R500 million for regeneration of cities in South Africa

UK development finance institution, CDC Group has announced a R500 million commitment to Divercity Urban Property Fund – an affordable housing platform focused on the regeneration of cities in South Africa.

This investment will fund the construction and management of more than 2,500 new residential units over the next five years, predominantly in Johannesburg.

According to the group, the projects will provide quality, affordable and environmentally sustainable housing for low and middle-income households in well-located but underinvested neighbourhoods in major cities in the country.

This transaction was also funded by South African impact investor Futuregrowth and existing Divercity shareholders.

“South Africa faces a housing shortage of approximately 2.3 million units. A significant majority of its lower-cost housing is built on the urban periphery. This limits residential options for low and middle-income households to predominantly informal, congested and low-quality housing on the outskirts of cities,” the group said.

“It also impedes access to essential services including schools, healthcare facilities, public transport networks and employment hubs needed for improved social inclusion and living standards.”

CDC said that up to 4,000 construction and permanent operational jobs are expected to be created through the investment.

Divercity is the main driver behind the Jewel City – the R2 billion-plus redevelopment of Johannesburg’s inner-city district.

Other projects being handled by Divercity in the inner city include the R400 million Absa Tower refurbishment, as well as new builds in the Maboneng precinct.

In 2020, as part of president Cyril Ramaphosa’s push for infrastructure projects to help combat the effects of the Covid-19 pandemic and lockdown, Divercity pledged R1.2 billion in a mixed use property development in Gauteng.

Its existing portfolio of R3 billion comprises 6,500 units and 90,000 square metres of commercial and retail lettable area. Pipeline developments comprise a further 4,000 apartments, and supportive commercial and retail uses of approximately 10,000 square metres.

Divercity has also acquired its residential property and asset manager, Ithemba Property, which has a 20-year track record in managing affordable rental housing.

“Through the creative design and structure of this platform by investors CDC, Ithemba and Atterbury – Divercity will be underpinned by market-leading property development and asset management expertise in rental housing which will be a competitive differentiator,” CDC said.

Read: Joburg’s R2 billion Jewel City redevelopment set to launch next week

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R500 million for regeneration of cities in South Africa