Real Estate Investor Magazine South Africa July/August 2019 | Page 7

EDITORIAL VIEW JOHANN RUPERT was privileged enough to be the chairperson at the Affordable Housing Investment Summit (AHIS) held in Nairobi, Kenya. At REImag our aim is to ensure that everyone has the ability to own or rent a property. If it is not affordable to purchase a property, we believe that it is imperative to have access to rent a property where they can work and thrive. Affordable housing can be defined as residence that is considered ‘affordable’ to those within a median household income bracket or below. The affordability is determined by the national government or by a recognised housing affordability index. Choosing a house is a response to an extremely complex set of economic, social and psychological impulses. Affordable, also known as inclusionary housing, refers to municipal and county planning ordinances that require a given share of new construction to be affordable by people with low to moderate incomes. This type of housing will see a steady surge and demand with population growth in young, urban upper lower and middle class. The World Bank estimates that sub-Saharan African region is expected to grow economically by an average of 3.6%. AHIS functioned to bring thought leaders and key stakeholders in the industry together and initiate a conversation about affordable housing. This included collaborating to find effective solutions with government bodies (a key component), investors, financial consultants, real estate developers, REITs, Private Equity firms, contractors, engineers, quantity surveyors, architects, designers, property owners, lawyers, journalists, financiers and caseworkers. Four key areas where we can direct our efforts were identified at AHIS. First, a substantial increase in the inflow of investments towards the affordable housing sector and a diligent reassessment of the housing finance sector of Africa. Second, tangible and scalable solutions were devised to increase the number of qualified players in the market with an improved product line. Thirdly, dissemination of accurate information with the latest trends in the affordable housing sector is a key success formula to drive the process. Lastly, we identified the need to help property developers tackle the red tape, administrative and financial challenges to fix the backlogs. Population growth and urbanisation are increasing the demand for affordable housing across Africa. By 2030 it has been estimated that urbanisation in African cities will be at 50%. The existing housing backlog in Kenya is around 2-million, South African at 2.3-million with Nigeria as much as 17-million. Standard media reports that some affordable housing programmes implemented in some African countries are not affordable to everyone. Ethiopia’s flagship social housing programme is considered the largest social housing project on the continent and one of the most ambitious in the developing world. Since 2006, the Ethiopian government through their Integrated Housing Development Programme, has been building affordable homes financed by public funds. This has been boosted by the Engage with REImag EMAIL [email protected] fact that all land in the country is state-owned. The question is, what can SA learn from this? In Kenya and Ethiopia the poorest are encouraged to register for the lottery system which allocates units as they became available. The challenges of the Ethiopian affordable housing programme are what we must learn from. We can also learn from the mishaps of others countries such as Angola’s failed low-cost housing system. President Jose Eduardo dos Santos who served Angola until 2017, made a promise to build one-million social houses over four years. This promise was made leading up to the 2008 national elections. The social housing project in the new city of Kilamba was built at a cost of USD3.5-billion by the Chinese and was aimed at increasing the number of houses in Angola by 500 000. Today it is now a ghost town as the cost of units are from USD120,000 - USD200,000 far beyond reach of the common citizen. In South Africa, all stakeholders need an ‘absolute buy-in’ from the government a key development partner to move forward with affordable housing schemes. The focus areas should be on how to reduce the costs of construction, state or privately built, the need for more equitable distribution and forging of partnerships between private and state. This includes defining what is the give and take of state and most importantly the source of financing or developer incentives. Examples of financing include the lottery system and other investment sources and other stimuli for developers to include affordable housing in their portfolios As globally-recognised thought leader Tim O’Reilly recently commented on this topic within an emerging market context by highlighting that ‘the lack of existing infrastructure turned out to be an advantage in adopting a radically new model’. In an emerging economy context, this means that adopting the latest technology can provide access to services or products on a large scale, without the need of developing expensive infrastructure or systems. To this end, new technologies in conjunction with affordable housing can effectively allow African economies to leapfrog more industrialized countries in terms of the development of industries or infrastructure. Successful investing NEALE PETERSEN EDITOR-IN-CHIEF THEODORE ROOSEVELT “ tv “ I Will affordable housing drive the next property boom? It is hard to fail. But it is worse to never try and succeed. INTERVIEWS REItv FaceBook LIVE radio REAL ESTATE RADIO PodCasts SA Real Estate Investor Magazine JULY/AUGUST 2019 5