
R150,000
R125/m2
Detached/5 storey
5 storey flat
R145,000
R80/m2
Detached/3 storey
3 storey walk-up
R 150,000
Detached house
R 100,000
R 50,000
R180,000
R500/m2
Semi-detached/5 storey
Semi-detached house
R126,000
R1000/m2
R-
Land cost (R/m2)
In-situ servicing
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14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
2020 - Urban sprawl
Land and
housing
Infrastructure
Total
State
City
Households
State
City
Households
State
City
2020 - Compact city
Households
R million
Capital cost of development over 10 years
22
2,500
Operating costs for low income households in
Year 10
27% difference
2,000
= R69 billion
over 10 years
1,500
1,000
500
2020 - Urban sprawl
2020 - Compact city
Housing
Transport
Services
Total
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Environmental impacts
3.0
2.5
22% difference
2.0
1.5
2010
2020 - 'Urban sprawl
2020 - 'Compact city
1.0
0.5
mllion tons CO2 pa
X10 million MWh pa
million Ml pa
million tons pa
Carbon emissions
Electricity consumed pa
Water consumed pa
Waste generated pa
Learning




There is no apparent capital financial
incentive for the City or State to densify
Capital costs are strongly driven by top
structure costs and land costs, not by
infrastructure costs
Short-term capital decisions outweigh
longer term operating cost savings
The majority of the costs of urban sprawl
and potential benefits of a compact city, are
borne by households and the environment,
and not by developers, the City or the State.
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[email protected]
www.pdg.co.za
Nick Graham
30th October 2012