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Private cities

Posted by Flux on 

17 April 2022

What’s trending?
The term ‘private cities’ refers to residential precincts that are set up by private organisations within which there exists a whole host of amenities. These may include schools, shopping centres and law enforcement, all of which reduce the need to leave the precinct. The Palm Islands of Dubai is a good example of this. We’ve already begun to see private cities in South Africa – the gated compounds of Waterfall and Steyn City in Johannesburg – and the trend appears to be accelerating. In South Africa this is driven by dissatisfaction with crime and poor government service delivery.

Why is it important?
Over and above national laws, these cities operate with their own set of rules, functioning like a bona fide city itself. There is no democratic process, rather the rules of the company that owns the estate apply. These developments attract investment to the region by large corporations and they utilise unused urban land to build housing. Governments tend to benefit from these estates as they bring about economic development without the use of taxpayer money. The authorities  have a fiscal incentive to support them because the residents continue to pay tax while requiring fewer services from the state. However the potential downside is that these developments increase the divide between rich and poor as they are typically populated by the wealthy.

What can businesses do about it?
These private cities, while somewhat controversial, provide opportunities for businesses to supply them with products and services. Businesses can set up shop in much the  same way Seattle Coffee Company did for example when they opened their doors in Steyn City late last year. Being located inside these estates provides opportunities to sell to high net worth individuals. The location also makes the company more attractive to potential staff living in these precincts: people would be attracted to the idea of working close to where they live instead of having to commute.

By Faeeza Khan

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Image credit: Estate Living

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