Housing in Southern Africa December 2015

Housing

Tlou Ramaru, DEA Chief Policy Advisor: Sustainable Development with Manie Annandale of Nedbank and Mohale Rakgate from DBSA.

Affordable green housing

D BSA’s Green Fund managed on behalf of the National Department of Environmen- tal Affairs (DEA) has earmarked a R120million concessionary loan fund- ing pool, which will be administered by Nedbank. The agreement between Nedbank and DBSA’s Green Fund will enable the development of sustainable green housing in the affordable housingmar- ket. The agreement also includes the monitoring of energy and water con- sumption in green affordable housing units to verify the actual savings. “Green affordable housing com- bines social and environmental sus- tainability to promote access of lower tomiddle income individuals to better quality housing units with lower run- ning costs. This captures the spirit of Nedbank’s Fair Share 2030 initia- tive, recognising that in order to be a thriving bank, we need to operate in a thriving society,” says Manie Annandale, Head of Affordable Hous- ing Development Finance at NCIB. The 400 units in Gauteng and the Western Cape will not only provide housing but local industries will be stimulated through the increased demand for green housing technolo- gies. This includes creating new job opportunities with the demand for in- sulation, efficient lighting, heat pumps and solar water heaters. “Funding initiatives such as this are meant to support South Africa’s efforts to move towards a greener economy, which is a priority focus area for the DBSA’s Green Fund. The partnership with Nedbank’s Affordable Housing

In a pioneering move, Affordable Housing Development Finance at Nedbank Corporate and Investment Banking (NCIB) and the Development Bank of Southern Africa (DBSA) Green Fund, concluded an agreement to jointly fund the development of 400 affordable green housing units in the Western Cape and Gauteng.

Unit makes it possible to fund in- novative affordable housing projects which contribute towards achieving the objectives of theNational Develop- ment Plan,” saysMohaleRakgate, Gen- eral Manager for Project Preparation Development unit at the DBSA. A typical household in the afford- able market earns up to R20 000 per month with bond instalments averag- ing R6 500 for a R620 000 home utilities representing almost 40-50% of the gross income. This places pressure on the home owner in terms of afford- ability. “Above-inflation increases in electricity tariffs will erode affordabil- ity further in years to come. Meaningful savings in electricity and water bills can reduce the likelihood of default on rentals or bond payments, and help to improve access to housing for new market entrants,’’ says Annandale. In South Africa, the new bench- mark for environmentally sustainable housing is the EDGE (Excellence in Design for Greater Efficiencies) tool. It was developed by the International Finance Corporation (IFC) for appli- cation in developing economies and was recently adopted by the Green Building Council of South Africa (GBCSA). This forms the basis for a new green housing certification system.

Compliance requires savings of at least 20% in each of three categories namely; energy, water and building material embodied energy. It is an- ticipated that a family of four living in a new two bedroom unit, compliant with EDGE and SANS 10400-XA, could save as much as R350-450 per month, compared to an older conventional unit with no energy efficiency features. Once savings are demonstrated, it is anticipated that property develop- ers will be able to recover the green construction premium from residents by sharing in the operational savings, either through marginally higher sell- ing prices or rentals. In the case of housing sales, mortgage lenders will play a critical enabling role by taking into account the likelihood of lower operational costs in their assessment of home loan applications relating to units in green developments. Fair Share 2030 is Nedbank Group’s business response to a series of economic, social and environmental challenges that threaten society’s long-term success. It represents an annual flow of money to be lent in a way that contributes to meeting eight major long-term goals for the future. The goals relate to the provision of affordable energy services. ■

December 2015