Real Estate Investor Magazine South Africa March/April 2020 | Page 23

“A lack of quality and affordable housing is one of the most
pertinent legacies of apartheid. One only has to drive close to any city
or town in South Africa to see the need for better homes. Investing
in housing moves South Africa forward, but also has the potential to
show measurable environmental and social impact,” says Spies.
Venturing into the residential property sector not only comes
in handy for the general public or persons seeking places to
stay, but makes great long-term financial returns for investors
too. It is financially rewarding especially if an investor has
chosen the correct investment model or form of investment.
For instance, investing in affordable accommodation in the
form of a Built-to-rent (BTR) asset is not a short term, high yield
investment, it’s the other way around.
Built-to-rent
“BTR investors are those looking for a long-term investment
vehicle that produces consistent inflation-beating operating
returns, if managed well, and good capital growth if the correct
location is selected for the asset in the first place,” says Spies.
“The returns are closely linked to the effective operation of the
asset, the relationship management of the tenant base and the
community that is established over time, creating a desirability
for clients to live there, stay for longer periods and receive value
in exchange for annual rent escalations (with limited surprises),
resulting in income and capital growth for the investor,” adds Spies.
In many success stories the concept of enduring always arise,
signifying the importance of staying put to the ultimate goal.
It is very hard to establish effective operation of the property
with regular ownership changes or “under new management”
signs on the door. Therefore, the intention to be in it for the
long run is a requirement for a BTR success story.
SUCCESFUL AFFORDABLE
ACCOMMODATION INVESTMENT
LOCATION
The location is a major determining factor. Great locations
are where the people are, close to schools, work, public
transport, social and other public amenities.
DESIGN
Design is also critically important. The purpose of the
home, whether it is built to rent or to be sold, and the best
design to provide a quality home to fit this purpose in the
most cost-effective way is key.
OPERATIONAL COSTS
Each element in the design has the opportunity to
influence the ongoing operational cost but it does provide
opportunities to innovate on an ongoing basis
DEVELOPMENTAL COSTS
it is important for developers to look at every opportunity
to lower the ongoing cost of the homes developed for the
middle-income group market. Developers can have great
results from enrolling their developments with entities
that certify their reduction in energy and water use
Investing in the affordable housing sector in South Africa
in the form of BTR has room for financial growth for dedicated
investors, especially if property owners pay attention to the
design and the layout of their properties. South Africa is way
ahead of the global urbanisation trend and therein lies a
fantastic opportunity to create and shape quality housing for
the emerging middle-class market. This is a sentiment shared by
Harold Spies who has expertise in the affordable housing sector.
“A lack of quality and affordable
housing is one of the most
pertinent legacies of apartheid.“
“I am an avid supporter of purposefully designed and
developed rental housing or BTR. I believe that rental housing
offers the opportunity to have a measurable impact in the
long run the economic, social and environmental impact of
rental housing. We have a responsibility as developers and
investors to create accommodation for the affordable market
that considers building material, recycling, energy saving
infrastructure and water harvesting, all whilst keeping it
affordable and attractive for a long-term rental stay. One such
development is our Urbika Estate in Boksburg,” says Spies.
There are a couple of factors that need to be adhered to
in order to develop enticing accommodation, as far as the
layout and structure of the development is concerned. These
factors also impact both the affordability of homes and the
ultimate success of housing developments. It takes a layered
approach which includes attention to the Location design,
developmental and operational costs.
Even though impact investing might not be seen by many as
a sustainable investment venture, it adds value to an investor’s
financial growth. It just requires investors to fix their eyes on
the prize, which is double sided. It benefits the investor and
leaves the society in peace. Investors need to be critical about
many things prior to deciding whether or not to invest in this
market. Similan advises their clients not to develop or invest in
marginal sites. Furthermore, the middle-income group is very
vulnerable to cost increases which is why it is important to look
at every opportunity to lower the ongoing cost of the homes
developed for this market.
“Design is as critically important as the location of the
development. We take a long-term view when it comes to
design and development. It is especially important to be
cognisant of operational costs when developing built-to-rent
opportunities,” concludes Spies.
SOURCE Similan properties
HAROLD SPIES Spies founded Similan 10
years ago, because he wanted to contribute
to the way that homes are designed,
developed and sold in SA.
SA Real Estate Investor Magazine MARCH/APRIL 2020
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