It’s 2025, and shares in New Durban City have tumbled more than 15% on news that the metro is being investigated for accounting “irregularities”. Shareholders are demanding a speedy and thorough investigation — particularly seed investor Sanlam, which says it will sell its 7% stake if there is any evidence of corruption in Africa’s first publicly traded city.

This sounds like the plot of a futuristic movie, but is entirely possible.

The concept of a listed city came to the fore in October this year, when Saudi Arabia announced plans to develop a US$500bn megacity. Crown Prince Mohammed bin Salman made headlines when he told Reuters that the metro would be floated on financial markets.

The world’s first “capitalist city” would be revolutionary, the crown prince said, adding that “it’s as if you float the city of New York”.

Klaus Kleinfeld, former chairman and CEO of Siemens, is leading the project.

Naturally, it’s almost inconceivable that SA would follow in the oil-rich nation’s footsteps, especially considering that government still wants to keep control over ill-run state-owned enterprises despite its deteriorating fiscal position.

But it’s tempting to imagine how a listed city would fare in a country that struggles daily with service delivery problems.

Whether such a city would be built from the ground up or would simply be an existing metro that filed for an IPO, this would
be the ultimate litmus test of whether the private sector can outdo the state on governance, efficiency, spatial planning, and, ultimately, service delivery.

If given the chance, the private sector — and government, for that matter — might actually be keen to fund this type of project.

Anchor Stockbrokers head of research, Craig Smith, says: “There certainly could be strong upside [for shareholders], but I guess it would come down to who controls that vehicle, [who is] behind it, and what his or her track record is in delivering sizeable mixed-use projects.”

Developing a city from scratch would require patient capital, and lots of it. The controlling company would most likely approach large insurance companies and pension funds.

These investors would have to see the project through the development phase before the city starts generating revenue by means of property sales, rental income, advertising space, parking, public transport, or port charges, if the city is by the sea.

Thereafter, the vehicle could be listed, allowing both retail and institutional investors to earn dividends from the metro, analyse its financials and vote at AGMs.

There are examples of this around the world, albeit on a far smaller scale. JSE-listed Capital & Counties effectively controls precincts in London, while Attacq develops and manages a large chunk of Waterfall City.

Two-thirds of Attacq’s assets generate rental income, and the company earns revenues from advertising in and outside its buildings, each of which is made to meet the requirements of tenants, says Jackie van Niekerk, chief operating officer of Attacq.

Van Niekerk says Attacq has “a continuous relationship with government, our tenants and customers in our malls, who are very important stakeholders in the ecosystem we are creating”.

A development like Steyn City, north of Johannesburg, created by billionnaire Douw Steyn, is a private “city”.

Unlisted group Rendeavour is developing cities in other parts of Africa, while Rabie Property Group essentially controls Century City in Cape Town.

It could be argued that these groups have a vested interest in being more forward looking than local governments. The more successful the estate, the higher the rentals and the better the returns.

“You would have a landowner that would have a direct incentive to make that development sustainable in the long term,” says Smith.

“In Waterfall, we benefit from our control of the urban design, which [relates] to the sustainability of a city,” says Attacq’s chief financial officer and interim CEO Melt Hamman.

A fully listed city, however, would simply not work in SA, says Karen Heese, an economist at Municipal IQ. The concept “goes against all policy and thinking about building inclusive cities and countering the legacy of spatially biased inequity brought about by apartheid.

“Planners tend to agree that the biggest challenge for SA’s urban areas lies in finding ways to better integrate communities and economic activity — an exclusively private sector option would counter this and perpetuate the inequities of the past,” she says.

Working-class people would face long commutes to work and economic exclusivity and unrest could follow.

Heese says private-estate developments can place strain on infrastructure “often in ill-suited areas”.