High commercial property rates in eThekwini impact on business investment and economic growth

IOL News

5 days ago

Concerns have been raised over high commercial property rates in eThekwini Municipality.
Image: Willem Phungula
Concerns have been raised about the high commercial property rates charged by the eThekwini Municipality in comparison to the City of Cape Town and the City of Johannesburg. Publicly available information indicates that eThekwini Municipality has the highest rates, a view echoed by the South African Property Owners Association.
Documents reveal that in the City of Cape Town, the rates randage on commercial property for the 2025/26 financial year is 0.016824, as confirmed by the city. In the City of Johannesburg, the charge for the same financial year is 0.023862. In eThekwini, the rates randage stands at 3.6234 for the same year.
Councillors of the municipality and a resident have warned that these high rates could undermine the city's efforts to attract businesses. The South African Property Owners Association confirmed that commercial rates were high in eThekwini. 'Our data shows that eThekwini is the most expensive municipality to do business in with respect to commercial business rates.'
A community member with an active interest in public policy and urban economic sustainability, who did not want to be named, said he had done a comparison of eThekwini's rates randage with other major metros in South Africa and key international benchmarks, and found that the rates charged in eThekwini were markedly higher.
He noted that these unusually high rates charges may have serious long-term implications for eThekwini. By significantly increasing the cost of holding and operating property, 'existing businesses may be driven out of the municipal area as operating costs become unsustainable, especially for small to medium enterprises. Prospective investors may be deterred from choosing Durban as a base for commercial expansion or property development when more cost-effective alternatives exist both locally and abroad.'
'This, in turn, could lead to a shrinking rates base, as more properties are vacated or lose value due to market pressure, leaving the municipality with fewer contributors to fund essential services. The municipality could then find itself in a downward fiscal spiral, where declining revenue necessitates further rate increases, which further undermines investment and retention of ratepayers.'
Asked about how their commercial property rates were calculated, Councillor Siseko Mbandezi, Mayoral Committee Member for Finance in the City of Cape Town, said the rates randage on commercial property for the 2025/26 financial year is 0.016824.
'All tariffs are charged in accordance with the City of Cape Town Tariff Policy. As with residential properties, the City determines the total revenue required to deliver the infrastructure and services needed to support a functional, successful city. The City's budgets aim to balance affordability for ratepayers with the needs of running the city to the benefit of all,' said the councillor.
DA eThekwini councillor Thabani Mthethwa said the high rates were among the reasons that eThekwini is struggling to attract investment and the rates base keeps shrinking. 'It is expensive to do business in eThekwini, coupled with the general collapse in basic service delivery. Therefore, eThekwini charges more but delivers less.'
IFP councillor Jonathan Annipen said this was a red flag for economic growth and sustainability in the region. 'High rates increase the cost of doing business, reduce profit margins, and deter both local entrepreneurs and external investors. In an already struggling economy, this can accelerate business closures and job losses, further weakening the city's revenue base.'
He added that while the municipality may argue that these rates are necessary to fund infrastructure, service delivery, and developmental projects, the reality is that overburdening businesses can have the opposite effect.
'Factors like the city's budget deficit, ageing infrastructure, and the need for expanded service delivery may inform rate decisions—but these cannot be addressed by simply increasing financial pressure on the private sector. In the long term, rates can be adjusted through broader fiscal reform. eThekwini must explore alternative revenue streams, improve collection efficiency, and reduce wasteful expenditure. Incentivising businesses that invest in local employment, skills development, and green technology can promote economic activity while maintaining revenue flow,' he concluded.
Last week, The Mercury reported that business confidence had declined in the second quarter of 2025. The Durban Business Confidence Index (DBCI) report showed that the index decreased to 52.4 index points in quarter 2, marking the third consecutive quarterly decline. In addition, 71.4% of respondents stated that, when lodging a complaint regarding poor service, it was unlikely to be resolved in a timely manner.
The City of Johannesburg did not respond to a request for comment. The eThekwini Municipality was contacted for comment about two weeks ago and reminders were sent but it had not responded by the time of publication.
THE MERCURY