The City of Cape Town identified 11 central sites it owns that would be set aside for affordable, social and transitional housing initiatives.
Mayor Patricia de Lille on Wednesday said the goal was to reverse the effects of apartheid spatial planning, forced removals and gentrification.
She admitted it was unsustainable to have a fragmented city.
"It comes at a high cost to poor people," she said, adding that residents spent as much as 40% of their income on travelling into town.
"Our inner city has become unaffordable for the working class. We have seen the increase in land prices."
According to De Lille, all spheres of government across the country had continued with apartheid spatial planning by taking people further and further out of cities.
Turning the corner
The City of Cape Town was now "turning the corner" in its approach to housing.
The housing sites were in Woodstock, Salt River and the inner city, less than 5km away from the Cape Town central business district, said City urban development mayoral committee member Brett Herron.
He said that up to 4 000 households were set to benefit from the developments.
Five sites would be made available to the private sector for affordable housing.
These sites are at New Market Street, Drury Street, Woodstock Hospital Park, Woodstock Hospital Site and Pickwick Street.
Three sites had already been allocated to social housing institutions. They are in Pine Road, Dillon Lane and the Salt River Market in Albert Road.
The Salt River Market would be a mixed-use development with retail and office space.
Subsidised rental units would be available for households earning less than R15 000 a month. Gap rental housing would be available for those earning between R3 500 and R20 000.
Two sites would be available for the first inner-city transitional housing projects.
The City also had its eyes on sites for future housing developments.
De Lille said she envisaged households with different incomes living together in units of the same quality.
"We need to reduce the number of people on housing waiting lists. We need to negotiate a percentage that comes from the waiting list," she said.
Developers would also design units to make a profit, and make the project affordable.
The City wanted to partner with the private sector, developers, social housing institutions, innovators and designers.
Proposals would have to be innovative, use different types of building materials, and incorporate green technology.
Herron said a prospectus would be issued on September 29 if all went according to plan.
Developers would be given about four months to prepare.
Their proposals would then be exhibited for the public, after which the process would move to bid evaluation.
"By the middle of next year, we will know what happens on each site," he said.