Real Estate Investor Magazine South Africa July/August 2019 | Page 19

AFFORDABLE HOUSING
20km from São Gonçalo do Amarante municipality.
Aiming to provide low-cost housing to 15 000 people,
Smart City Natal is a prime example of innovative affordable
housing. Planet Smart City utilises architectural, digital,
environmental and social innovation to create homes that
are ‘meant to last’. Construction on Smart City Natal began
at the end of March and is expected to be completed at
the end of this year. One of the main aims of Planet Smart
City is to develop an integrated community within their
developments. Powered by the use of technology, Smart
City residents will be able to access all city services via the
use of an app. This app will allow residents to communicate
with one another and foster a sense of community.
Countries across the world are pioneering new methods
to implement affordable housing. South Africa has the
opportunity to learn from the mistakes of other countries
who have implemented affordable housing schemes,
adopting their policies and molding them to suit our
economic and social climate.
AHIS Summit Kenya
The Affordable Housing Investment Summit held in
Nairobi, Kenya, Chaired by Neale Petersen, in June this
year has functioned to facilitate a dialogue on developing
inclusionary housing policies across the world. The summit
aimed to generate solutions to the key issues faced in
affordable housing. It also focused on creating affordable
housing in a sustainable manner. Key stakeholders from
investment, property and development were present at the
summit, engaging on methods to make low-cost housing
a reality.
The Central Bank of Kenya reported that in 2017 there
were only 26 187 mortgages, showcasing that there is a
rise in slums and informal settlements in the country. The
Cabinet Secretary, Ministry of Transport Infrastructure,
Housing, Urban Development and Public Works, James
Macharia spoke at the AHIS Summit and explains that Kenya
is moving towards implementing their affordable housing
scheme.
“This Summit is convened at a time when the Government
has embarked on an ambitious plan of delivering 500 000
affordable housing units by 2022 as one of the pillars of
the Big Four Agenda. The Affordable Housing Program
(AHP) provides an opportunity to right the systemic issues
in housing through clear interventions that will restore our
people’s dignity,” he said.
Kenya’s AHP will focus on the mobilization of affordable
housing finance, land identification and registration,
the provision of support infrastructure, using innovative
construction technologies and materials to generate a large
number of houses. Using ‘end-user financing’ the AHP will
offer various purchase options – from cash sales, tenant
purchase (with the concept of rent-to-own) and subsidised
mortgages.
Macharia announced at the summit that the first phase of
the AHP is in construction. “Our first project to develop 1 370
units at Park Road is ongoing and the first phase comprising
288 units will be completed in November this year.”
Various forms of existing legislature have been adapted
to provide an opportunity for first-time buyers and
developers. “These include the Stamp Duty for first time
home buyers having been zero-rated with the Finance Act
of 2018, thereby reducing the burden for home buyers,” said
Macharia.
Other incentives of the AHP include; lower income tax
rates for developers who are creating 100 units and above,
lower taxation on housing bonds at 10% (provided that the
interested does not exceed KES 300 000).
At the AHIS Summit, Macharia concluded on the
importance of housing for residents of Kenya. “Homes are
tangible, appreciating assets that will give people a sense
of ownership that we expect will eventually fix our politics
– from emotions and personality—drive to issues based,” he
said.
The way forward for SA
STATS South Africa recently announced that countries’
GDP has dropped significantly by 3.2%.“The 3.2% decline
is the biggest quarterly fall in economic activity since the
first quarter of 2009, with the economy – under strain from
global financial crisis- tumbled by 6.1%,” STATS SA said in a
statement.
With the countries’ economy in a precarious state, the
implementation of affordable housing has been a slump
one. The economic strains placed on local residents and
shortage of job opportunities has compounded the growth
of informal settlements and the dire need for affordable
housing. Several plans for low-cost housing are yet to be
implemented as they undergo critical analysis across the
country.
At the most recent SONA address, President Cyril
Ramphosa announced his hopeful intentions for new cities
to be developed, even amidst the dismal economic state of
the country.
“I dream of a South Africa where the first entirely new city
built in the democratic era rises We have not built a new city
in 25 years of democracy. Around 70% of South Africans are
going to be living in urban areas by 2030,” said Ramaphosa
Although, the City of Johannesburg is pioneering this
with their most recent policy implementation – creating
rules by which new developers have to integrate low-cost
housing there is a need to develop mechanisms that provide
a fruitful output for investors, developers and residents. With
loose ends still to tie, there future of affordable housing in
South Africa appears positive.
SA Real Estate Investor Magazine JULY/AUGUST 2019
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