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October 2015
Housing
S
peaking on affordable hous-
ing opportunities within the
next three to five years, Anton
Crous from Cosmopolitan Projects
discussed the challenges facing de-
velopers. He said that full title entry
level housing must be functional,
built to required specifications and
sizesmust also include energy saving
elements. Of course, he explained,
this comes at a price and still has to
be a value proposition for the banking
sector. Nowwith the new regulations,
the developer has to consider the
locality, infrastructure and proximity
to job opportunities and essential
amenities such as schools, shopping
precincts, transport nodes, as well
Growth in affordable housing
Developers, contractors, industry stakeholders, equity funders and the
banking sector recently attended the International Housing Solutions
7th annual Affordable Housing Conference at the Johannesburg
Country Club. This is a highlight on the housing calendar as it attracts
major role players in the affordable housing and rental market.
as offerings to the affordable housing
sector that includes affordable secu-
rity villages, erf sizes and packages.
The greatest development chal-
lenges is incorporating bulk service
contributions, which have increased
annually by double digits. The lack
of capacity and infrastructure for
bulk services and council’s unreal-
istic service standards means that
many projects are not undertaken,
which impacts negatively on housing
delivery.
Crous gave an example that in
2012 a 200 m² stand was delivered
for R90 000 excluding VAT. Three years
later the same land in the same town-
ship andwith the same land price, has
escalated to R150 000 excluding VAT.
His message to investors/buyers
and the banks is that investors or
buyers need to look at the returns
and be prepared to pay a premium
for good stock with strong growth
potential. Low construction costs as
well as cheap land deals and low city
council costs are a thing of the past.
On rentals, Crous notes that high
density units are preferred, provided
that they are well located have life
style facilities, security and children’s
play areas. Getting the rental price
right is by far the most important
factor.
“Cosmopolitan have been focus-
sing on the delivery of high and low
density rental stock since 2009. It
works well to target this market seg-
ment,” he said, “that does not want
to buy or that cannot buy because
of debt.”
In the next three to five years
Crous is confident that the demand
for affordable housing and rental will
continue. Even though higher interest
rates and inflation will keep develop-
ers’ profit margins low. The sector
will be hampered by high bulk con-
tributions and servicing standards
required by councils. And, week GDP
growthwill put pressure on individual
income growth, which in turn will be
reflected in the selling prices.
Crous acknowledged the support
that the banking sector has played
in the industry and concluded that
affordable housing projects will re-
main focussed on price, loan to value
and rental yields being acceptable to
banks.
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