SPECIAL FOCUS
Yusuf Patel, MD of Basil Read Developments
WE NEED TO MOVE
BEYOND RDP MODE
– TO STOP LOOKING
AT THE PROBLEM AS
A BACKLOG – AND
ENSURE THAT WE
START LOOKING AT
WAYS TO PROVIDE
COST-EFFECTIVE,
INCLUSIVE
OPPORTUNITIES
FOR PEOPLE.
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get into a virtual cycle where affordable
housing becomes a driver for the economy
to improve job creation, and generate more
household income. “In the long term, that
means people will take out more loans,
banks are going to have better clientele, and
the overall picture will slowly improve,” he
says. “It’s not an easy ask, but I think that
everybody is going to have to start looking
at doing things slightly differently if we’re
going to solve this challenge. Developers
need to look at innovative ways to cut
costs, government needs to address the
regulatory costs, and banks are going to
have to come up with innovative financing
methods – whether it’s reducing interest
rates, increasing loan terms or even making
it an aspect of their CSI projects – to make
investments more attractive over a
longer-term period.”
Patel says that it would be easy for all
parties to sit back and wait for the others
to jump in first, but warns that delays lead
to social unrest, as seen in mining towns
over the last few years. “If we don’t find
solutions for providing adequate housing,
proper services and the like, action like
that is only going to spread, which, apart
from the effects it has on people’s lives,
affects the overall economy of the country
and makes it harder for people to earn a
living,” he says.
It sounds like the South African housing
market is depending on a lot of players
to do each other ‘favours’ in terms of
reducing costs, so that savings can be
passed on to consumers. Patel says that
this question of affordability is critical
because, ultimately, the country needs to
produce housing options that people can
afford to stay in, and invest in for the long
term, so that people see their long-term
futures there. “It will help people to make
wise spending choices. We need to ask
how much of household spending is going
towards housing, and how we get people
to direct more of their spending toward
housing as an investment, rather than
other consumable products,” he says.
In terms of the country’s infrastructure,
what effect do these 1.5 million housing
opportunities have on elements like
the thinly-stretched power grid? “The
rising cost of energy is one of the major
bulk infrastructure challenges,” adds
Patel. “Electricity connection costs for
developments are rising quite substantially
because of the situation with our
power supply, and we’re burdening the
affordable housing sector with the same
cost constraints as the top end of the
market, yet an affordable housing owner
is consuming much less water and power
than a homeowner in a house in Sandton,
for example. That’s unfair and it needs
to change. Pursuing renewable energy
options in affordable housing is a definite
option and could enable people to access
energy more quickly and cheaply, but we
need the regulatory framework in place
to feed energy generated by solar or wind
back into the grid – that’s the only way
to make sustainable energy viable. It’s
something which could definitely assist us
with our challenges, but the frameworks
need to either be clarified, or established
in the first place.”
Alternative building technologies –
materials and innovative solutions – are
another option, but Patel says that the
long-term cost-reduction benefits have yet
to be properly illustrated due to the high
initial costs. He says the market needs
to call on suppliers of these technologies
to package them in a way that reduces
upfront costs, with an eye on the overall
affordability of a home.
This housing problem is not uniquely
South African. In London, much of what
is considered to be multi-million pound
prime real estate today, started off as social
housing stock after World War II. “There
was a level of social housing investment,
and over time it became an economic effort
on the part of the household, the broader
city and the broader economy,” says Patel.
“Germany had the same issue, where they
had to provide mass housing. They looked
at it