Closing the gap
With a public/private sector partnership formally
established to provide more homes for South
Africans, where to next? By Trevor Crighton
T
he Social Contract for the
Development of Sustainable
Human Settlements, signed
in October at the conclusion
of the National Settlements
Indaba by government and
other human settlements stakeholders,
saw the public and private sector commit to
delivering 1.5 million housing opportunities
by 2019. The contract – a commitment by
big employers, banks, mining companies
and developers – effectively declares South
Africa the largest construction site in Africa
and the developing world, and is estimated
to be worth over R250 billion.
That value will see multiple markets
addressed, including the ‘gap market’,
in terms of affordable bonded
housing investments by banks, rental
accommodation developments, government
subsidies, housing investments by big
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employers and mining companies, bulk
services development for townships and
human settlements, upgrading of current
informal settlements infrastructure and
community infrastructure like schools
and churches.
Executive Director of Basil Read
Developments and former president of the
South African Planning Institute, Yusuf
Patel, says that while it’s no ‘silver bullet
solution’, the Social Contract is at least a
firm foundation for a public/private sector
partnership on a scale never attempted
before. “The key to meeting the targets set
by the Minister of Human Settlements, and
indeed in providing homes for people who
desperately need them, comes down to
cost,” he says. “Firstly, we need to produce
homes with a selling price that’s in the right
range, and to get the selling price down,
we need to get our building costs down.
The second issue is that in order for people
to afford homes, they need to get access to
finance, and we need to come up with more
innovative financing solutions to make the
monthly repayments cheaper.”
On the cost-cutting side, Patel says that
the regulatory framework must change in
terms of approvals needed with regard to
town planning, environmental issues and
funding. “If we could cut down on the time
taken to grant those approvals, we could cut
costs significantly,” says Patel.
The availability and cost of bulk
infrastructure also play a major role. “We
need better planning when it comes to bulk
infrastructure. Without proper planning
and cost containment on the back-end
elements, like water treatment plants,
power supply etc., the final selling price of
the units will be prohibitive to the market
we’re trying to serve,” he adds.
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