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Dynamic models for understanding infrastructure and housing investments

Dynamic models for understanding infrastructure and housing investments. ACC Sustainable Human Settlements Citylab Urban Transformation: Challenges For Infrastructure & Housing Provision Nick Graham 30 th October 2012. Why use dynamic models?.

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Dynamic models for understanding infrastructure and housing investments

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  1. Dynamic models for understanding infrastructure and housing investments ACC Sustainable Human Settlements Citylab • Urban Transformation: Challenges For Infrastructure & Housing Provision Nick Graham 30th October 2012

  2. Why use dynamic models? • To understand the multiple processes and variables that simultaneously affect housing supply and demand • To understand the interactions between housing, infrastructure, transport, space and money. Example: eThekwini Housing Model Example: City Efficiency Costing Model

  3. eThekwini Housing Model

  4. Supply and demand in the housing market at city scale Demographic growth Policy Household fragmentation Funding Economic growth Survival strategies / Market forces

  5. Dynamic housing model Input data Scenario data Outputs Demographics • Demographic and economic growth scenarios: • MSFM projections • User-defined • Uniform DEMAND Housing stock status quo Housing dynamic • Delivery scenarios: • Unconstrained • Match programme to funding • Eliminate backlog • Static delivery SUPPLY Delivery programme Funding shortfall • Funding scenarios: • Constrained • Unconstrained Capital funding AFFORDABILITY

  6. Dynamic model: eThekwini

  7. Learning • Interventions need to be understood in the context of market distortion and general supply shortage • Targets, budgets and programmes do not tie up and are unrealistic.

  8. City Efficiency Costing Model

  9. Capital cost components TOP STRUCTURE SERVICES LAND PREPARATORY WORK SOCIAL SERVICES

  10. Capital cost drivers

  11. Capital cost drivers

  12. Capital cost drivers

  13. Location, land price and connector infrastructure Poor location Good location

  14. R165,000 R300/m2 3 storey/5 storey R150,000 R125/m2 Detached/5 storey R145,000 R80/m2 Detached/3 storey R180,000 R500/m2 Semi-detached/5 storey R126,000 R1000/m2

  15. 27% difference = R69 billion over 10 years

  16. Environmentalimpacts 22% difference

  17. Learning • There is no apparent capital financial incentive for the City or State to densify • Capital costs are strongly driven by top structure costs and land costs, not by infrastructure costs • Short-term capital decisions outweigh longer term operating cost savings • The majority of the costs of urban sprawl and potential benefits of a compact city, are borne by households and the environment, and not by developers, the City or the State.

  18. nick@pdg.co.zawww.pdg.co.za Nick Graham 30th October 2012

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