South African cities held back by innovation, transport and environmental issues

A leading global city is an international hub for business and culture. It has a large and diverse economy with a strong cultural scene, world-class education and infrastructure. It’s a tough city to replicate, so it attracts some of the best talent. But it’s probably not in South Africa.

The Schroders Global Cities Index aims to help real estate investors by identifying and ranking some of the world’s best and brightest cities in four categories: economy, transport, innovation and environment.

Unfortunately, South Africa performs poorly in all categories – held back mainly by innovation, transport and environment scores.

“South Africa has only two big names from an economic point of view: Cape Town and Johannesburg. However, none of these cities are among the top 200 global cities,” says Tom Walker, co-head of listed global real estate assets at international asset manager Schroders.

Johannesburg came in at 277 while Cape Town ranked number 316.

“However, South Africa is doing relatively well compared to other African cities, beaten only by Cairo and Alexandria in Egypt,” says Walker.

Lack of transport infrastructure impacts cities

Transport infrastructure plays a number of important roles for cities. It can help provide access to a wider range of employment opportunities, making it an important social leveling factor.

“A city that has an efficient system for moving people, goods and data will be more economically and socially sustainable as residents access more potential roles, while the use of cars, buses and trucks is significantly reduced, improving air quality and reducing emissions,” says Walker.

For Johannesburg, the density of the formal public transport system is low compared to major European, North American and Asian cities. It’s the reverse with Cape Town – where there’s better rail coverage, but more limited air connectivity. But, says Walker, Schroders finds airport connectivity to be good by global comparisons.

“No South African city has access to the highest class of ports, although Cape Town, Durban and Port Elizabeth all receive a modest positive transport score thanks to the presence of a cargo port,” says Walker.

That said, World Economic Forum infrastructure quality scores remain poor for South Africa, particularly for rail and road systems. The quality of airports and ports is noticeably better.

Air quality in Johannesburg degrades environmental score

The UN predicts that the world’s population will reach almost 9 billion by 2035 and more than half will live in cities.

“The Environmental Score measures cities’ ability to meet the demands of rapid global urbanization and climate change, focusing on three key areas, physical risks to buildings from issues such as storms or forest, the risk to the well-being of humans working in those places from issues such as air quality, and then politics, looking at how government policies can increase or decrease environmental risks,” says Walker.

South Africa scores poorly mainly on the components related to our well-being and policy measures, he says.

“The risk to well-being is related to the expectation that life is likely to become more unpleasant for people living in these cities. Key measures include water stress, heat stress, water quality and water quality. air,” says Walker.

He adds that Johannesburg is particularly handicapped by poor air quality.

On policy, Walker notes South Africa’s average scores “in the middle of the pack” on carbon policy, recycling policy and general environmental policy (lowest score here).

“Scores can be improved by reducing CO2 GDP/CO production intensity2 per capita, signing and respecting international agreements on climate change, more ambitious Nationally Determined Contributions (NDCs), etc. adds Walker.

Innovation stifled by higher education provision

High quality education systems foster innovation and create jobs in a city. Skilled graduates entering the labor market attract business and can start their own business. The resulting wages and wealth creation, Walker says, fuel real estate demand.

Only four of the nine cities we cover in South Africa have a university among the top 1,000 universities we consider,” he says.

Three universities are within the limits of Johannesburg up to 25 km outside. Walker explains that the city benefits from the University of Pretoria, which is caught in the “sphere of influence” assumed to be wielded by Johannesburg, but only two of these institutions feature in the top 1,000.

“The relative low performance of the University of the Witwatersrand and the University of Johannesburg appears to be due to the low academic reputation score, low citations per faculty member – academics do not generate highly cited research in the world compared to other universities – and the low reputation of employers,” says Walker.

On the other hand, Cape Town fares slightly better, with the University of Cape Town ranking higher in the rankings, thanks to a significantly higher academic and employer reputation.

The Schroders Global Cities Index covers these cities in South Africa: Johannesburg, Cape Town, Pretoria, Durban, Port Elizabeth, Bloemfontein, Kimberley, Buffalo City and Polokwane.