SA firm cashes in on South Africa’s biggest property trend

JSE-listed homebuilder, Balwin, continues to cash in on the trend in South Africa’s property industry for sectional-title residential estate living, after reporting a 30% rise in revenue for the year ended February 2017.

Balwin had 13 developments under construction during the period, and in line with its forecast, sold 2,711 apartments at an average selling price of R995,000 per unit.

Revenue increased 30% to R2.7 billion and gross margin remained on target at 37% in spite of an increase in construction related costs. ]

Profit for the period improved 18% to R661 million.

Highlights:

  • Revenue rose 30% to R2.7 billion;
  • HEPS and EPS up 7% each to 141 cents;
  • Final dividend of 31 cents declared, a 48% increase;
  • 2,711 apartments handed over, of which 2,234 registered;
  • Cash balance of R547 million;
  • Solid demand sustained with 1,283 apartments pre-sold for FY 2018;
  • Significant current pipeline of 33,786 units to be developed over approximately 10 years.

Balwin, which listed on the JSE in October 2015, targets high-growth, high-density metropolitan nodes in South Africa’s major cities,

The group’s estates average in size between 500 and 1,000 units, offering buyers two and three bedroom apartments ranging in size from 45 square metres to 120 square metres.

Balwin said it sells 20 to 25 units per location, per month, targeting a profit margin of between 35% and 40%.


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The property group launched six new developments during the financial year:

  • Malakite and Amsterdam in Johannesburg;
  • Grove Lane and The Blyde in Pretoria;
  • The Sandown in the Western Cape;
  • The Polo Fields, Balwin’s first development in Waterfall.

Steve Brookes, CEO and founder of Balwin noted that the company acquired a parcel of land in Ballito, Durban which earmarks its entrance into the KwaZulu-Natal housing market.

He said that the land acquired can accommodate over 2,500 apartments which will be developed over a period of eight years with development expected to be launched during the current financial year.

KwaZulu-Natal is a strategic growth area for Balwin and the Company aims to acquire further land for development. Balwin has opened an office in Umhlanga as a result.

“The acquisition of a parcel of land in Ballito, Durban marks Balwin’s entrance into the KwaZulu-Natal housing market, a strategic objective identified at the time of listing.

“Our secured development pipeline has been extended to 33 786 apartments to be rolled out over approximately ten years which will sustain our future growth,” Brookes said.

“We are mindful of the challenging economic conditions that lie ahead. Balwin’s business model allows for flexibility to rapidly adapt to prevailing market conditions and reduce risk,” he said.

Balwin was Brookes in 1996, with its first development – a small 50 unit sectional-title development in the south of Johannesburg – selling for R99,000 per unit.


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SA firm cashes in on South Africa’s biggest property trend