I well remember when spectacular Clifton on Cape Town’s Atlantic coast served a quite different residential community, among their number artists, writers and poets. They lived modestly on land leased cheaply from the municipality. Life was indeed a beach for those who had somewhat mysteriously acquired valuable residential rights and easy access to brilliant sunsets. Then the city did something sensible. It offered the established residents the opportunity to convert their land leases into freehold at an attractive rate. Rents and the value of renovated homes began an upward spiral that continues to this day, and the original locals mostly sold up and cashed in their windfalls ― to be replaced by the rich and not so famous. (Dorothy Kgosi) The originals preferred to move on to other less valuable locations and lower rentals. They opted to consume less expensive accommodation and more of the other necessities of life. The renovators, demolishers and builders moved in to satisfy those who could afford more valuable homes on Clifton Beach, homes that have proved to be good investments. And so a growing flow of revenue from rates levied on the market value of the Clifton villas went to the city. A Clifton-type story is now evolving more widely in Cape Town and environs, where rents and property values have been rising and are expected to increase further. High-rise real estate developments are well under way to meet the demand for space, providing jobs and incomes way up the supply chain, which includes the supply of labour. The average price of a home in Cape Town and the Western Cape has increased by 60% since 2020. In Durban or Johannesburg house prices have on average increased by only 12% since 2020. There are, however, well recognised downsides to a successful city. More congestion for the established residents and visitors, and more strain to deliver water and electricity, refuse collection services, roads and flyovers, and to fight fires. The other downside for those who do not own is more expensive accommodation for those who rent for cash. You could live a lot cheaper, renting at far lower rates per square metre, in Johannesburg and Durban. The answer to the growing scarcity of any good or service, including accommodation, is to increase supply. Build, baby, build. Anyone who travels to inner Cape Town from the north or south will notice that there is an abundance of undeveloped land close to the city. Turning that low or zero yield land into many more homes is surely possible. By adding at its own expense the infrastructure to connect vacant land to essential services, the city would help deliver increased supplies of housing by reducing its costs of supply. Lower costs translate to lower prices, given competition. The extra income collected every year from the rates charged on the additional housing stock would help recover such costs. Investing in infrastructure can provide good long term returns in kind and in cash for a growing city. Property developments can be made more viable when higher permitted bulk is exchanged for additional so-called social housing, as appears to be under way in Cape Town. Accommodation supplied at a subsidised rental for those fortunate enough to win such a lottery. However, a number questions need to be answered about social housing. The poor will not be able to afford even heavily subsidised rentals in high-rise buildings, which have to be well maintained. Middle-income, or soon-to-become middle-income, teachers, health workers and administrators could qualify. But how will they be selected? And will they be permitted to do a Clifton? Rent out or sell up because it makes sense for them to spend less on what becomes expensive accommodation and more on the other essentials? A successful city armed with a growing stock of taxable real estate can exercise choices that reinforce the potential to raise incomes with a budget that provides for improved amenities that in turn add to property values. The tax revenue helps maintain the municipal capital stock and fund additional capacity to meet growing demands. This supports and reinforces property values that then further improve flows of revenue. The value of taxed real estate in Cape Town has been rising at about 7% per annum over the past 10 years, more than doubling from R1-trillion in 2016 to nearly R2.2-trillion in 2025. Taxes collected on property have been rising at about the same rate, also more than doubling, from R6.5bn in 2015-16 to R13.92bn in 2025-26. The city budget expects R15.8bn in rates income in the 2026-27 fiscal year, an increase of 13.7%. Cape Town can, however, be charged with spending and funding too conservatively. It should be encouraged to do more with its strong balance sheet (minimal debt), rising revenue streams and flows of cash. It could raise debt to add further to its infrastructure in ways that would further reinforce property values and revenues. More boldness is called for. • Kantor is head of the research institute at Investec Wealth & Investment. He writes in his personal capacity.Business Day