{"id":866840,"date":"2026-07-20T16:00:00","date_gmt":"2026-07-20T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=866840"},"modified":"2026-07-20T14:40:47","modified_gmt":"2026-07-20T12:40:47","slug":"people-and-businesses-are-moving-to-where-things-just-work-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/866840\/people-and-businesses-are-moving-to-where-things-just-work-in-south-africa\/","title":{"rendered":"People and businesses are moving to where things just work in South Africa"},"content":{"rendered":"\n

New data shows that people and businesses in South Africa are increasingly deciding to move to areas where local government works better.<\/p>\n\n\n\n

According to the Bureau for Economic Research (BER), the widening gap in municipal performance is becoming a key driver of where people choose to live and where companies choose to invest.<\/p>\n\n\n\n

This is because better-run municipalities attract more residents, stronger property markets and higher levels of business activity.<\/p>\n\n\n\n

In a research note published on 20 July, the BER said municipalities play a crucial role in economic growth because “all growth must take place somewhere”.<\/p>\n\n\n\n

“Metros (city regions) remain the most important from a population and growth perspective. Therefore, as large metros continue to struggle, this starts to weigh on overall economic growth,” it said.<\/p>\n\n\n\n

The BER added that there is growing evidence that economic growth is stronger in municipalities with better governance, which highlights the close relationship between reliable local government and investment.<\/p>\n\n\n\n

It argued that South Africa’s municipal crisis is not primarily caused by a lack of funding but by governance failures and poor financial management.<\/p>\n\n\n\n

While municipalities generate about 75% of their operating revenue from their own tax bases, they are increasingly failing to collect the money they bill.<\/p>\n\n\n\n

By December 2025, households and businesses owed municipalities R234.7 billion in unpaid accounts.<\/p>\n\n\n\n

At the same time, municipalities owed Eskom R70.1 billion and water boards R25.9 billion, creating severe financial pressure that has left many unable to maintain infrastructure or spend money already allocated for capital projects.<\/p>\n\n\n\n

The BER welcomed the National Treasury’s tougher stance after Finance Minister Enoch Godongwana froze payments to 69 municipalities.<\/p>\n\n\n\n

The BER noted that it demonstrated a willingness to use existing powers to improve governance despite political challenges ahead of the local government elections.<\/p>\n\n\n\n

It also supported broader reforms under Operation Vulindlela 2.0 and the review of the Local Government White Paper, but warned that stronger intervention powers are still needed when municipalities fail.<\/p>\n\n\n\n

“The reform of municipal intervention powers under Section 139 of the Constitution has become a revolving door rather than a recovery mechanism,” the BER said.<\/p>\n\n\n\n

It further argued that stronger administrative powers and more credible recovery plans are needed to restore failing municipalities rather than merely delay their decline.<\/p>\n\n\n\n

The impact of municipal performance is increasingly visible in South Africa’s property market.<\/p>\n\n\n\n

According to the Residential Property Price Index, Cape Town recorded annual residential property price growth of 11.5% in January 2026, compared with Johannesburg’s 4.7%.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Commercial property investment is a clear example of the shift <\/h2>\n\n\n\n

The BER said semigration and tourism have contributed to this gap, but added that “its scale is difficult to explain without also crediting a premium for the relative reliability and predictability of the municipal environment.”<\/p>\n\n\n\n

The BER said non-residential building plans, which serve as an early indicator of business investment, remain heavily concentrated in municipalities where companies have greater confidence in service delivery.<\/p>\n\n\n\n

“Firms can postpone building a factory, warehouse or office far more easily than households can postpone where they live, making commercial building activity an early indicator of investor confidence in local institutions,” it said.<\/p>\n\n\n\n

The Western Cape continues to attract a disproportionate share of this investment, while municipalities with ongoing governance problems have seen much weaker activity.<\/p>\n\n\n\n

One of the clearest examples is Growthpoint Properties, South Africa’s largest listed real estate investment trust.<\/p>\n\n\n\n

Over the past decade, the company has steadily shifted its investments away from Gauteng, particularly Johannesburg, and towards coastal markets such as Cape Town and Durban.<\/p>\n\n\n\n

Growthpoint said this strategy reflects changing economic conditions, stronger growth prospects along the coast and deteriorating municipal performance in Gauteng.<\/p>\n\n\n\n

In its 2025 integrated report, the company said that Gauteng, particularly the Sandton node, remains an area of weakness, constrained by unreliable municipal infrastructure and services.<\/p>\n\n\n\n

It added that property owners face “runaway municipal cost increases, for which fewer services are being reliably received and a lack of infrastructure maintenance.”<\/p>\n\n\n\n

The company described its strategy as a “rebalance of exposure away from inland Gauteng and towards the coastal regions, specifically Cape Town and, even though it is a smaller market, the Durban area.”<\/p>\n\n\n\n

Since 2017, Growthpoint has sold 186 properties worth R14.9 billion as part of this strategy, while directing investment into developments in the Western Cape.<\/p>\n\n\n\n

This includes Cape Town’s Arterial Industrial Estate, the Canopy by Hilton hotel at Longkloof, the redevelopment of Ninety One’s offices and new student accommodation in Observatory.<\/p>\n","protected":false},"excerpt":{"rendered":"

New data shows that people and businesses in South Africa are increasingly deciding to move to areas where local government works better.<\/p>\n","protected":false},"author":92,"featured_media":771485,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2079204846603817238","_sma_x_attempts":1,"footnotes":""},"categories":[23],"tags":[17585,6198,853],"class_list":["post-866840","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-bureau-for-economic-research-ber","tag-growthpoint-properties","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=866840"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866840\/revisions"}],"predecessor-version":[{"id":866858,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866840\/revisions\/866858"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/771485"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=866840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=866840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=866840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}