Old Mutual Investment Group (SA) (OMIGSA) Alternative Investments has launched an innovative Housing Impact Fund targeted primarily at helping South Africans earning less than R15 000 a month meet their housing needs.
The fund finances the construction of affordable homes for sale and rent, as well as providing housing loans, helping fill a serious gap in the market between government-provided housing and those who can afford their own homes.
One of the fund’s investment projects – Karino Lifestyle Estate – has just been launched in Nelspruit, Mpumalanga, at a cost of R450m for 1 350 housing units. The value of the development over a six-year period is estimated at R1.55bn, representing a considerable financial injection into the greater Nelspruit economy.
Christine Glover, head: Housing Impact Fund, said: “The Housing Impact Fund is OMIGSA’s response to Human Settlements Minister Tokyo Sexwale’s call on the private sector to assist in finding lasting solutions to the housing challenge in the country.
“I strongly believe that the Housing Impact Fund is a product that many socially conscious institutional investors have been waiting for, and OMIGSA is pleased to take the lead in offering investors innovative investment opportunities in affordable housing. With a backlog of 650,000 housing units in the affordable sector to be completed and against the backdrop of a global recession, much work still lies ahead”.
“Investment in affordable housing in underdeveloped areas has previously been neglected by institutional investors due to the high level of risk in this industry. But our unique partnerships with developers through special purpose vehicles (SPVs) ensure that we maximize the direct profit participation potential for the fund, and also mitigate direct corporate risk.”
The fund has started with commitments of R4.5bn from Old Mutual South Africa (OMSA) with 48% dedicated to fund new housing developments, 26% to rental accommodation and 16% to housing loans.
“These are really triple-bottom line investments,” said Glover, “meeting environmental and regulatory requirements while delivering market-related commercial returns, as well as servicing a previously neglected sector of the housing market. It’s not so often that investors find an opportunity to contribute to alleviating the serious housing backlog in South Africa while making a sound return on their investment at the same time.”
Some investments by the Housing Impact Fund to date include:
New Town Development – This housing project is situated south of Johannesburg adjacent to Orange Farm. In a joint venture with Basil Read, this project will provide approximately 18,000 new housing units, 12 schools, a large retail centre, two neighbourhood centres and approximately 40% of the development has been set aside for parks, recreation and water conservation.
Mettle Property Solutions – An OMIGSA joint venture with Mettle Property Solutions including multiple housing projects across South Africa. Currently there are seven projects underway involving over 10,000 new houses. Included in this portfolio is the Karino Lifestyle Housing project in Nelspruit, Mpumalanga which was launched on 19 August.
Urban Space Housing – This housing development initiative together with Renprop and Probuild involves eight different projects which will deliver over 25 000 new housing units in planned urban environments. The projects are spread around the country in areas such as Kimberly, Bloemfontein, Middleburg, Pretoria, Randfontein and West Rand.
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