By Xolile Bhengu
Global affordable housing specialist International Housing Solutions has raised $175- million (R1.3-billion) to build 30000 affordable housing units in South Africa.
IHS said the funding for its South Africa Workforce Housing Fund came from US and local investors and would be used to fund developers working in the R280000 to R650000 range.
The fund was created to invest in housing for rent and sale to low- and moderate-income families to meet the growing demand for affordable bond-financed housing in South Africa.
The capital funding includes $95-million from a North American pension fund and a US foundation endowment, as well as up to $80- million in participating debt from the US Overseas Private Investment Corporation .
The South African Department of Housing has a housing backlog of 2.3-million people, worsened in part by the failure of the commercial sector to provide housing stock that can be bought for about R500000.
A R42-billion public private partnership was formed by banks and government four years ago through the Financial Services Charter to create affordable housing stock, but has still to make a visible impact.
Elize Stroebel, country director for IHS, said in addition to funding developers to create affordable bonded housing, the organisation was also funding developers creating affordable rental stock in South Africa.
Stroebel said a year after it opened its doors it was involved in various projects, including a 3000-unit project in Witbank, a 5000-unit project in the Eastern Cape, and an 800-unit affordable rental project in Johannesburg’s inner city.
She said the financial injection from the US was an affirmation of international investor faith in the potential for the growth of local residential housing business.
“Investors see South Africa as a good investment and realise that they have the potential to gain good returns from the developments that are funded.”