Owner of R3 billion development in South Africa gets government injection

The Public Investment Corporation (PIC) has invested in the Divercity Urban Property Group, which is one of the developers of Barlow Park in Sandton.

The PIC said that the landmark investment into Divercity, which is focused on the affordable rental housing market, is its first push into the multifamily residential rental sector.

The investment will allow for further growth in affordable housing, supporting Divercity’s ambitions to develop an additional 2,500 retail units.

The partnership also aims to address South Africa’s critical housing shortage by delivering high-quality and well-located affordable housing.

Multifamily properties refer to residential buildings such as apartment buildings that are owned and managed by institutional landlords.

Research sponsored by Divercity, ABSA and the South African Multifamily Residential Rental Association (SAMRRA) showed that the sector has growth potential.

The study, which was done by the global property researcher MSCI, showed that the sector delivers consistent performance, low volatility, and predictable returns.

“As South Africa faces an acute need for housing, well-located, well-managed affordable rental portfolios offer immense value for both investors and our society.”

“This investment signifies growth in the multifamily asset class,” said Carel Kleynhans, CEO of Divercity Urban Property Group.

Kabelo Rikhotso, the PIC’s Chief Investment Officer, said that South Africa faces a critical housing shortage.

Rikhotso added that the PIC looks for investments that not only deliver consistent returns but also investments that drive impactful change.

“Our partnership with Divercity aligns with our mandate to support economic transformation and upliftment, creating accessible, quality affordable housing in strategic urban locations,” said Rikhotso.

“By investing in the multifamily rental sector, we’re contributing to a resilient, inclusive housing market that offers real value to South African communities and to our stakeholders.”

Divercity’s portfolio includes Barlow Park, which is developing with the Atterbury Group, Moolman Group and Twin City Development.

The development is situated next to the M1 highway in Sandton has is visible to those who take the route regularly.

It is situated at 180 Katherine Street, Sandton, and is only a few minutes away from Sandton City. The suburb is widely referred to as the richest square mile in Africa.

The project was announced in 2017 and valued at R3 billion.

However, construction only started in 2022 due to COVID-19 and changes in the real estate market.

The development plans to offer 4,100 affordable residential units in 11 apartment blocks.

The massive development also includes a 5,500 sqm retail centre, which houses Checkers, Clicks, MR Price, PnP Clothing and Nando’s

There is also a Curro High School, which anchors the development.

Another similar development recently finished by Divercity is the Jewel City Precinct in the heart of the Johannesburg CBD.

Jewel City has six city blocks, 17,000 sqm of office space, 10,000 sqm of retail space, a school, a day clinic and sports facilities.

Divercity also owns the Absa Towe in the Johannesburg CBD.