07 Aug 2012
An innovative joint venture between an estate agency, construction group and investment company would build a total of 18 000 housing units annually.
Some R5 billion annually will be spent by the consortium into affordable housing projects nationally in a bid to broaden home ownership and wealth development.
Acutts Motlekar, a joint venture between the Acutts Property Group and African investment holding company Motlekar Holdings, in conjunction with construction company Group Five as the building contractor and development manager aims to build 18 000 housing units to the market each year.
This conservatively translated into a R5 billion injection to the local economy with spin-offs and job creation expected in land surveying, architecture, building and construction, material delivery and administration.
Currently the initiative has the capacity to deliver 100 houses a day, a mobilisation that will also promote employment in the selling, mortgage origination and property transfer value chain.
The properties would be geared towards first-time buyers and middle-income earners, typically households earning R13 500 to R25 500 monthly to secure bonds of between R450 000 and R850 000.
The new suburbs would correspond with the government's proposed economic zone requirements for new commercial centres.
Acutts chairman, Pat Acutt says in areas where government is driving economic development, there is a critical need for housing as investments come to bear.
“Government is driving a need to create housing, specifically in the spectrum of the economically-active population that can purchase affordable housing - and this initiative answers that demand, says Acutt.
Acutt notes that the Old Mutual research into South Africa's affordable housing reflected the country has 14 million households of which half were sub-standard quality and included 3 million formal dwellings without sanitation.
Government housing focussed on households earning below R3 500 a month, while private sector development catered to the country's top 10 percent earners receiving more than R20 000 a month.
The research, covered in its A Glimpse into the Development Impact Funds report by Christine Glover and Leon Dykman and released in March 2012, concluded that a quarter of South African households had limited opportunities to participate in the formal housing market.
A 2006 survey revealed that the country had a housing backlog of 660 000 units in the middle and upper income tiers covered by the Financial Services Charter (households earning between R2 500 and R7 500), while Statistics South Africa showed a decrease in private sector housing delivery in line with a market contraction and reduced bank lending.
Acutt says the association between Acutts and Motlekar would drive and transform the South African affordable housing property sector.
The realty company Acutts Motlekar will market the newly constructed houses and apartments across South Africa on behalf of the property developers.
The joint venture would manage the marketing, sales and mortgage origination processes for a number of developments.
Each suburb would range between 600 and 5 000 houses to effect the delivery of quality houses to communities.
The consequential spin-off would involve the development of schools, shopping centres, health facilities and transport initiatives which Acutt confirmed formed part of the pre-planning phases in terms of getting the development areas approved.
Acutts Motlekar director and project manager Ken Fann says the limit to the number of properties built in each development depended on the limitations for the neighbourhood.
Specifically, if the number of schools currently available could not handle 5 000 new homes, then approvals would only be granted for the capacity in that region.
Acutt points out that the country's financial institutions were committed to providing mortgage finance to the affordable housing segment.
The developments would have a streamlined credit approval and bond calculation system on-site to assist potential buyers.
Homes within the schemes were colour-graded to guide buyers with their choices in line with their mortgage limits and in the initial phase, where homes have already been built, transfer would be effective within six to eight weeks.
Acutt says the banks would typically grant bonds, but the joint venture had also made a deal with Old Mutual via its Development Impact Funds, specialist financial services company Mettle and specialist home loan group Integer.
The Old Mutual Development Impact Funds South Africa specifically provides opportunities to invest in assets benefiting disadvantaged individuals and communities, while generating commercially accepted returns on investment.
The underlying investments primarily focus on stimulating the supply of affordable housing and related infrastructure and on increasing access to housing finance for lower-income households.
Glover and Dyman's report expected these funds to facilitate the development of more than 50 000 affordable housing opportunities over the next decade.
Finance would include unsecured housing financial and mortgages in areas where the Acutts Motlekar developments would focus.
The Integer product linked the home loan to a transaction account, debit card and credit facility, while Mettle was a niche provider of property finance focusing on the affordable housing segment.
Currently the company is managing property that would lead to the delivery of 12 000 housing units in this market.
Acutt says the initiative has already seen three new sales agents employed on site at Crystal Park and he anticipates around 200 front-line estate agency positions would be created as the developments rolled out nationally.
Further positions would be created in administrative levels, effectively promoting Black Economic Empowerment and transformation within the real estate industry, he adds.
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