Real Estate Investor Magazine South Africa March 2014 | Page 24

INNER CITY

BY ROGER HUDSON

Rising from the rubble
Proof that previously derelict buildings can be profitable

I

n the post-apartheid era, the Johannesburg
inner city was in a state of severe decay.
Rising to the regeneration challenge, Jozi
Housing (Pty) Ltd was formed in 2003. Since
its inception it has successfully converted
dilapidated buildings in some of the most
crime-ridden, corroded areas such as Hillbrow
and Berea, into attractive, high qualit y,
affordable rental housing. Actively helping
to encourage civic-minded people to move
back into the city centre, Jozi’s refurbishment
initiatives have helped to increase the potential
for further inner city investment.

However, the journey has not been without
challenge. In 2003, the market was distressed.
Traditional banks responded by redlining the
inner city and subsequently withdrawing from
the inner city investment arena altogether.
Reacting differently to the traditional banks,
Trust for Urban Housing Finance TUHF
decided to critically examine the causes of
market failure from a legal and institutional
perspective, and subsequently formulated
workable strategies which are still relevant
today, enabling companies like Jozi the liquidity
essential to facilitate positive market change.
When Sandy Barnes joined Jozi as Chief
Executive Officer in 2004, the company had
already financed the company’s first five
buildings. Working in close collaboration
with Sandy with his gutsy determination and
unwavering belief in the inner city, a viable
and highly successful long-term regeneration
partnership was built. Jozi has to date acquired,
refurbished and is successfully managing 20
residential buildings.
With tenants seeking suitable urban rental
accommodation, the pressure to supply rental

22

March 2014 SA Real Estate Investor

SUBSCRIBE

housing increases and the refurbishment trend
gathers positive momentum. The demand for
clean, attractive, inner city rental housing by
better quality tenants eager to experience the
convenience of inner city urban living, means
that criminal elements, slumlords and building
hijackers in particular, are driven out.
According to Sandy, progress with regard
to the overall rejuvenation process is steady
but slow. He says, “Perceptions and issues
of crime surrounding t he inner-cit y as
highlighted in the media can be drastically
reduced t h roug h t he ef f icienc y of t he
service delivery model implemented by the
Johannesburg City Council and its various
affiliate branches.” He continues by saying,
“Even though there are negative perceptions
around the inner city, there are currently a
number of developers identifying derelict
buildings and converting them into places
in which people live and work with dignity,
thereby upgrading inner city communities
into healthy, secure, safe environments.”
He maintains that while the broader pace of
change could quicken the current appreciated
value of inner city property,

www.reimag.co.za