Developers, Balwin and investors, Transcend, have announced that they plan to spend R6.4 billion on developing homes for the in-demand middle-class segment in Gauteng.
In a shareholder statement released by Balwin, the two groups said that they plan to bring to market up to 8,900 affordable rental apartments across five developments in key Gauteng nodes over the next six years.
Balwin will be responsible for the design and construction of each development and sectional title apartment. It will also market and secure lease agreements for the apartments with prospective tenants.
Transcend will then have the opportunity to purchase fully tenanted apartments in phases from Balwin. Transcend’s intention is to participate in all five developments although they will be treated and reviewed independently.
“Today’s announcement is fantastic news for the rental housing market in South Africa. The planned developments worth an estimated R6.4 billion will see us deliver up to 8,900 premium apartments expertly designed to offer quality finishes not yet seen in the affordable rental market,” said Balwin CEO, Steve Brookes.
“Furthermore, Transcend’s focus on predominantly walk-up apartments strategically located in desirable neighbourhoods and often equipped with lifestyle-enhancing facilities is perfectly in line with Balwin’s proven development model and popular design.”
Subject to the requisite approvals, “Green Park”, comprising of approximately 1,200 apartments, is the first development earmarked for this alliance. Located in Boksburg, the first apartments are expected to bedelivered to Transcend in early 2018.
The development, among other lifestyle facilities, will make use of solar energy solutions and provide high speed fibre connectivity.
“This alliance is perfectly in line with our strategy to focus on a defensive asset class, that delivers affordable housing rentals to a heavily underserviced portion of the real estate market outside of conventional inner-city residential rental housing,” said Rob Wesselo, CEO of Transcend.
Rentals will be aligned with Transcend’s portfolio and are expected to range from R4,000 to R8,000 which is currently the sweet spot for a growing middle class in South Africa’s urban centres, he confirmed.