Satellites and the Center

By Michael Landerer

The case about Phu My Hung and their decision to build Crescent Mall got me thinking about the effects of such a complex on the greater Ho Chi Min City metropolitan area. Indeed, the building of a confined luxury area 4 kms south of the city reminded me in particular of one city that I have been to recently where such centers have negatively impacted overall development. The city of Johannesburg has various sub-cities built around luxury retail, safety, and the promise of removal from the dirtiness and in the case of Johannesburg, danger of living and working in the historic city center.

In Johannesburg, over the last several decades there has been a diaspora from the central business district outwards towards Northern suburbs that are gated, self-contained, and often in large complexes dominated by malls. The most notably of these areas is Sandton. Sandton, a suburb, 20 minutes north of the city center has 125,000 residents including most of the wealthier residents of Johannesburg. About 2/3s of its residents are white or Indian, far different demographics than the rest of the country. The neighborhood itself is largely interconnected indoors with the center lying in the Sandton City Mall. An enormous complex housing high end and more moderate retail stores, dozens of restaurants, both luxury hotels and apartments, and progressively more and more offices. Sandton is widely known as “Africa’s Richest Square Mile”.

Progressively over time, as residents have left Downtown Johannesburg for Sandton, so have businesses. The Johannesburg Stock exchange is in Sandton. Most of the financial intuitions and progressively more corporate headquarters have moved to Sandton.

With so many wealthy and influential residents living and working outside of the city in Sandton and similar areas like Rosemont, Johannesburg itself has been left behind. There has been less impetus for Downtown Johannesburg to become safer, more developed, and re-gentrified. Instead influential citizens and developers have expanded on the model of Sandton building self-enclosed neighborhoods around malls outside of the city center.

New developments and infrastructure have reflected the new reality. On the recently developed Gautrain, an express train around the region, the direct line from the Airport will only take somebody as far as Sandton without transfer. This type of infrastructure reflects that it is assumed that a business traveler or tourist only needs to travel that far and not necessarily all the way to the city center.

If Sandton is any indication, the Crescent Mall is clearly the right step in defining Phu My Hung and Saigon South as an enclosed and attractive area for wealthy residents, Taiwanese expats, and tourists. The question remains, is Phu My Hung the right step for the long-term development and sustainability of Ho Chi Min City. Phu My Hung may mean “Wealthy, Beautiful, Prosperous” to its residents but will it mean that for Ho Chi Min City?

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2 thoughts on “Satellites and the Center

  1. Pingback: How can we best talk about people in a finance course? | Sustainable Cities: Urbanization, Infrastructure, and Finance

  2. By John Macomber

    This evocative post underscores three classic dilemmas in economic development and urban planning. Future very large urban agglomerations will have to figure out how to address these dilemmas through some combination of investment and policy.

    One manifestation has been in the US as core downtowns, built before the time cars and big box stores, got “hollowed out” in the late 20th century as shoppers and office workers wanted to drive to (and park at) a mall or suburban office campus. Almost every older city and town in America witnessed this.

    The second is a “tragedy of the commons” situation where satellite developments are clearly more lucrative for the promoters and also easier to accomplish; but the result arguably diminishes the whole society because of the disconnect between centers, the added commuting time, and the frequent class isolation. Many projects studied in the HBS “Real Property” or “Design Development Construction” courses are good “quick money” investments but not such good regional planning for this reason.

    The third dilemma concerns how else to accommodate very large inflows of urban dwellers. Worrying about a 50,000 person suburb around Toronto or Austin is one thing; somehow weaving in several millions of people in greater Jakarta or Dhaka or Cairo or Sao Paolo is another. Can this be done without creating disconnected satellites? Can it only be done via satellites? Can stand alone Tier II and Tier III cities grow and succeed? The Dharavi, Phu My Hung, and King Abdullah Economic City situations are examples of a) revitalizing an urban core, b) investing in a satellite, and c) trying to start a new city that is too far away from the center to be a satellite. New York and Hong Kong, inviting downtown density with a social and economic magnetism that overwhelms the centrifugal force of the satellites, are fourth models.

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