Challenges in affordable housing investment However, accessing finance for affordable rental housing is only the first hurdle. Rising operational costs – including rising property taxes and service charges which have outpaced inflation – create additional challenges for developers.
Corruption in many areas of local government, including the national and metro police services, issues surrounding cross-border trade and bribery, and the rise of“ construction mafias”, complicate the investment landscape. Some municipalities are beginning to address these challenges, but the problem persists.
Additionally, non-payment in certain areas further complicates the fiscal landscape, as demonstrated by the way inner-city revenues are used to subsidise less financially stable regions. All these factors combine to have a negative impact on property investment and are leading to disinvestment.
A net positive for inclusive growth Despite these obstacles, well-located affordable housing remains a fiscally prudent and economically inclusive investment. By refurbishing existing buildings in inner cities, developers can capitalise on existing infrastructure, reducing the costs associated with outlying developments. Quality, affordable housing boosts property values and stimulates economic activity, making urban densification a financially sound strategy.
Inclusive economic growth is fundamentally a micro-economic issue. The creation of small and medium enterprises and job opportunities happens at the neighbourhood level. When safe, decent affordable housing is available in a neighbourhood, economic activity is stimulated by virtue of the fact that tenants can pay their rent, access goods and services from local small businesses and engage in the amenities available. Access to affordable housing is crucial for unlocking wealth-generating opportunities and fostering livelihoods.
TUHF’ s partnership with The Jobs Fund is a testament to our commitment. Together, we have successfully delivered 125 affordable housing projects, creating nearly 3,000 units and over 1,900 jobs. This collaboration demonstrates the transformative potential of well-located affordable housing for local economic development. Local economic development, in turn, stimulates the fiscus as people pay their rates, taxes( including VAT) and utilities.
Addressing urban sprawl requires a strategic, long-term approach that prioritises incity affordable housing. By leveraging existing infrastructure and focusing on urban densification, we can create a scalable, replicable, and sustainable environment for inclusive economic growth. And the net effect is fiscally positive. Affordable housing is not just a social need; it is an investment in the future of our cities and our country
About the Author Paul Jackson is the CEO of TUHF a commercial property financier that provides specialised financial services and solutions to clients in urban areas of large metropolitans across South Africa, based on the Group’ s in-depth market knowledge and targeted business model..
53