Smart urbanism and sustainability require new business models

June 7th, 2018, Published in Articles: PositionIT, Featured: PositionIT

The Royal Institution of Chartered Surveyors (RICS) gathered in Sandton from 30 to 31 May for the fourth annual RICS Summit Africa to discuss smart urbanism and sustainability in the built environment. The need for new business models also received attention. The summit brought together professionals in the built environment from business, government, academia and the NGO sector, and attracted more than 220 delegates this year. It was predominantly attended by private sector organisations.

In his opening address, RICS CEO Sean Thompkins described rapid urbanisation as a key driver of the built environment’s relevance today – along with challenges such as climate change, Industry 4.0 and new business models. The built environment itself will be affected by these developments, he said, and it is important that this sector gets ahead of the curve before it gets disrupted by technological and other changes.

These challenges bear on the built environment and cities, which are often built for the moment but are now challenged further with uncertainty in sectors such as transportation technology that influence them.

RICS president, John Hughes and GBCSA non-executive deputy chair, Nkosinathi Manzana, sign a memorandum of agreement at the RICS Summit Africa.

RICS president, John Hughes and GBCSA non-executive deputy chair, Nkosinathi Manzana, sign a memorandum of agreement at the RICS Summit Africa.

Since funding is a key stumbling block to invest in important projects, Thompkins said, cities will have to become less reliant on national budgets and will require new revenue models. Potential new business models received special attention during the summit, with public private partnerships touted as a good financing model for developing countries.

Sustainability also featured prominently in the discussions. In Thompkins’ view, the built environment should also be more welcoming to the natural environment to be sustainable. He also sees technology as an enabler of this relationship. He further said that professionalism and international standards go hand-in-hand to unlock development, raising the challenge for retaining professional skills.

Barbara Barungi, a managing partner at Imara Africa Consulting, brought a macro-economic view to the discussion. While Africa is the second fastest growing continental economy, its economic growth varies greatly across regions, with a handful of large economies responsible for growth. The impact when they don’t grow is also felt regionally.

With most of the continent’s economies at the mercy of commodity prices, she argued for diversification into agriculture, and the built environment and construction. Infrastructure, she said, can be a driver of growth. Citing studies from McKinsey and the World Bank, she said urbanisation can contribute to growth as urbanised areas tend to accompany higher consumer demand.

However, project financing still predominantly comes from governments and developmental institutions such as the African Development Bank. Barungi does not consider this sustainable, especially not for smart city development, as this funding is accompanied by the threat of high debt levels and debt accumulation.

That said, governments have a role to play in creating healthy policy environments which are essential to drawing foreign investment. Currently, most private sector investment occurs in three areas: telecommunications, transport and energy. Infrastructure development can unlock other sectors, she said, but this would mean addressing policy and government inefficiencies.

A panel discussion following the keynotes discussed the need for sustainable and inclusive growth. Dr Martyn Davies from Deloitte also stressed Barungi’s message of diversification, adding that manufacturing is vital for addressing inequalities in South Africa and Africa in general, as it will create a working class.

With rapid urbanisation in Africa and challenges around climate change, green building and developing more sustainable cities have gained momentum and significance. For this reason, RICS and the Green Building Council SA signed a memorandum of understanding during the summit, which commits both organisations to working closer together in promoting sustainable development in Africa’s built environment.

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