[DEBATE] : (Fwd) Gentrifying Joburg isn't easy, now or then

[Patrick Bond]

(The Ponte people just don't get it about the housing crash now 
underway. It reminds me of the optimistic hype about yuppies and buppies 
we heard about at the peak of the last property cycle in the early 
1990s, about which I coauthored a chapter, below.)

www.mg.co.za

Bertrams waits for nip and tuck

Zahira Kharsany | Johannesburg, South Africa

12 June 2008 06:00


On the surface there does not seem to be much of a difference in 
Bertrams over the past two years. ( Photograph: Oupa Nkosi)
Bertrams, a run-down suburb adjacent to Ellis Park, has been set for a 
facelift from the day that South Africa was awarded the football World Cup.

Ellis Park, in the heart of Johannesburg, will host five first-round 
matches, a second-round match and a quarter­final. With only 734 days to 
go, little change can be seen in the area.

Overflowing buildings, broken doors and gates, children running through 
the streets -- Bertrams is overcrowded and an over-rented area because 
of its close proximity to the CBD. Refugees, South Africans and drug 
dealers live side by side.

Johannesburg Development Agency's (JDA) marketing and communications 
executive manager Sammy Thamsanqa Mafu said there are legal problems in 
the area that have hampered the proposed development.

"We have started with the road infrastructure and paving the streets as 
well as putting into place new street lights."

Sipho Zulu (25), who works as a forklift driver in Germiston, said he 
paid R400 for the small room he is renting in the area. "The smaller the 
room the less you pay." Zulu, like many others, rents from slumlords who 
do not necessarily own the property. Caretakers collect money for 
property owners or slumlords.

Drugs dealers are a problem in the area but some residents feel that 
they have now left. Zulu points down the street showing where drug 
dealers operate. "If you go to that corner you can ask them about the 
drugs, I don't do drugs."

Further along the road sits Sibongile Buthelezi, braiding Ntombi Msibi's 
hair. Buthelezi works nights at a meat-packing factory. She shows me the 
room she has been renting for the past eight years. It forms part of a 
house that has collapsed on one side and is barely standing on the other.

"They came in March with forms and papers about taking a flat in town, 
but we have not seen them since. More then 10 of us sleep here."

Msibi lives a few streets away from Buthelezi and works as a plumber. 
She lives in a room that was built behind a house and pays R570 in rent.

"I'm paying a lot of money and there is no electricity. Every month I 
pay and I still have to pay for paraffin. If you want a nice room with 
hot water and electricity you pay R1 000 or R1 200, that's how much I 
earn a month. One day you'll find me on the street."

Msibi says that to cook, residents have to make fires on the floor. 
"Just imagine being in Johannesburg and 2010 is around the corner, and 
you have to still make food on a fire."

"No one has come to ask us about leaving or moving to another area."

Agmat Badat, senior development manager at the JDA, said the city is not 
a big landowner in Bertrams and that the JDA had to identify specific 
areas for upgrade.

"The number one priority is the area between Bertrams, Berea, Gordon 
Road and Liddle Street. We have purchased all the buildings in that 
area. There are seven heritage buildings on that block and we are now 
waiting for heritage approval to begin demolitions."

Badat hopes that in the next three to four months it will get approval 
so that it can fast-track the demolitions and the building of new 
housing blocks.

"We spent about R24-million purchasing the land and another R8-million 
relocating residents to the BG Alexandra Building in town. There is an 
urban management team in place in Bertrams and Pikitup will take over at 
the end of June."

Windows and doors are bricked up to prevent squatters from returning to 
buildings that have been vacated. Security patrols make sure that this 
remains so. Residents have either moved elsewhere or are making use of 
the temporary housing in town supplied by the JDA.

"The incentives are that we have agreed to pay their deposits for a 
place at the BG or, if they find their own place, we transport their 
goods. If they leave the BG they can keep the deposit to use for another 
place. The BG is not permanent accommodation but there are child-care 
facilities and a mobile clinic in the building."

JDA's Mafu said the process of uplifting the Bertrams area is not linear 
and that 2010 is a catalyst for development and not the "end all". The 
prioritised areas are also part of the World Cup security zone and it is 
unlikely that residents will be able to stay in the area before or 
during that period.

Aiming sky high
Adjacent to Bertrams and looking out over Hillbrow is Ponte City. Built 
in 1976, the building has 54 floors and is 185m high. Ponte was one of 
the most sought-after residential blocks during the 1980s. The 
cylindrical column has unrestricted views across the city and since the 
election in 1994 has become home to thousands of immigrants from Africa. 
Like the rest of Hillbrow, it attracted its share of crime and developed 
a reputation as a dangerous place. Unused parking levels were popular 
with prostitutes and their clients.

In May 2007 Ponte changed ownership and a re-development project “New 
Ponte” has been put in motion with Investagain as the developer. 
Investagain bought the building for R170-million and plans to spend 
R150-million refurbishing it.

The new Ponte will contain 467 residential units; a retail floor with an 
upmarket restaurant, a supermarket, a state-of-the-art gym and wellness 
centre, speciality shops, cafes, a gigantic children’s play area, a 
climbing wall and ample parking.

Part-owner and developer David Selvan explained the first half of the 
building project is 90% complete.

“The first 22 floors, which include the residential apartments, are 
complete. We had to strip them and were left with a concrete shell. We 
had to redo everything, and the finish is granite tops for the kitchen, 
wood and porcelain-tiled floors and marble bathrooms. The apartments are 
fully furnished. They cost between R410 000 to R920 000. One penthouse 
has been sold so far for R5-million but they are really not on the 
market yet.”

“We have signed a mandate with Pam Golding as our estate agent and this 
is one of its first big buildings moving into the city centre.”

***

“Contradictions in the Transition from Urban Apartheid: Barriers to 
Gentrification in Johannesburg”
by Patrick Bond, Johnny Steinberg and Paul van Zyl

in D.Smith, ed. The Apartheid City and Beyond: Urbanization and Social 
Change in South Africa (Routledge, London, 1992)

 From the top of Africa’s tallest building, the 50-floor Carlton Center 
in Johannesburg, the panoramic view is disquieting. The surrounding 
skyline began changing rapidly in the 1980s, in a dangerously uneven 
way. Now, while the western side of the central business district (CBD) 
is graced by ever more sophisticated, shiny, postmodern architectural 
gems housing mainly financial institutions, the eastern end remains 
clogged with dozens of overcrowded 1930s low-rise flats. On the rooftops 
of these buildings Carlton Center observers can see the cardboard 
shanties of poor and working families.
Hidden by the variegated surface-level mosaic of Johannesburg land-use 
patterns, extremely deep-rooted political and economic dynamics have 
spawned classic competitive struggles over urban space. The most 
contradictory of these are the seemingly irreconcilable encounters 
involving capitalists as individuals versus broader capitalist class 
interests.
The stakes are high, because half of all office space in South Africa is 
located in the Johannesburg CBD. (Threatening now to alter the balance 
of these forces, there is also to be found, competing for space on the 
east end of town, the militant tenant rights organization Actstop.)
 From where did this struggle for the CBD of Johannesburg emerge, and 
what will result, especially in the portentous, so far 
relatively-untapped east end? We argue that the crusade for inner-city 
redevelopment has occurred in the context of a broader economic crisis; 
that it has been led by the structural rise of finance in the economy; 
and that it comes at a momentous time when urban desegregation permits 
the space of the city to play a greater role in the broader formation of 
class alliances.
Thus for the CBD’s east end, the most coherent approach of the local 
state and capital is gentrification, but of a peculiar sort, aimed at an 
ascendant fraction of the black working class more than at traditional 
white yuppies. It is not, however, just the unusual target of this 
semi-gentrification project that creates the contradictions to which we 
refer. Instead the contradictions emanate from intercapitalist 
competition and the general tendency, deeply embedded in the South 
African economy, towards overindebtedness and untrammelled financial 
speculation.
It is in the struggle for this CBD space that some of the most glaring 
contradictions of South African urbanization in the 1990s can be readily 
observed. This chapter attempts to construct a broader 
political-economic framework that can shed light on the spatial fix to 
economic crisis in other South African settings, and on the social and 
political contradictions of post-apartheid urbanization.

Overaccumulation crisis

But what do we mean by crisis? It is widely accepted that South Africa 
has experienced a structural slowdown in economic growth since around 
1974, the exact causes of which are subject to debate. Business 
economists (e.g. Dickman 1990) typically attribute the crisis to 
government policies ranging from apartheid to ineffectual monetary and 
fiscal policy and seek remedies in free markets and a 
non-interventionist state. Progressive economists point to increased 
labor militancy and wage struggles beginning in the early 1970s 
(Nattrass 1990); the transmission of international crisis (Moll 1990); 
or some combination of the two which served to undermine a previously 
stable racial Fordist regime of capital accumulation (Gelb 1991).
Meth (1990:33), however, is rightly opposed to arguments about the roots 
of crisis which “lay a large portion of the ‘blame’ on ‘apartheid’ and 
much of the rest of it on the ‘unreasonable’ (politically-motivated) 
wage claims of the workers.” Many of the policy implications that stem 
from such analyses are objectionable to progressives and in any case 
could not be expected to resolve the crisis, as the failure of 
anti-labor, anti-government intervention programs of Reagan and Thatcher 
amply demonstrate (Clarke 1988). Yet, says Meth (1990:32), even Gelb 
“allows capital to slide too easily off the hook” of responsibility for 
the crisis. ln contrast, Bond (1991a, 1991b) advances the proposition 
that South Africa’s current economic crisis--like that, indeed, of the 
global system--is best described as one of overaccumulation of capital, 
a permanent tendency embedded in the normal operation of the system, at 
global, national, and even regional levels (Harvey 1982; Clarke 1988). 
 From this starting point, the rise of finance and its simultaneous 
search for investment outlets in the built environment follow logically. 
The conditions in Johannesburg are very much related to these broader 
processes.
ln South Africa’s case, bottlenecks between investment for consumer 
goods and producer goods which emerged in the late 1960s were paramount 
to the particular form of the overaccumulation crisis (Clarke 1978). 
These were exacerbated by extensive multinational corporate direct 
investment in consumer goods industries; by aggressive 
import-substitution policies which gave enormous support to locally made 
consumer luxury goods; by enormously skewed distribution of income and 
wealth; and by South Africa’s abundant mineral resource endowment, which 
promoted a lotus-eating effect--that is, it was easier to import 
producer goods than make them locally (Meth 1990).
The immediate results included a build-up of substantial retail and 
whole-sale inventories in the late 1960s; a “wild speculative boom” 
(Johannesburg Stock Exchange 1990) in the stock market from 1967 to 1969 
(followed by collapse from mid-1969 to 1971); an intense but ruinous 
spurt of automation in private-sector manufacturing from 1971 to 1973; 
and the subsequent levelling off and decline of new private-sector 
manufacturing investment from 1973; all of which pointed to untenable 
structural bottlenecks and presaged a long economic slump. The 1980s 
witnessed negative per capita growth; negative growth rates in 
productive investment; and an absolute decline in the value of capital 
stock, especially in manufacturing.
The economic crisis directly affected the development of South Africa’s 
built environment, especially cities, in a manner reminiscent of the 
spatial fix that Harvey (1982) theorizes. For example, one early state 
reaction to the slump in private-sector investment was a huge increase 
in parastatal spending on transport, storage, communications, and the 
like. As the crisis set in, state construction of electricity grids and 
water lines also rose dramatically by comparison with the boom years of 
the 1960s.
These built-environment investments mopped up some overaccumulated 
capital and helped overcome certain barriers to profitability that 
distance presented, but not enough to prepare the ground for renewed 
long-term private-sector investment and accumulation. And in any case 
the strategy was also built on an enormous foreign-debt build-up, which 
came home to roost with a vengeance from 1985. The debt facilitated 
intensive anti-apartheid financial sanctions pressure (a key reason for 
the political reforms described below); led to severe 
balance-of-payments constraints; forced the Reserve Bank to hike real 
interest rates; and caused a fiscal crisis from which the state 
attempted desperately and unsuccessfully to emerge through privatization 
of some key parastatal corporations.
In the 1980s the built environment continued to play a role in the way 
the crisis unfolded. The state led the spatial fix into the bantustans 
(homelands), partly to support the pre-De Klerk political vision of 
apartheid. Direct state investment in township housing declined after 
the 1970s, but there was a huge increase in bantustan development 
grants. In addition, massive state subsidies were provided to the 
private sector, from the early 1980s, for decentralized production in 
bantustan border regions.
In spite of shifting some 15 percent of manufacturing employment from 
urban areas to decentralization points during the mid-1980s, the 
strategy backfired when international anti-apartheid sanctions began to 
bite. Decentralized firms producing low-cost, low-technology, 
labor-intensive commodities had to turn from export to local markets in 
the late 1980s, thus squeezing metropolitan capital (Pickles 1991). 
Cities were by then already beginning to suffer from classic symptoms of 
deindustrialization, including vacant swaths of CBD manufacturing and 
warehousing space. The Urban Foundation, Development Bank of Southern 
Africa, South African Chamber of Business and Johannesburg City Council, 
among others, have since exerted pressure against Pretoria to cease 
subsidizing this temporary spatial resolution of overaccumulation, one 
beset in any case by rampant inefficiencies and corruption. (CBD 
warehousing districts also suffered due to the intensification of 
corporate vertical integration--hence less scope for merchant 
intermediaries--which accompanied South African monopoly capital’s 
centralization and manufacturing diversification dating from the 1960s.)
This background is crucial to understanding the nature of the 
political-economic-spatial escape route favored by the state and big 
business in the late 1980s, a route which will be followed through to a 
waystation in the Johannesburg CBD in the pages below. The crisis and 
its initial bantustan spatial fix helped hollow out the core productive 
space in the CBD, and the subsequent financial fix helped fill the 
spatial vacuum. More so than mainstream investment theory or French 
regulation theory favored by COSATU’s Economic Trends group (Gelb 1991), 
the theory of overaccumulation captures the frantic if uneven search for 
profits in different sectors and circuits, different regions, and over 
different time horizons in the space economy.
To make that clear, it is the financial fix--the creation of 
unprecedented amounts of fictitious capital to forestall the devaluation 
of overaccumulated capital--that we turn to in more detail in view of 
its assertive role in restructuring the South African city during a 
period of crisis in the productive economy. Fictitious capital refers 
simply to the paper representations of value, whether securities, debt 
instruments, real estate titles, etc. The concept is important because 
it allows researchers to link certain forms of spatial development 
directly to powerful financial markets (Harvey 1982: chs.9-10).

Finance and the city

In South Africa, the decline in the productive economy from the 
mid-1970s and the inability of the state’s spatial fix to fully mop up 
overaccumulation, as summarized above, were the precursors to the 
enthusiastic flow of capital into financial markets in the early 1980s. 
Not long after the 1981 collapse in the gold price, the Johannesburg 
Stock Exchange began an eight-year upward spiral that outpaced 
investment in fixed capital stock by a factor of eight. In 1989 alone, 
the market rose by more than 50 percent in US-dollar terms, the highest 
increase in the world, while real economic growth was limited to 2 percent.
During the first nine months of 1991, amidst a 20-percent decline in 
average stock market value across the globe, the Johannesburg Stock 
Exchange industrial index ranked second best in the world, losing just 4 
percent.
“It is a damning indictment of the economy,” conceded Nedbank’s chief 
economist, Edward Osborn,
but we’ve also seen it in the States, in Japan, etc. This tremendous 
shift into simply pushing up values on the markets. So market values 
have risen extraordinarily, but the underpinning economic values have 
not been rising. So what we’ve really seen is financial inflation taking 
place at a horrendous rate. We haven’t been immune from this 
international trend, in fact we’ve been one of the leading cases of 
this. (Interview, September 1990)
The financial rot has also extended deep into the credit system, not 
just the stock market. As a percentage of economic output, 
private-sector debt to banks doubled during the 1980s; personal and 
company foreclosures increased to record levels following the business 
cycle downturn in the late 1980s; and the fallout included severe 
banking collapses and a merger wave that left South African financial 
institutions entering the 1990s with far too many paper assets relative 
to their underlying capital (Bond 1990e). Worst of all, the debt was 
not, by and large, pumped into new productive investments. “A very large 
proportion of this has gone into bolstering the demand for financial 
assets,” Osborn acknowledged. “So we’ve had the situation of a massive, 
exponential rise in financial flows, which are just swirling about, as 
it were, going into an inflation of values, financial assets, feeding a 
whole inflationary process in this country.”
In short, capitalists facing the overaccumulation crisis examined their 
balance sheets following the 1981 gold bust, withdrew funds that might 
have otherwise gone into production and, with the help of the big 
institutional investors and new borrowings, funnelled the money instead 
into non-productive outlets. In addition to the stock market, real 
estate also became a major speculative investment arena, in spite of 
enormous interest rate hikes in the late 1980s, with turnover up 75 
percent in nominal terms from 1986 to 1989 (South African Reserve Bank 
Quarterly December 1989).
Consider the scope for residential investments, organized by financial 
and landed capital, in inner-city Johannesburg. The target is the black 
market, which, after all, accounts for 70 percent of retail purchases in 
the CBD. White yuppies maintain stronger social connections to the 
northern suburbs and don’t appear to fit into the plans of developers at 
this juncture. Illustrating the potential market in the black urban 
professional class, a 1990 brochure for the Anglo American Corporation’s 
Inner-City Property Development Fund promotes a R16-million investment 
in Hillbrow; a six-block site with two dozen residential buildings and 
1,500 units. The site, now occupied largely illegally by working-class 
blacks, and
undoubtedly one of the primary residential hubs of South Africa, 
provides the investor with excellent potential in terms of both rentals 
and sales. Yet it should also be said that by giving residents a 
desirable place in which to live--and therefore a stake in the area’s 
future--it will help to stabilise and renew one of the CBD’s critical 
buffer zones. This important project should be seen as a vital first 
step in the urban renewal process.
Similarly, the Urban Foundation has targeted nearby Joubert Park for 
residential redevelopment, and for manufacturing revitalization based on 
the small-scale furniture industry and potential linkages into the 
broader export-orientation that the state and capital now favor so 
strongly. Along with Hillbrow, the area has suffered severe devaluation, 
thanks in part to repossessions and redlining by financial institutions 
(Prinsloo 1988; Weekly Mail 25/10/90). Declines of up to a quarter in 
values of sectional title flats in repossession have been experienced by 
building societies. And the main drawback to the Urban Foundation’s 
extensive redevelopment scheme, apparently, is that surveys conclude 
that current black residents are not interested in home-ownership, even 
though their incomes could support bond repayments. Inculcating home 
ownership values thus remains a strong theme of the Urban Foundation 
(interviews with the Foundation’s staff and city planners, August 1990). 
As in the case of township social restructuring which proceeded largely 
according to the dictates of housing finance (see Chapter Six), the 
selected saturation of the inner city by capital took place within a 
broader context: the establishment of a post-apartheid social contract, 
of which top-level negotiations between Pretoria and the African 
National Congress are but a surface example.

A new political-economic dispensation?

As the 1990s begin, the broader avenue that the state and capital were 
paving to exit the economic crisis included the following byways: 
export-oriented manufacturing production; capital-intensive production 
processes; greater use of foreign debt to import the means of 
production; continued liberalization of domestic financial markets; 
privatization of state assets, and deregulation of commerce; 
differentiation of black workers into a 30-percent core of skilled 
workers and a 70-percent periphery of unskilled, self-exploited, 
informal sector labor; for the core workers, vast increases in consumer 
indebtedness, supported through the collateral provided by 
newly-privatized housing; relatively unhindered labor mobility and a 
commitment to urbanization, but both based on individuals’ capacity to 
purchase urban exchange-values (like houses) organized increasingly by 
established capitalists; for the poor, one-off site-and-service grants 
of R6,000 which will locate them in controlled peri-urban dumping 
grounds a great geographical distance from the formal economy; and, to 
ease the tensions inherent in the package, a social contract and 
unprecedented access to development finance intended to coopt leading 
sectors of the progressive movement, especially urban civic associations 
and the ANC.
While the seeds of this approach to solving dilemmas raised by 
overaccumulation have been sown for some years (Morris and Padayachee 
1988), it is only recently that coherence has emerged from the diverse 
set of programs within such powerful institutions as: the Urban 
Foundation, founded by Anglo American and other leading corporations to 
ameliorate social tensions and to carefully dismantle urban apartheid 
following the 1976 Soweto uprising; the R2.5-billion Development Bank of 
Southern Africa; and the Independent Development Trust, a R2-billion 
development initiative announced by President de Klerk in February 1990, 
run by Judge Jan Steyn, long-time chair of the Urban Foundation. These 
bodies have apparently assumed responsibility for guiding and grounding 
the overall political-economic strategy in the built environment, and 
for drawing into the package sufficient private capital and state 
resources and the appropriate political actors. Swilling (1990) labelled 
this aspect of the strategy--one constructed, he says, by the econocrats 
who replaced the P.W. Botha-era securocrats--”deracialized 
urbanization,” although deracialized apartheid may be just as accurate 
to describe the likely spatial outcome of class differentiation, he 
suggests. “Coordinated by the Urban Foundation,” the deracialized 
urbanization strategy “is the first time all the major private sector 
organizations linked together to tackle the challenge of formulating new 
policy directions for the country,” the Urban Foundation itself 
testifies (New African 10/9/90).
Different corporate members of business organizations affiliated to the 
Urban Foundation have long tired of certain aspects of apartheid, 
including rigid labor markets, low cost and low quality consumption 
patterns, international isolation, and social and political instability. 
The constraints that apartheid urban land use impose on capital are 
damaging to capital’s growth strategy for the 1990s, because, McCarthy 
and Smit (1987) argue, they even affect the capacity of manufacturers to 
expand their operations into international markets. Transport 
bottlenecks that accompany apartheid geography are an especially 
important barrier to profitability, and this provides at least some of 
the logic behind the Urban Foundation’s compact city philosophy. And in 
any event, the population density of inner-city Johannesburg is 
remarkably low in comparison to both First World and Third World cities 
around the world. Tomlinson (1987, 1990) argues that Johannesburg could 
comfortably accommodate a 150-percent increase in population density, 
especially in such peripheral areas as the now sterile mining belt on 
the city’s southern edge. Aside from Hillbrow, Joubert Park, and a few 
similar inner-city belt locations, the best indication of the success of 
the broader socio-spatial post-apartheid restructuring might be found in 
the east end of the Johannesburg CBD. It is there that the 
contradictions in the whole process are also evident.

The east end of the Johannesburg central business district

Originally, the built environment in east end of Johannesburg housed 
low-income whites as well as factory premises for small-scale 
manufacturing enterprises. In the early 1990s, the buildings were still 
predominantly owned by individuals and small firms, with financial and 
corporate capital only beginning to show noticeable interest at the 
margins of the district. Nearby, in Bertrams, 78 percent of property 
transactions involved investment companies, banks, building societies, 
and property developers in 1989, up from 28 percent in 1982 (Madisa et 
al 1990:49). Yet in the 1980s, a number of processes radically altered 
the character and property values of the east end.
With the de facto erosion of the Group Areas Act, residential buildings 
became occupied entirely by illegal black residents. One result is a 
marked decline in the value of housing stock, as unscrupulous landlords 
milk the properties, leaving widespread squalor, despair, and little 
legal recourse. However, due to the 330-percent rise in South African 
CBD real estate values since the early 1980s (Financial Mail 21/4/89), 
land prices in the east end are disproportionately high relative to the 
value of the buildings.
It is this zone of land which has been earmarked by the Johannesburg 
City Council for an ambitious redevelopment project. Local government 
would embark upon a substantial infrastructural upgrading scheme to 
improve not only services, facilities, and amenities, but also 
aesthetics. The Council then envisaged a process whereby large 
corporations purchased the buildings in this zone of the CBD, restored 
them, and then sold them to employees.
The prime targets were “thousands of middle and upper income earners.... 
mostly employed in the high-rise banking complex taking shape in the 
west of the city,” according to one councillor (Star 22/4/90). Even the 
upper strata of the working class might qualify for sectional title 
ownership of flats in slightly refurbished tenements. “I’ll be talking 
to the big boys [corporate capital],” said a leading city official. “I’m 
sure they will jump at the opportunity. I can’t even begin to describe 
what a problem it is for those chaps when their employees live in rented 
homes in Soweto” (Interview with Planning Department official, August 1990).
The Council’s scheme would, if successful, result in the movement of 
formally employed black workers into the inner city, but would also 
intensify the spatial marginalization of the seasonally employed and 
structurally unemployed. The employee home ownership features 
established the conditions whereby the inner-city social structure would 
be regulated through a concrete relationship between monopoly capital 
and core workers. And the marginalization of excluded workers would 
occur in a destatified manner. “When people get evicted no one can lump 
the blame on the Council’s shoulders. Market forces will dictate where 
people can and cannot live,” said the city official, with some satisfaction:
People complain that we are renovating theaters while people don’t have 
roofs over their heads. But we cannot become a charity organization. It 
is not for us to mould this city’s future. It is the role of the free 
market. We must leave the free market to its own devices. (Interview, 1990)
Thus the City Council’s attempt to shape the east end of the CBD while 
remaining servile to the market would contribute, at a micro level, to a 
reorganization of the metropolitan region’s class structure that 
corresponds to the larger political economic metamorphosis described in 
the previous section. But can the City Council’s ambition be achieved?
At first blush, the eastern end of the CBD seems ideal for redevelopment 
based on classic gentrification processes (e.g., Smith 1979): 
disinvestment leading to the existence of a property (if not land) “rent 
gap”; willingness by the local state to play a catalytic role; 
sufficient liquidity of property investment capital; and the social 
pressure and conditions in the spatially-organized labor market that 
ensure a client base for redevelopment. Yet what is striking about this 
area, at the beginning of the 1990s, is that the opportunity to carry 
out the Council project successfully may well already be lost.

East end property market contradictions

Because of the high costs of underlying land, added to disproportionate 
new construction costs, investments in existing buildings are at optimum 
profitability in this area when directed to office, not residential, 
usage. The difference between building costs and yield for office space 
is now eight times higher than that for residential usage (interviews, 
August 1990). Furthermore, office blocks require less maintenance and do 
not carry with them the threat to the landlord of Group Areas Act 
violations and penalties. “People think residential rentals have gone 
through the roof, but they are still not enough to attract developers,” 
says the financial director of Sable Holdings. “The returns on 
residential property are way below those of office or industrial 
property.... You have hundreds of tenants complaining about the plumbing 
and other stuff. Commercial property is a pleasure--you simply collect 
your cheque every month” (Weekly Mail 18/10/90).
Profitability calculations had become clear to the small property 
investors by mid-1990. At that time, in a 20-block area of the east end, 
no fewer than 33 buildings were, simultaneously, publicly advertised for 
sale, renovation, or offices to let. What was common to all the 
buildings was a unilateral move from residential and industrial usage 
into office usage.
An increase in evictions of poor tenants is one predictable outcome of 
this process. In one typical case in mid-1990, rents were raised for 
run-down single rooms in Polly Lodge [near Polly and Jeppe Streets] from 
R88 per month to R450 per month, leading Actstop members to construct 
tents outside for dislodged victims and to erect signs demanding, 
“Nationalize the buildings!” Adjacent to Polly Lodge stands Executive 
House, a one-way mirrored, upmarket office block boasting subdued hints 
of postmodern design. Home now to legal firms and government offices, 
Executive House was in 1985 an empty industrial building.
The trend emblematized by Polly Lodge and Executive House is clear. 
Lucrative small office development possibilities have fundamentally 
skewed the land-use patterns in the east end of the Johannesburg CBD. 
Both the capital investment in (and structural transformation of) 
buildings in this area will make the return to marginally-profitable 
residential usage virtually impossible.
What does this mean in theoretical terms? During an overaccumulation 
crisis, the logic of capital accumulation--which in early 1990s South 
Africa is based increasingly on the political-economic vision of high 
finance and its allies--confronts its own constraints simultaneously, as 
restructuring proceeds. The short-term investment strategies of 
individual capitalists, in the context of a CBD rife with land 
speculation, obstructs the realization of a new economic, social, and 
spatial order that would serve broader capitalist class interests.

Conclusion

We have argued that flows of capital through the built environment are a 
crucial ingredient in the way the state and capitalist class have 
addressed South Africa’s overaccumulation crisis. When combined with the 
rise of debt and financial speculation within the South African 
economy--which are themselves logical outcomes of overaccumulation--the 
impact on the form and functions of the Johannesburg CBD, as one 
example, are conspicuous. Add to this the conjunctures of 
racial-residential change and the search for a political settlement to 
South Africa’s problems, and the CBD appears as a key node for the 
contradictions wrought by the crises of both apartheid and South African 
capitalism.
The contradictions boil down to time-honored tensions and conflicts 
between individual capitalists and capitalist class interests. Because 
these do not appear anywhere near resolution at the urban scale, the 
attempt to redevelop the CBD through a limited gentrification project 
that simultaneously aims to support the broader restructuring of economy 
and society is likely to be futile.
The arguments presented in this chapter are best considered 
suggestions--not irrevocable conclusions--about the dynamics now 
operating on South African cities. It is entirely possible that the dire 
warnings implied by the analysis will prove to be groundless, if, 
somehow, the South African economy does manage to recover from 
structural stagnation. For example, a chaotic and perhaps 
depression-ridden 1990s global economic environment could conceivably 
allow gold to again assert its traditional role as ultimate store of 
value and, as in the 1930s, thereby help South Africa to play the role 
of “prosperous undertaker during the plague.” Based on our analysis of 
the depth of South Africa’s economic crisis, this seems, sadly, to be 
the country’s best hope.
Or as another example, the state and capital’s optimal political 
solution--a social contract with leading segments of the progressive 
opposition, but enmeshed in a fully capitalist post-apartheid 
society--may well be achieved elsewhere, if not through a stillborn 
vision of gentrification in the Johannesburg CBD’S east end. Joubert 
Park, the site of the Urban Foundation’s ambitious redevelopment 
initiative, or Hillbrow, viewed with anticipation by Anglo American, are 
already undergoing a more thorough physical devaluation process that 
better sets the stage for the kind of financial and socio-economic 
restructuring which could, conceivably, overcome the contradictions 
faced in the east end of the CBD.
Only time and praxis will tell, as the inner-city poor, represented by 
Actstop, continue to show an extraordinary capacity to resist the mass 
evictions that will accompany either the gentrification or small 
corporate office strategy, not to mention the oppression they face in 
their current status (Star 26/8/90). This sort of resistance should come 
as no surprise, for, since the early 1970s, cities have been the sites 
of the main pressures for transformation of South African society. From 
early trade union organizing to the 1976 Soweto uprising to broad 
popular-front politics in the 1980s, South Africa’s apartheid cities 
have hosted heroic resistance to both apartheid oppression and economic 
exploitation. And from rent strikes to bond boycotts to consumer 
boycotts to other forms of anti-apartheid and anti-capitalist 
organizing, this continues to be the case (Bond 1990f).
What is new and different about the recent rise of finance in the South 
African economy, though, is its totalizing capacity to both drive urban 
investment of a particular sort and, because real estate speculation has 
proceeded too far, to simultaneously block the urban political economic 
change necessary to stabilize a new social order. Hence the struggles 
for space in the CBD point to the acute need for further, deeper 
progressive analyses and political offensives against powerful--yet 
potentially vulnerable--financial peaks at the South African economy’s 
commanding heights.