FEATURES
Rob Wesselo , MD of IHS .
units that cost between R500 000 and R700 000 to build ; rentals have a cost from R3 500 to R7 500 per month ,” he says .
Under Wesselo ’ s leadership , IHS has completed more than 60 projects . “ I ’ ve enjoyed everything that I ’ ve done , I ’ ve loved every house we ’ ve completed ,” he smiles . Although they are always developing their product , the Fluerhof housing project in Johannesburg is one project that stands out for him , due to its sheer scale .
“ The Village in Clubview , Centurion is an example of our latest product type , it ’ s a typical project and we are building these all over the country ,” he says . The complex consists of 288 units and offers 24-hour security , wide open spaces and lush trees , coupled with braai facilities and a children ' s play area . The apartments are tiled throughout , the kitchen has granite tops and each apartment has its own balcony or patio . Wesselo says that they ’ ve spent a lot of time with architects Boogertman + Partners to create a finish that is easy on the eye , elegant and sophisticated .
“ The look and feel is awesome . It ’ s affordable but it looks great ,” he says .
SOCIAL HOUSING MEETS IHS
Wesselo happily tells me that they ’ ve just approved their first social housing project in Matlosana , an area previously known as Klerksdorp .
“ We are busy tenanting the 1 200 units . We ’ ve already approved 3 700 social housing units ; half of which are either built or under construction . It ’ s a nice product to rent from R1 000 a month ,” he says . The move really excites Wesselo as this will see the company providing housing for a lower Living Standards Measure ( LSM ). These projects are in partnership with the developer Instratin . Social housing is completely different to affordable housing because the former looks at an income band for rental purposes while the latter is purely market driven . “ When we build affordable housing , we build capital structures which fund these houses . We raise some debt from banks and invest equity , we ’ ve raised about USD515- million ( R7.3-billion ) of equity over the past eight years . In the past we didn ’ t receive subsidies from government for affordable housing , but we have started to access subsidies for social housing from the government ,” he adds .
Social housing is regulated and invested in through the Social Housing Regulatory Authority ( SHRA ). It subsidises projects to deliver affordable rental housing for low to moderate income groups and to achieve spatial , economic and social integration of the urban environments in South Africa . In the past only non-profit organisations were subsidised but raising capital can be difficult for such organisations . Legislation was changed when the SHRA was established in 2010 .
SHRA invests with other development agencies ( ODEs ) privately investing in social housing . “ There ’ s a structure where you receive subsidies from government upfront , so you can rent to people with lower income bands at a lower price , and it can still be viable ,” he says . IHS has invested in four deals committing R120-million worth of equity .
He predicts that soon we will see social housing REITs . “ The market should also be an institutional asset class . It is an awesome way to access equity markets , it ’ s much cheaper than private equity funds .” According to Wesselo , this is the sector where the government and the private sector can work well together .
“ Capital in equity market is cheap compared to private equity capital , if government matches that with subsidies SHRA can work well ,” he says . He commends the number of houses that government has delivered over the years . “ In other countries when you talk about housing they are amazed , no other country in the world has delivered the number of free houses that South Africa has . The social housing rental product idea gets more bang for your buck because it ’ s more sustainable ,” he says .
THE START OF GREEN AFFORDABLE HOUSING
IHS has several investors . “ Many investors we raise money from are development facilitation institutes ( DFIs ). They are not just interested in profit , they also want impact ,” he says . Impact refers to servicing a market that ’ s been underserviced for a long time and that provides safety , jobs , easy access to work , school and opportunities .
He says that this is one of the ways they got into the green affordable housing space . Investors had equity available for investment in green affordable housing .
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AFFORDABLE
SA HOUSING